SHORT BACKSPREAD - It involves buying one option nearer the money and selling two (or more) options of the same type farther out-of-the-money, with the same expiration, on the same underlying. Requires margin. SHORT OPTION (COVERED) - See COVERED CALL. SHORT OPTION (NAKED) - Selling an option you don’t own. See SHORT. SHORT STRADDLE - See STRADDLE. SHORT STRANGLE - See STRANGLE. SHORT SYNTHETIC- See SYNTHETIC. SHORT UNDERLYING - Selling an asset you don’t own. See SHORT. SLIPPAGE - Thinly traded options have a wider Bid-Ask spread than heavily traded options. Therefore, you have to give more in order to execute a trade in thinly traded options less in heavily traded ones. This give is what we refer to as slippage. SPREAD- A trading strategy involving two or more legs, the incorporation of one or more of which is designed to reduce the risk involved in the others. SPREAD ORDER - This is an order for the simultaneous purchase and sale of two (or more) options of the same type on the same underlying. If placed with a limit, the two !35
options must be filled fora specified price difference, or better. It can be critical in this type of order to specify whether it is an opening transaction or a closing transaction.
