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

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

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

underlying security.

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.

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.

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**.

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