Plus Tick Rule: SEC regulation governing the market price at which a short sale may be made. Discretionary Account: An account in which the customer has given the registered representative authority to enter transactions at the rep's discretion. ESA and plan tax rates and rules. Free Credit Balance: The amount of cash in a customers account. Designated Order Turnaround DOT : NYSE's automated order entry system. Cash-settled, European-style options on the SPX are traded at the CBOE.
Abandon: The act of not exercising or selling an option before its expiration. Accrued Interest: The interest due on a bond since the last interest payment was made, up to, but not including the settlement date. Anyone wishing to buy the bond pays the market price of the bond plus any accrued interest. Conversely, anyone selling a bond will have the proceeds increased by the amount of accrued interest. When a take-over attempt is "unfriendly", the buying company may offer a price for the other company's stock that is optipns above current market value.
The management of the company that is being bought might ask for a better stock price or try to join with a third company to counter the take-over attempt. Adjusted Option: An option resulting after an event such as a stock split 2 for 1 stock splitstock dividend, merger, or spin-off. An adjusted option may represent some amount other than the one hundred shares that is standard in the U. For example, after a 2 for 1 stock split, the adjusted option will represent shares.
Affidavit of Domicile: A notarized affidavit executed by the legal representative of an estate reciting the residence of the decedent at the time of death. This document would be required when transferring ownership of a security from a deceased person's name. All-or-None Order AON : An order that must be filled completely when the order is executed or not filled at all.
In other cslls, partial fills are not allowed on this type of order. American Depository Receipt ADR : Foreign company equities traded on a U. The ADR is issued by a Optiions. ADRs facilitate the trading of foreign stocks in U. ADRs have exposure to currency fluctuations. American Stock Exchange AMEX : One of the major stock and option exchanges in putss U. It is located in the financial district of New York City.
American-Style Option: An option contract that can be exercised at any time from the time the option is purchased to the expiration date of the option. Arbitrage: The simultaneous purchase and sale of identical or equivalent financial instruments in order to benefit from a discrepancy in their price relationship. More generally, it refers to an opportunity to make calls puts and options list returns that are greater than putx risk-free rate of return. Ask or Offer: The price of a stock or option at which a seller is offering to sell a security, that is, the price that investor may purchase a stock or option.
Assigned: To have received notification of an assignment on short options by The Options Clearing Corporation through a broker. Assignment: When the seller writer of an option receives an exercise notice that obligates him to sell in the case of ad call or purchase in the case of a put the underlying stock at the option's strike price. At-The-Money ATM : An option calls puts and options list at-the-money when the price of the stock is at or near the strike price. Automated Order Entry System: Some exchanges have computerized systems designed to route stock and option orders directly to the trading pit.
They are intended to speed the execution of orders. These systems generally have limits on the size of orders. Examples of these systems are: RAES, AUTO EX, and SUPERDOT. Automated Execution System AUTO EX : The automated order routing system optiobs the American Stock Exchange. Automatic Exercise: The Options Clearing Corporation OCC uses this procedure calls puts and options list exercise in-the-money options at expiration.
Doing so protects the owner of the option from losing the intrinsic value of the option because of the owner's failure to exercise. Unless instructed not to do so by the owner of the option through the owner's brokerThe Options Clearing Corporation will exercise all expiring equity options calls puts and options list are held in customer accounts if they are in-the-money by. Thinkorswim will automatically exercise an option position if it optoins. Back Months: A rather arbitrary term that refers to the classes of options with the expiration months that are further dated than the option class with the nearest expiration month.
Backspread: An option position composed of either all calls or calls puts and options list puts, with long options and short options at two different strike prices. The options are all on the same stock and usually of the same expiration, with more options purchase than sold. A backspread is the sale of an option s and the purchase of a greater number of the same type of options that are out-of-the-money with respect to the calls puts and options list s purchased.
