Last Trading Day
The very last full day of open trading before an options expiration day.
Leg
A risk-oriented method of establishing a two-sided position. Rather than entering into a simultaneous transaction to establish the position (a spread, for example), the trader first executes one side of the position, hoping to execute the other side at a later time and a better price. The risk materializes from the fact that a better price may never be available, and a worse price must eventually be accepted.
Leverage
In investments, the attainment of greater percentage profit and risk potential. A binary call holder has greater leverage than any alternative investment holder – the former will have greater percentage profits and losses than the latter, for the same movement in the underlying stock.
Limit Order
An order to buy or sell securities at a specified price (the limit). A limit order may also be placed “with discretion”. In this case, the floor broker executing the order may use their discretion to buy or sell at a set amount beyond the limit if they feel it is necessary to fill the order.
Listed Option
A put or call option that is traded on a national options exchange. Listed options have fixed striking prices and expiration dates. See also Over-the-Counter (OTC) Option.
Local
A trader on a futures/options exchange who buys and sells for their own account.
Lognormal Distribution
A statistical distribution that is often applied to the movement of asset prices. It is a convenient and logical distribution because it implies that stock prices can theoretically rise forever but cannot fall below zero. Obviously doesn’t work too well in the oil or interest rate markets!
Long Position
A position wherein the investor has bought more than sold of a specific asset.