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November 19, 2017 
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I - N
A to C - D to H - I to N - O to R - S to Z

I
Illiquid Market
Market which has no volume that subsequently creates a lot of slippage due to lack of trading volume.

Immediate/Cancel
An order which must be filled immediately or canceled.

Index
An 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.

Index 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.

Interest Rate
The charge for the privilege of borrowing money, usually expressed as an annual percentage rate.

Interest Rate Driven
Refers to a point in the business cycle when interest rates are declining and bond prices are rising.

Inter-market Analysis
Observing the price movement of one market for the purpose of evaluating a different market.

Inter-market Spread
A spread consisting of opposing positions in instruments with two different markets.

In-the-Money
If you were to exercise an option and it would general a profit at the time, it is known to be in the money.

In-the-Money Option
A "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 security 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.

Inverse Relationship
Two or more markets which act totally opposite of one another producing negative correlations.

Investment
Any purchase of an asset to increase future income.

Iron 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.

L
LEAPS
Long-term stock or index options which are available with expiration dates up to three years in the future.

Leg
One side of a spread.

Limit Move
The maximum daily price limit for an exchange traded contract.

Limit Order
An order to buy a stock at or below a specified price or to sell a stock at or above a specified price.

Limit 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.

Liquidity
The 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.

Locked Market
A market where trading has been halted because prices have reached their daily trading limit.

Long
The term used to describe the buying of a security, contract, commodity, or option.

Low (lo)
This is the lowest price paid for a stock during a certain period.

Low IV
This 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.

M
Make a Market
A market maker stands ready to buy or sell a particular security for his/her own account to keep the market liquid.

Margin
A 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.

Margin Account
A customer account in which a brokerage firm lends the customer part of the purchase price of a trade.

Margin Call
A call from a broker signaling the need for a trader to deposit additional money into a margin account to maintain a trade.

Margin Requirements (Options)
The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover his daily position price changes.

Mark-to-Market
The daily adjustment of margin accounts to reflect profits and losses. In this way, losses are never allowed to accumulate.

Marked 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.

Market
A specific asset, security or commodity that is traded at an exchange.

Market-If-Touched (M.I.T.)
A price order that automatically becomes a market order if the price is reached.

Market 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.

Market 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.

Market 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.

Market Price
The most recent price at which a security transaction took place.

Market 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.

Max Loss
The maximum amount of losses possible from the option trade in the 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
A model value for the option quote is the Bjerksund and Stensland Approximation of the Black-Scholes "fair" value of the option based on the estimated IV from the stock's other options.

Model Profit
The Optionetics option trade ranker tool software uses an option 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 data.

Momentum
When a market continues in the same direction for a certain time frame, the market is said to have momentum.

Momentum Indicator
A technical indicator utilizing price and volume statistics for predicting the strength or weakness of a current market.

Momentum Trading
Investing with (or against) the momentum of the market in hopes of profiting from it.

Moving Averages
The 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.


Mutual Fund
An open end investment company that pools investors' money to invest in a variety of stocks, bonds, or other securities.

N
Naked Option
An option written (sold) without an underlying hedge position.

Naked Position
A securities position not hedged from market risk.

Narrowing the Spread
The closing spread between the bid and asked prices of a security as a result of bidding and offering.

NASDAQ
National 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.

Near-the-Money
An option with a strike price close to the current price of the underlying tradable.

Net Change
The daily change from time frame to time frame. For example, the change from the close of yesterday to the close of today.

Net Profit
The overall profit of a trade.

New York Stock Exchange (NYSE)
The largest stock exchange in the United States.

Note
A short-term debt security, usually maturing in five years or less.

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