Options Glossary: M

Margin / Margin requirement

The minimum equity required to support an investment position. To buy on margin refers to borrowing part of the purchase price of a security from a brokerage firm.

Mark-to-market

An accounting process by which the price of securities held in an account are valued each day to reflect the closing price or closing market quotes. As a result, the equity in an account is updated daily to reflect current security prices properly.

Market order

A trading order placed with a broker to immediately buy or sell a stock or option at the best available price.

Market quote

Quotations of the current best bid/ask prices for an option or stock in the marketplace (an exchange trading floor). The investor usually obtains this information from a brokerage firm. However, for listed options and stocks, these quotes are widely disseminated and available through various commercial quotation services.

Market maker

An exchange member on the trading floor who buys and sells options for their own account and who has the responsibility of making bids and offers and maintaining a fair and orderly market. See also Specialist / specialist group / specialist system.

Market maker system (competing)

A method of supplying liquidity in options markets by having market makers in competition with one another. As an alternative to a specialist system, they are also responsible for making fair and orderly markets in a given class of options.

Market-not-held order

A type of market order that allows the investor to give discretion to the floor broker regarding the price and/or time of trade execution.

Market-on-close order (MOC)

A type of option order that requires that an order be executed at or near the close of trading on the day the order is entered.

Married put strategy

The simultaneous purchase of stock and put options representing an equivalent number of shares. This is a limited risk strategy during the life of the puts because the stock can always be sold for at least the strike price of the purchased puts.

MIAX

Miami Options Exchange

Model

A mathematical formula used to calculate the theoretical value of an option. See also Black-Scholes formula.

Multiple-listed / multiple-traded option

Any option contract listed and traded on more than one national options exchange. See also Fungibility.

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