Definitions for terms that appear in same-day options alerts and scanner output. These are
general explanations of standard market terminology, not investment advice.

## Contract and expiration

**0DTE (zero days to expiration).** An option contract on its final trading day, expiring at
the end of the current session. A description of timing, not a distinct product.

**Expiration.** The point at which a contract resolves and ceases to exist. An in-the-money
contract settles for its intrinsic value; an out-of-the-money contract expires worthless.

**Strike price.** The price at which the contract can be exercised.

**Call.** A contract whose value rises as the underlying rises past the strike.

**Put.** A contract whose value rises as the underlying falls below the strike.

**In the money (ITM).** The underlying has moved past the strike in the direction the
contract needs, so the contract has intrinsic value.

**Out of the money (OTM).** It has not. At expiration, an out-of-the-money contract is worth
nothing.

**At the money (ATM).** The underlying is at or very near the strike.

**Assignment.** For physically settled contracts, an in-the-money position held to
expiration may become a position in the underlying, with the capital that implies.

**Cash settlement.** Resolution by paying the difference in cash rather than delivering the
underlying. Common for index options.

## Pricing

**Premium.** The price paid for the contract. For a buyer, this is the maximum amount that
can be lost.

**Intrinsic value.** How far in the money the contract currently is. Zero for an
out-of-the-money contract.

**Extrinsic value.** Everything in the price that is not intrinsic value — principally the
value of time remaining and expected movement within it. Converges toward zero at
expiration.

**Bid.** The best price a buyer is currently willing to pay.

**Ask.** The best price a seller is currently willing to accept.

**Midpoint.** The average of bid and ask. A calculation, not an offer — a trade will not
necessarily execute there.

**Bid-ask spread.** The gap between bid and ask. A real cost paid on entry and exit, and a
proportionally larger one on cheap or thinly traded contracts.

**Slippage.** The difference between the price expected and the price actually filled.

## The greeks

**Theta.** The rate at which extrinsic value erodes as time passes. Accelerates as
expiration approaches; on the final day it can erode a position over hours.

**Delta.** How much the contract's price moves for a one-unit move in the underlying. Also
loosely used as a rough proxy for the chance of finishing in the money.

**Gamma.** The rate at which delta itself changes. Largest near the money and near
expiration, which is why a same-day position's character can shift substantially on a small
move.

**Vega.** Sensitivity to changes in implied volatility.

**Implied volatility (IV).** The market's expectation of future movement, as implied by
current option prices. Not a forecast of direction.

## Market and scanner terms

**Underlying.** The instrument the option is written on.

**Volume.** Contracts or shares traded over a period.

**Relative volume.** Current volume compared with what is typical for that instrument at
that time of day. More meaningful than raw volume, since activity clusters around the open
and close.

**Open interest.** The number of contracts currently outstanding.

**Liquidity.** How readily a contract can be traded near its displayed price. Low liquidity
can make a quoted price effectively unavailable.

**Trend.** Sustained directional movement, generally assessed by comparing shorter- and
longer-horizon measures.

**Chop.** A range-bound tape without sustained direction. Signals that are meaningful in a
trending market are frequently noise here, which is why scanners gate on market context.

**Market context.** The state of the broader market, applied as a gate on whether an
individual observation qualifies.

**Setup score.** A scanner's ranking of how completely conditions matched its configured
rules. **Not** a probability of profit and not a prediction.

**Qualification rules.** The pre-configured conditions an observation must clear before an
alert is sent. Written before the session and applied identically to every subscriber.

## Related

- [What 0DTE means](/guides/same-day-expiration-options) — the mechanics in full.
- [What a 0DTE scanner does](/guides/0dte-scanner) — how these inputs are combined.
- [0DTE options alerts](/guides/0dte-options-alerts) — what ends up in an alert.

0DTE options are highly speculative and can lose 100% of premium. Read the full
[risk disclosure](/risk-disclosure) before subscribing.