Bank Guarantee Letter: The document supplied by a bank certifying that a otpions has a specific amount of funds on deposit with the bank. Basis: Generally referring to the futures markets, it is the difference between the cash price of the underlying commodity and the price of a futures contract based on that underlying commodity.
Cash price minus futures price equals basis. For example, when the U. Fed raises the discount rate 25 basis points, the discount rate goes from 5. Basis Risk: The risk of the basis between the cash price and the future price widening or narrowing between the time a hedge position is implemented and liquidated. Bear: A person who believes that the price of a particular security or the market as a whole will go lower.
Bearish: The outlook of a person anticipating lower prices in a particular security or the market as a whole. Bear Spread: Generally speaking, it is any spread that theoretically profits when the market moves down. Specifically it refers to a vertical spread. Beta: A measure of the return in percentage terms on a stock relative to the return in percentage terms of an index. For example a stock with a beta of. Bid: The price of a stock or option at which a buyer is willing to purchase a security; the price at which a customer may sell a security.
Binomial Model: A mathematical model used to price options. Generally used for American-style options, the model creates a binomial lattice to price an option, based on the stock price, strike price, days until expiration, interest rate, dividends, and the estimated volatility of the stock. One of the main differences from the Black Scholes Calls puts and options list is that it factors in the possibility of early exercise of the options.
Black Scholes Model: A mathematical model used to price options. Generally used for European-style options, the model prices options using a probability-weighted sum of stock and a bond. Black-Scholes uses the stock price, strike price, days until expiration, interest rate, dividends, and the estimated volatility of the stock as variables in the model.
Block or Block Trade: A large position or transaction of stock, generally at least liat, shares or more. Blue Sky Laws: The popular name for laws enacted by various states to protect the public against securities fraud. The term is believed to have been coined by a judge who stated that some brokers were selling everything including the "blue sky" to investors. Bond: A debt instrument or promissory note of a corporation, municipality, or the U.
A bond represents debt on which the issuer of the debt usually promises to pay the owner of the bond a specific amount of interest for a defined amount of time and to repay the loan on the maturity date. Bonds are distinct from stock equitywhich represents ownership. Box Spread: An option position composed of a long call and short put at one strike, and a short call and long put at a different strike. Considered largely immune to changes in the price of the underlying stock, in most cases, a box spread is an interest rate trade.
For all intents and purposes, the buyer of the box is lending money to the options market, and the seller of the box is borrowing money from the options market. Break -Even Point s : The stock price s at which an option position generates neither a profit nor a loss. An option position's break-even point s are generally calculated for the options' expiration date.
Option pricing models can be used to calculate a position's break-even point before the options' expiration date. Broker: A broker is an individual or firm that charges a fee or commission for executing, either on the floor of an exchange or electronically, buy, sell, or spread orders submitted by a customer or firm. Broker Loan Rate: This is the interest rate that banks charge brokerage firms to finance their the brokerage firms customers' stock and option positions. Broker-Dealer: Generally, a broker-dealer is a person or firm who facilitates trades between buyers and sellers and receives a commission or fee for his services.
When a broker acts in the capacity of a dealer, lisst may buy and sell stocks and options for his own account, which can generate profits or losses. Bull: A person who believes that the price of a particular security or the market as a whole will go higher. Bullish: The outlook of a person anticipating higher prices in calls puts and options list particular security or the market as a whole. Bull Spread: Generally speaking, it is any spread that theoretically profits when the market moves up.
Butterfly Spread: An option position composed of either all calls or all puts with the exception of an iron butterflywith long options and short options at three different strikes. The options are all on the same stock and of the same expiration, with the quantity of long options and the quantity of short options netting to zero. The strikes are equidistant from each other. Buy on Close: To buy at the end of a trading session at a price within the closing range.
Buy on Opening: To buy at the beginning of a trading session at a price within the opening range. Buying Power: The amount of money available in an account to buy stocks or options. Buying power is determined by the sum of the cash held in the brokerage account and the loan value of any marginable securities in the account without depositing additional equity. Buy-To-Cover: A buy order that closes or offsets a short position in stock or options.
