Reference
QuantMint Glossary
Plain-English definitions of every metric we surface on a trade card and every term we use in a daily blog post.
QuantMint Score
A 0–100 composite score that ranks every spread candidate produced by our scanner. It blends pricing edge (vs. our American-options model with always-on QuantLib cross-validation), probability of profit, liquidity (open interest + bid-ask spread), implied-vol level, and structural quality (strike placement, days to expiration). Higher is better. Anything ≥ 80 is a high-conviction setup; 60–79 is acceptable; below 60 is filtered out.
ATM IV (At-The-Money Implied Volatility)
The implied volatility of the option whose strike is closest to the current stock price. It's the market's forecast of how much the stock will move, expressed as an annualized standard deviation. Rich (≥ 35%): premiums are inflated — favor selling. Normal (20–35%): typical level. Cheap (< 20%): premiums are compressed — favor buying. We use ATM IV instead of IV Rank because it's a direct, comparable, point-in-time read on option richness.
Probability of Profit (POP)
Our model's estimate of the chance the trade closes profitable at expiration, computed from a Monte-Carlo simulation of the underlying using the option-implied volatility surface (with American early-exercise and dividend adjustments). POP for a credit spread is approximately the probability the underlying stays on the right side of the short strike plus the credit collected.
Max Gain (Potential Gain)
The most you can earn on the trade, in dollars, if it works perfectly. For a credit spread that's the net credit collected (× 100 × number of contracts). For a debit spread it's (strike width − debit paid) × 100 × contracts. Realized only if you hold to expiration and the trade finishes in the profitable zone.
Max Loss (Max Risk)
The most you can lose on the trade, in dollars, if it goes against you completely. For a defined-risk spread that's (strike width − net credit) × 100 × contracts, or simply the debit paid for a debit spread. This is the number that should size your position. Never risk more on one trade than you're willing to lose.
Breakeven
The underlying price at which the trade returns exactly $0 at expiration. For a bull put spread: short-put strike − net credit. For a bear call spread: short-call strike + net credit. An iron condor has two breakevens (one on each side). Above breakeven on a bullish trade or below it on a bearish trade, you keep more of the credit.
Bull Put Spread
A defined-risk credit spread: sell a higher-strike put and buy a lower-strike put with the same expiration. You collect a net credit upfront. Profitable if the stock stays above the short strike (less the credit). Bullish to neutral. Max loss = strike width − credit.
Bear Call Spread
A defined-risk credit spread: sell a lower-strike call and buy a higher-strike call with the same expiration. You collect a net credit upfront. Profitable if the stock stays below the short strike (plus the credit). Bearish to neutral. Max loss = strike width − credit.
Iron Condor
A four-leg, range-bound strategy: combine a bull put spread (below current price) with a bear call spread (above current price) at the same expiration. You collect two credits and profit if the stock stays inside the range. Max loss = wider wing's width − total credit.
Cash-Secured Put
Sell a put with cash set aside to buy the stock if assigned. You collect premium and either keep it (if the stock stays above the strike) or get assigned the shares at an effective cost basis of strike − credit. Used to generate income or to buy a stock at a discount.
Credit Spread
Any spread where you collect more premium on the leg you sell than you pay on the leg you buy, resulting in a net credit hitting your account when you open the trade. Bull put spreads, bear call spreads, and iron condors are credit spreads. You profit from time decay and from the underlying behaving as expected.
Debit Spread
Any spread where you pay more for the leg you buy than you receive on the leg you sell, resulting in a net debit (cost) when you open the trade. Bull call spreads and bear put spreads are debit spreads. You profit if the underlying moves enough in the expected direction before expiration.
The Greeks: Delta, Gamma, Theta, Vega
Option sensitivities. Delta: change in option price per $1 move in the underlying (approximate probability of finishing in-the-money). Gamma: change in delta per $1 move — the option's acceleration. Theta: dollars lost per day from time decay (option sellers love it; buyers fight it). Vega: dollars gained per 1-percentage-point rise in implied volatility.
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