D
Debit
An expense, or money paid out from an account. A debit transaction is one in which the net cost is greater than the net sale proceeds. See also Credit.
Deliver
To take securities from an individual or firm and transfer them to another individual or firm. A call writer who is assigned must deliver stock to the call...
Delivery
The process of satisfying an equity call assignment or an equity put exercise. In either case, stock is delivered. For futures, the process of transferring...
Delta
The first-order sensitivity of an option price to a change in the underlying.
Delta Neutral
A strategy consisting of holding puts and calls where the sum of the deltas is zero. For example, if a portfolio has 10 calls on a stock with a delta of .6...
Delta Spread
A ratio spread that is established as a neutral position by utilizing the deltas of the options involved. The neutral ratio is determined by dividing the d...
Depository Trust Corporation (DTC)
A corporation that will hold securities for member institutions. Generally used by option writers, the DTC facilitates and guarantees delivery of underlyin...
Derivative security
A financial security whose value is determined in part from the value and characteristics of another security, the underlying security.
Diagonal Spread
Any spread in which the purchased options have a longer maturity than do the written options as well as having different striking prices. Typical types of...
Discount
An option is trading at a discount if it is trading for less than its intrinsic value. A future is trading at a discount if it is trading at a price less t...
Discount Arbitrage
A riskless arbitrage in which a discount option is purchased and an opposite position is taken in the underlying security. The arbitrageur may either buy a...
Discretion
Freedom given to the floor broker by an investor to use his judgment regarding the execution of an order. Discretion can be limited, as in the case of a li...
Divisor
A mathematical quantity used to compute an index. It is initially an arbitrary number that reduces the index value to a small, workable number. Thereafter,...
Downside Protection
Generally used in connection with covered call writing, this is the cushion against loss, in case of a price decline by the underlying security, that is af...
Dynamic
For option strategies, describing analyses made during the course of changing security prices and during the passage of time. This is as opposed to an anal...