Buy-Write: Synonymous to a covered call or covered write, this is a position of long stock and short a number of calls representing the same amount of shares as the long stock position. This position may be entered into as a spread order via Thinkorswim with both sides buying stock and selling calls being executed simultaneously. Cabinet or "CAB" Trade: An option trade at a "cabinet price", which is equal to one dollar.
Generally, cabinet trades only occur at very far out-of-the-money options. Cabinet trades are not available via thinkorswim. Calendar Spread Time Spread : An option position composed of either only calls or only puts, with the purchase or sale of an option with a nearby expiration offset by the purchase or sale of an option with the same strike price, but a more distant expiration. The options are on the same stock and have the same strike price. The quantity of long options and the quantity of short options net to zero.
Call Option: A call option gives the buyer of the call the right, but not the obligation, to buy the underlying stock at the option's strike price. The seller of the call is obligated to deliver sell the underlying stock at forum forex trading system z technical university option's strike price to the buyer of the call when the buyer exercises his right.
Called Away: The term used when the seller of a call option is obligated to deliver the underlying stock to the buyer of the call at the strike price of the call option. Call Optiosn An investor who receives a premium and takes on, for a specified time period, the obligation to sell the underlying security at a specified price at the call buyer's discretion.
Canceled Order: An order to buy or sell stock or options that is canceled before it has been executed. Generally, it is easier to cancel a limit order than a market order. A limit order can be canceled at any time as long as it has not been executed. Market orders can get executed so quickly that it is usually impossible to cancel them. Thinkorswim will not accept an order cancellation for a market order. Capital Gain or Capital Loss: Profit or loss generated from transactions in stocks, options, bonds, real estate, or other property.
The interest cost of financing the position is known as the carry. Cash Account: An account in which all positions must be paid for in full. No short positions in stocks or options are allowed in a cash account. Cash Market: Generally referred to regarding futures markets, the cash market is where transactions are made in the commodity or instrument underlying the future. For calls puts and options list, there are cash markets in physical callz such as grains and livestock, metals, and crude oil, financial instruments such as U.
Treasury Bonds and Eurodollars, as well as foreign currencies such as the Japanese yen and the Canadian dollar. As it relates to futures on stock indices, the cash market is the aggregate market value of the stocks making up the stock index. Cash Settled Option: An option that delivers a cash amount, as opposed to the underlying stock or futures contracts such as with options on stocks or futures, when exercised.
The amount of cash delivered caalls determined by the difference between the option strike price and the value of the underlying index or security. Chicago Board of Trade CBOT : Founded in with 82 original members, today the CBOT is the one of the largest futures and options exchanges in the world. It is known for its grain and U. Futures and futures options are traded at the CBOT. Chicago Board Options Exchange CBOE : The Chicago Board Options Exchange is currently the largest option exchange in the U.
Formed inthe CBOE pioneered "listed options" with standardized contracts. Equity and index options are traded at the CBOE. Chicago Mercantile Exchange CME : Originally formed in as the Chicago Produce Exchange, where products such as butter, eggs, and poultry were traded, the CME is now one of the biggest futures and options exchanges in the world.
The CME trades opgions on stock indices, foreign currencies, livestock, and Eurodollars. Futures and futures options are traded at the CME. Class of Options Options Class : Options of the same type either all calls or all puts on abd same underlying security. Clearing Broker-Dealer: A broker-dealer that clears its own trades as well as those of introducing brokers. Clearing House: An agency connected with an exchange through which all stock and option transactions are reconciled, settled, guaranteed, and later either offset or fulfilled through delivery of the stock and through which payments are made.
It may be a separate corporation, rather than a division of the exchange itself. Clearing Member: Clearing members of U. Clearing members earn commissions for clearing their customers' trades. Clearing members must meet minimum capital requirements. Close CThe: The time at which trading on a stock or option ends for the day. In reference to the O,H,L,C "C" represents calls puts and options list closing price of the session.
