GLOSSARY
Twenty terms that cover most of what you'll encounter reading SigmaSnap signals — and most options content anywhere. No jargon defined with more jargon.
A measure of how much a stock's price typically varies around its average. One sigma is the stock's 'normal' wiggle room; measuring moves in sigma units lets you compare a sleepy utility and a volatile growth stock on the same ruler.
A price move that takes a stock two standard deviations from its recent mean. Under a normal distribution, prices stay inside 2 sigma roughly 95% of the time — so trading beyond it is statistically rare, which is what makes these extremes interesting to mean reversion traders.
The tendency for prices that deviate far from their historical average to move back toward it. One of the most documented effects in quantitative finance, and the statistical foundation of the SigmaSnap engine.
Buying one option and selling another of the same type and expiration at a different strike, for a net cost (debit). The debit is the maximum possible loss; the strike width minus the debit is the maximum profit. The workhorse structure behind most SigmaSnap signals.
A debit spread built for a move higher: buy a call at a lower strike, sell a call at a higher strike. Profits as the stock rises toward or past the short strike; risk is capped at the debit paid.
The bearish mirror of a bull call spread: buy a put at a higher strike, sell a put at a lower strike, pay a debit. Profits as the stock falls; maximum loss is the debit.
The price at which an option contract can be exercised. A spread's strikes define both its cost and its profit zone — which is why SigmaSnap signals always specify exact strikes rather than leaving them to interpretation.
How many days remain until an option expires. Shorter DTE means cheaper contracts but less time for the thesis to play out; a correct idea on the wrong timeline still loses.
The market's forecast of how much a stock will move, baked into option prices. High IV makes options expensive, low IV makes them cheap — and IV tends to spike exactly when stocks hit the extremes mean reversion traders care about, which is one reason spreads (which offset inflated premium) fit these setups.
A rapid collapse in implied volatility — most famously after earnings — that deflates option prices even when the stock moves your direction. Buyers of single options get hurt worst; spreads partially hedge it because the short leg loses value too.
The daily erosion of an option's value as expiration approaches. Long options bleed theta every day; spreads reduce the bleed because the option you sold decays in your favor while the one you bought decays against you.
How much an option's price changes per $1 move in the stock, and a rough proxy for the probability it expires in the money. A 0.30-delta option moves about $0.30 per $1 of stock movement.
A momentum oscillator from 0–100 that measures how stretched recent price action is. Extreme readings (traditionally below 30 or above 70) signal potential exhaustion — one example of the confirmation-style factors quantitative systems layer on top of raw statistical extremes.
The percentage of closed trades that finish profitable. Necessary but not sufficient: a high win rate with oversized losses still loses money, which is why win rate should always be read alongside average return and profit factor.
Total gains divided by total losses. Above 1.0 means the strategy makes more than it loses; a profit factor of 2.0 means $2 made for every $1 lost. One of the cleanest single numbers for judging a strategy's health.
The average result per trade across all trades — winners and losers combined. Positive expectancy is the actual definition of an edge: it means that over many trades, the math is on your side even though any single trade can lose.
Deciding how much capital to risk on each trade. The most underrated variable in trading: consistent risk per trade is what lets a statistical edge compound instead of being wiped out by one oversized loss. SigmaSnap sizes every signal to a uniform risk target.
A predefined exit that caps a losing trade before it gets worse. Every SigmaSnap signal ships with its stop specified up front — deciding your exit before entering is what separates a plan from a hope.
A predefined level for taking gains. SigmaSnap signals use tiered targets (T1/T2/T3), commonly closing part of the position at each — banking profit while leaving room for the move to extend.
SigmaSnap signals arrive as complete trade plans — structure, strikes, targets, and stop already specified. Free for 14 days.
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