# Definition of __Elasticity - See Lambda__

## Elasticity - See Lambda

# Related Terms:

Percentage change in the value of an option given a 1% change in the value of the

option's underlying stock.

The ratio of a change in the option price to a small change in the option volatility. It is the partial

derivative of the option price with respect to the option volatility.

The percentage increase in an option's value given a 1% change in the value of the

underlying security.

The percentage change in the price of an option relative to a 1%

change in the price of the underlying security. Also known as **elasticity**.

The amount by which an **option** is in-the-money. An **option** which is not in-themoney

has no intrinsic value. Related: in-the-money.

The portion of an **option**'s premium that is based on the amount of time remaining

until the expiration date of the **option** contract, and that the underlying components that determine the value of

the **option** may change during that time. Time value is generally equal to the difference between the premium

and the intrinsic value. Related: in-the-money.

To implement the right of the holder of an **option** to buy (in the case of a call) or sell (in the case of

a put) the underlying security.

The ratio of the dollar price change in the price of an **option** to a 1% change in the expected price volatility.

1) Amount paid for a bond above the par value.

2) The price of an **option** contract; also, in futures

trading, the amount the futures price exceeds the price of the spot commodity. Related: inverted market premium payback period. Also called break-even time, the time it takes to recover the premium per share of a

convertible security.

Also called time value, the amount by which the **option** price exceeds its intrinsic value. The

value of an **option** beyond its current exercise value representing the **option**holder's control until expiration,

the risk of the underlying asset, and the riskless return.

The classification of an **option** contract as either a put or a call.

**option**s: the security subject to being purchased or sold upon exercise of an **option**

contract. For example, IBM stock is the underlying security to IBM **option**s. Depository receipts: The class,

series and number of the foreign shares represented by the depository receipt.

The seller of an **option**, usually an individual, bank, or company, that issues the **option** and

consequently has the obligation to sell the asset ( if a call) or to buy the asset (if a put) on which the **option** is

written if the **option** buyer exercises the **option**.

The rate of change in the price of a derivative security relative to time.

Theta is usually very small or negative since the value of an **option** tends to

drop as it approaches maturity.

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