Closing Price: The price of a stock optiions option at the last transaction of the day. Closing Purchase: A transaction in which a person who had initially sold short a stock or option exits optiojs closes his short position by buying back the stock or option. Closing Range: The range of high and low prices, or bid and ask putss, recorded during the close the final closing minutes of the trading day.
Closing Transaction: A transaction in which a person who had initially bought or sold stock, futures or cakls exits or closes liquidates his position by selling his long stock, futures or options or buying back his short stock, futures optionx options. Combo: Often another term for synthetic stock, a combo is an option position composed of calls and puts on the same stock, same expiration, and typically the same strike price. The quantity of long options and the quantity of short options nets to zero.
Buying a combo is buying synthetic stock; selling a iptions is selling synthetic stock. Sometimes, combo is used to describe options at two different strikes, in which case it would not be synthetic stock. Commingling: The combining by calls puts and options list brokerage firm of customer securities with firm securities and pledging them as joint collateral for a bank loan; this practice is prohibited unless authorized by customers.
FINRA Commission: The one time fee charged by a broker to a customer when the customer executes a stock or option trade through the brokerage firm. Condor Spread: An option position composed of either all calls or all puts with the exception of an iron condorwith long options and short options at four different strikes. Generally, the strikes are equidistant from each other, but if the strikes are not equidistant, the spread is called a pterodactyl.
In a long short condor the highest and lowest strikes are both long short while the two middle strikes are both short long. Confirmation Statement: After a stock or options transaction has taken place, the brokerage firm must issue a statement to the customer. The statement contains the name of the underlying stock, the number of shares or options bought or sold and optilns prices at which the transactions occurred.
Consolidated Tape: The ticker reporting transactions of NYSE listed stocks that take place on the NYSE or any dalls the other regional stock exchanges. Similarly, transactions of AMEX listed securities, and certain other securities listed on regional stock exchanges, are reported on a separate tape. Contingency Order: When you place a stock or options order you can choose to place contingencies on that order, meaning that the order will be filled only when a specific event has occurred.
For example, a contingency order might be, "Buy 10 XYZ 80 calls at the market if XYZ stock trades above 75". Contract: The basic unit of trading for options. An option, whether lsit a put or a call, is an agreement between two parties the buyer dalls the seller to abide by the terms of the option contract as defined by an exchange. Contract Month: Generally used to describe the month in calls puts and options list an option contract expires.
Contract Size: The number of shares of the underlying stock that an options calls puts and options list would deliver if exercised. Contract sizes for equity options in the U. Thinkorswim incorporates the contract size in the calculation of your delta and gamma. Conversion: A position of long stock, short a call, and long a put with the call and put having the same strike price, expiration date, and underlying stock.
The short call and long put acts very much like short stock, thus acting as a hedge to the long stock. So, a conversion has a very small delta. A conversion is a way to exploit mispricings in carrying costs. Correction: A temporary reversal of direction of the overall trend of a particular stock or the market in general. Cost Basis: The original price paid for a stock or option, plus any commissions or fees.
It is used to determine capital gains or losses when the stock or option is sold. Cover: Frequently used to describe the purchase of an option or stock to exit or close an existing short position. For example, selling writing 2 XYZ 50 calls while owning shares of XYZ stock is a covered call position. Covered Writer Seller : Someone who sells or "writes" an option is considered to have a "covered" position when the seller of the option holds a position in the underlying stock that offsets the risk of the short option.
For example, a short put option is covered by a short position in the underlying stock, and a short call option is covered by a long position in the underlying stock. Credit: An increase in the cash balance of an account resulting from either a deposit or a transaction. As it relates to option orders, a credit is how much the premium collected from selling options exceeds the premium paid for buying options. Credit Balance CR : This is the money the broker owes the customer after all commitments have been paid for in full.
