Glossary

The words you meet on a trading screen and a contract note, in one line each.

Ask: The lowest price a seller is currently willing to accept.
Average price: The cost per unit of a position built over several buys.
Bid: The highest price a buyer is currently willing to pay.
Breakeven: The price at which a trade neither makes nor loses money, after the premium (for options) and charges.
Call option (CE): The right, not the obligation, to buy the underlying at the strike on expiry.
Circuit limit: The band within which a stock may trade on a day; trading pauses or stops at the limit.
Contract note: The broker's statement of every trade and charge for the day — the record to check.
Delivery: Shares bought and held past the day, credited to your demat account.
Derivative: A contract whose value comes from an underlying asset — futures and options are derivatives.
Expiry: The last day a futures or options contract trades; it settles after that.
Futures: A contract to buy or sell the underlying at a set price on expiry, marked to market every day.
Gap: When a price opens well above or below the previous close, jumping past orders in between.
Implied volatility (IV): The volatility the option price implies; high IV means expensive options.
India VIX: NSE's index of expected 30-day Nifty volatility, computed from option prices.
Intraday (MIS): Positions opened and closed the same day; the broker squares off what is left before the close.
Intrinsic value: What an option would be worth if exercised now: how far it is in the money, never below zero.
Limit order: An order to trade only at your price or better. It may not fill.
Long-term capital gains (LTCG): Gains on listed shares or equity funds held over 12 months: taxed at 12.5% above ₹1.25 lakh a year (since 23 July 2024). Check with a tax adviser.
Lot size: The fixed number of units in one futures or options contract, set by the exchange.
Margin: The money a broker blocks to let you hold a leveraged position.
Mark to market (MTM): Settling a futures position's daily gain or loss in cash at each day's close.
Market order: An order to trade at whatever price is available now. Fast, but the price is not known in advance.
Open interest (OI): The number of futures or options contracts open (not yet closed) at a time.
Premium: The price of an option, paid by the buyer to the seller.
Put option (PE): The right, not the obligation, to sell the underlying at the strike on expiry.
Research Analyst (RA): A person or firm registered with SEBI to publish buy/sell research; the registration number starts with INH.
Reward-to-risk: Possible profit to the target divided by possible loss to the stop-loss.
Short-term capital gains (STCG): Gains on listed shares or equity funds held 12 months or less: taxed at 20% (since 23 July 2024). Intraday and F&O are taxed as business income instead. Check with a tax adviser.
Slippage: The difference between the price you expected and the price you got.
Stop-loss: The price at which you exit to cap the loss, decided before the entry.
Strike: The price at which an option lets its holder buy (call) or sell (put).
STT: Securities Transaction Tax, charged by the government on every trade on an exchange.
Theta: How much an option's price falls per day from the passing of time alone.
Underlying: The asset a derivative is based on — a stock or an index such as Nifty 50.

Tax rates are as of October 2026 and change with budgets; confirm with a tax adviser.