term, pronounced as three separate letters, is Wall Street shorthand for Standard & Poor's 100 stock index.
is the predicted profits divided by the predicted losses
projecting the stock price randomly into the future
using the Statistical
Volatility (SV). The prediction stops at the expiration
of the earlist expiring option leg.
Offer Down The
change of the offer of the market related to a downward price movement at that specific time.
lowest price at which a person is willing to sell.
Trader A trader who does not trade on the actual floor of an organized futures of stock exchange.
liquidate a futures position by entering an equivalent but opposite transaction. To offset a long position, a sale is made; to offset a short position, a purchase is made.
option in question is trading at its exercise price (also referred to as at-the-money)..
Order An order to buy or sell a security at a specified price, valid until executed or canceled.
Outcry A system of trading where an auction of verbal bids and offers is performed on the trading floor. This method is slowly disappearing as exchanges become automated.
Trades A current trades that is still held active in a customer's account.
period at the beginning of the trading session at an exchange.
Call A period at the opening of a futures market in which the price for each contract is established by outcry.
Price The range of prices at which the first bids and offers were made or first transactions were completed.
Costs The theoretical cost of using your capital for one investment versus another.
security that represents the right, but not the obligation, to buy or sell a specified amount of an underlying security (stock, bond, futures contract, etc.) at a specified price within a specified time.
Holder The buyer of either a call or put option.
Premium This is the price of an option.
Writer The seller of either a call or put option.
ticket or voucher representing long or short securities and options.
Flow The volume of orders being bought or sold on the exchanges.
option whose exercise price has no intrinsic value.
Option (OTM) A
call option is out-of-the-money if its exercise or
strike price is above the current market price of the
underlying security. A put option is out-of-the-money
if its exercise or strike price is below the current
market price of the underlying securi
Overvalued A term used to describe a security or option whose current price is not justified.
Trading The ability to simulate a trade without actually putting up the money for the purpose of gaining additional trading experience.
stated or "nominal" value of a bond (typically $1,000) that is paid to the bondholder at maturity.
Risk The theoretical risk of a trade in a specific time frame.
Based A system of compensation in which a broker receives fees based on their performance in the marketplace
apply to security prices. In the case of shares, one point indicates $1.00 per share. For bonds, , one point means 1% of par value. Commodities differ from market to market.
Spread The price movement required for a security to go from one "full point" level to another (i.e. stock goes up or down $1).
total of a trader's open contracts.
Position Delta The
sum of all positive and negative deltas in a hedged position.
Limit The maximum number of open contracts in a single underlying instrument.
amount of cash that an option buyer pays to an option seller
of a share of common stock on the date shown. Highs and lows are based on the highest and lowest intra-day trading price.
/ Earnings Ratio (PE) A
technical analysis tool for comparing the prices of
different common stocks by assessing how much the market
is willing to pay for a share of each corporation's
earnings. PE is calculated by dividing the current
market price of a stock by the earnin
gs per share.
Principal The initial purchase price of a bond on which interest is earned.
Company A company that issues private stock and is not publicly traded.
of Profit Probability
of Profit is the probability that the predicted stock
within the option trade's profit zones. The predicted
stock price distribution
is computed by projecting the stock price randomly
into the future using the
SV. The prediction stops at the expiration of the earlist
expiring option leg.
Public Company A
company that issues stocks to be traded on the public market.
option contract giving the owner the right, but not
the obligation, to sell a specified amount of an underlying
security at a specified price within a specified time.
The put option buyer hopes the price of the shares
will drop by a specific date w
hile the put option seller (or writer) hopes that the price of the shares will rise, remain stable, or drop by an amount less than their profit on the premium by the specified date.
order that must be filled as soon as it reaches the trading floor at the price specified, or be canceled immediately.
price being offered or bid by a market maker or broker-dealer for a particular security.
Price Refers to the price at which the last sale and purchase of a particular security or commodity took place.
Backspread A delta neutral spread where an uneven amount of contracts are bought and sold with a ratio less than 2 to 3. Optimally no net credit or net debit occurs.
Call Spread A bearish or stable strategy in which a trader buys 2 higher strike calls and sell1 lower strike call. This strategy offers limited risk and unlimited profit potential.
Put Spread A bullish or stable strategy ion which a trader buys 1 higher strike put and sells two lower strike puts. This strategy offers limited risk and unlimited profit potential.
received from a quote service as the prices change.
Strength A stock's price movement over the past year as compared to a market index.
Strength Index (RSI) An indicator used to identify price tops and bottoms.
price level the market has a hard time breaking through to the upside.
income profit made on an investment.
Reward-Risk Ratio The
mathematical relationship between the maximum potential risk and maximum potential reward of a trade.
Stop A stop that, when hit, is a signal to reverse the current trading position, i.e., from long to short. Also known as stop and reverse.
higher than expected.
Risk The potential financial loss inherent in the investment.
Graph A graphic representation of risk and reward on a given trade as prices change.
Manager A person who manages risk of trades in a portfolio by hedging their trades.
Profile A graphic determination of risk on a trade. This would include the profit and loss of a trade at any given point for any given time frame.
by which a long or short position is offset by an opposite transaction.
Stops Something which when quoted, floor traders use to move the market. When stops are bunched together, traders may move the market in order to activate stop orders and propel the market further.