An option is trading at a discount if it is trading for less than its intrinsic value. A future is trading at a discount if it is trading at a price less than the cash price of its underlying index or commodity.
See Also:
Discount Arbitrage: A riskless arbitrage in which a discount option is purchased and an opposite position is taken in the underlying security. The arbitrageur may either buy a call at a discount and simultaneously sell the underlying security (basic call arbitrage) or may buy a put at a discount and simultaneously buy the underlying security (basic put arbitrage).
Broker: An individual or firm which charges a commission for executing buy and sell orders.
Discount Brokers: Brokerage firms that offer lower commission rates than full service brokers, but do not offer services such as advice, research and portfolio planning.
