Illiquid Market Market
which has no volume that subsequently creates a lot of slippage due to lack of trading volume.
order which must be filled immediately or canceled.
index is a group of stocks which can be traded as one portfolio, such as the S&P 500. Broad-based indexes cover a wide range of industries and companies and narrow-based indexes cover stocks in one industry or economic sector.
Options Call options and put options on indexes of stocks are designed to reflect and fluctuate with market conditions. Index options allow investors to trade in a specific industry group or market without having to buy all the stocks individually.
Rate The charge for the privilege of borrowing money, usually expressed as an annual percentage rate.
Rate Driven Refers to a point in the business cycle when interest rates are declining and bond prices are rising.
Analysis Observing the price movement of one market for the purpose of evaluating a different market.
Spread A spread consisting of opposing positions in instruments with two different markets.
you were to exercise an option and it would general a profit at the time, it is known to be in the money.
"call" option is in-the-money if the strike price is
less than the market price of the underlying security.
A "put" option is in-the-money if the strike price
is greater than the market price of the underlying
Intrinsic Value The amount by which a market is in-the-money. Out-of-the-money options have no intrinsic value. Calls = underlying -strike price. Puts = strike price - underlying.
Relationship Two or more markets which act totally opposite of one another producing negative correlations.
purchase of an asset to increase future income.
Butterfly The combination of a long (short) straddle and a short (long) strangle. All options must have the same underlying and have the same expiration.
stock or index options which are available with expiration dates up to three years in the future.
side of a spread.
Limit Move The maximum daily price limit for an exchange traded contract.
Order An order to buy a stock at or below a specified price or to sell a stock at or above a specified price.
Up, Limit Down Commodity exchange restrictions on the maximum upward or downward movements permitted in the price for a commodity during any trading session day.
ease with which an asset can be converted to cash in the marketplace. A large number of buyers and sellers and a high volume of trading activity provide high liquidity.
Market A market where trading has been halted because prices have reached their daily trading limit.
term used to describe the buying of a security, contract, commodity, or option.
(lo) This is the lowest price paid for a stock during a certain period.
is the lowest ATM IV found over a historical time period
for the stock.
The period chosen is a 6 month period.
Low Risk Investing A
trade which is hedged for purposes of limiting price loss as opposed to a directional trade where loss is unlimited.
a Market A market maker stands ready to buy or sell a particular security for his/her own account to keep the market liquid.
deposit contributed by a customer as a percentage of the current market value of the securities held in a margin account is thus the margin amount. This amount changes as the price of the investment changes.
Account A customer account in which a brokerage firm lends the customer part of the purchase price of a trade.
Call A call from a broker signaling the need for a trader to deposit additional money into a margin account to maintain a trade.
Requirements (Options) The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover his daily position price changes.
daily adjustment of margin accounts to reflect profits and losses. In this way, losses are never allowed to accumulate.
to Market At the end of each business day the open positions carried in an account held at a brokerage firm are credited or debited funds based on the settlement price of the open positions that day.
specific asset, security or commodity that is traded at an exchange.
(M.I.T.) A price order that automatically becomes a market order if the price is reached.
Maker An independent trader or trading firm that is prepared to buy and sell shares or contracts in a designated market. Market makers must make a 2-sided market (bid and ask) in order to facilitate trading.
on Close An order specification that requires the broker to get the best price available on the close of trading, usually during the last five minutes of trading.
Order Buying or selling securities at the price given at the time the order reached the market. A market order is to be executed immediately at the best available price, and is the only order that guarantees execution.
Price The most recent price at which a security transaction took place.
Value The price at which investors buy or sell a share of common stock or a bond at a given time. Market value is determined by the interaction between buyers and sellers.
maximum amount of losses possible from the option trade
Optionetics option trade ranker tool.
Max Profit The
maximum amount of net profit possible from the option
trade in the
Optionetics option trade ranker tool.
Mid-cap Stocks Usually
solidly established medium growth firms with less than 100 billion in assets. They provide better growth potential than blue-chip stocks, but do not offer as wide a variety of investment attributes.
model value for the option quote is the Bjerksund and
Approximation of the Black-Scholes "fair" value of
the option based on the
estimated IV from the stock's other options.
Optionetics option trade ranker tool software uses
mathematical model ( the Bjerksund Stensland American
option model) to
fairly price the option. The Optionetics software computes
what the profit of
the option strategy would be using the mathematical
model option prices.
The profit value is called the Model Profit. If this
"model profit", when the
trade is formed, is close to the profit of 0.0 ( a
new trade should start with
no profit ) then we are confident the option data being
used for the trade is
good. Model profits that exceed $200 likely are caused
by incorrect option
Momentum When a market continues in the same direction for a certain time frame, the market is said to have momentum.
Indicator A technical indicator utilizing price and volume statistics for predicting the strength or weakness of a current market.
Trading Investing with (or against) the momentum of the market in hopes of profiting from it.
moving average is probably the best known, and most
versatile, technical indicator. A mathematical procedure
in which the sum of a value plus a selected number
of previous values are divided by the total number
of values. Used to smooth or eliminate t
he fluctuations in data and to assist in determining when to buy and sell.
Fund An open end investment company that pools investors' money to invest in a variety of stocks, bonds, or other securities.
Option An option written (sold) without an underlying hedge position.
Position A securities position not hedged from market risk.
the Spread The closing spread between the bid and asked prices of a security as a result of bidding and offering.
Association of Securities Dealers Automated Quotations system -- a computerized system providing brokers and dealers with price quotations for securities traded over-the-counter as well as for many New York Stock Exchange listed securities.
option with a strike price close to the current price of the underlying tradable.
Change The daily change from time frame to time frame. For example, the change from the close of yesterday to the close of today.
Profit The overall profit of a trade.
York Stock Exchange (NYSE) The largest stock exchange in the United States.
short-term debt security, usually maturing in five years or less.