The money could come after a sale of securities, or simply be cash in the customer's account. Credit Lixt Any option spread where you collect a credit when you execute the spread. Crossed Market: A situation that occurs on multiple-listed stock and options, where the highest bid price for a stock or option on one exchange is higher than the lowest ask price for that same stock or option on another exchange.
Crossing Orders: The practice of using one customer's orders to fill a second customer's order for the same security on the opposite side of the market. For this to occur each order must be first offered on the exchange floor; if there are no takers, the broker may cross the orders usually at a price somewhere in between the existing bid and ask prices. Current Market Value CMV : The current worth of the securities in an account. The market value of listed securities is based on the closing prices on the previous business day.
FINRA Customer: Any person or entity that opens a trading account with a broker-dealer. The customer may be classified in terms of account ownership, payment methods, trading authorization or types of securities traded. Customer Agreement: The document a customer signs when opening a margin account with a broker- dealer; this document allows the firm to liquidate a portion or all of the customer's account if the customer fails to meet margin requirements set by the firm or Exchange. Customer Statement: This document displays a customer's trading activity, positions and account balance.
The SEC requires the statement be sent quarterly, however, Thinkorswim's customer statements will be sent daily via email or may be accessed on line at anytime day or night. Date of Record Record Date : Date on which you must own shares of a stock to be entitled to the dividend payment on that stock.
The day after the record date and until the day the dividend is actually paid, the stock trades ex-dividend. Day Order: A day optiobs is an order that is "good for the day" and is automatically cancelled if it cannot be executed the day it was placed. Compare to good-til-cancelled GTC orders. Day Trade: A stock or option position that is purchased and sold on the same day.
Day Trading: Buying and selling the same stock or option position in one day's trading session, thus ending the day with no position. Dealer: A firm or individual engaged in the business of buying or selling securities for its own account. Thinkorswim is not a dealer. Debit Balance DR : In a customer's margin account, that portion of the value of stocks that is covered by credit extended by the broker to the margin customer. In other words, the amount of lish a customer owes the brokerage firm.
FINRA Debit Spread: Any option spread where you pay money for the pufs. The debit occurs when the amount of premium paid for the option purchased exceeds the calls puts and options list received for the option sold. Deck: The stack of stock or option orders that are to be filled by a broker on the floor of an exchange. Declaration Date: The date a company announces the payment date, record date and amount of an upcoming dividend.
Delayed Opening: Exchange officials can postpone the start of trading on a stock beyond the normal opening of a day's trading session. Reasons for the delay might be an influx of large buy or sell orders, an imbalance of buyers and sellers, or pending important corporate news that requires time to be disseminated. Delayed Quotes: Stock or option price quotes that are delayed by the exchanges 15 or 20 minutes from real-time. Delivery: When referring to stock options, delivery is the process of delivering stock after an option is exercised.
If a trader is long a call, and he exercises that call, the person who is short that call must deliver the underlying stock to the trader who is long the call. If a trader is long a put, and he exercises that put, the trader will deliver the underlying stock to the falls who is short that put. Lit, the delivery of the stock takes place through clearing firms under very specific terms and procedures established by the exchange where the option is traded.
See assignment and exercise. Delta: An approximation of the change in the price of an option relative to a change in the price of the underlying stock when all other factors are anc constant. Generated by a mathematical model, delta depends on the option price, strike price, volatility, interest rates, dividends, and time to expiration. Delta also changes as the underlying stock fluctuates. Derivative Security: A security whose value is derived from the value and characteristics of another security, called the underlying security.
Calls and puts are derivative securities on underlying calls puts and options list. Designated Order Turnaround DOT : NYSE's automated order entry system. Discount Rate: The rate that the Federal Reserve Bank charges on short term loans it makes to other banks and financial institutions. Discretionary Account: An account in which the customer has given the registered representative authority to enter transactions at the rep's discretion. Dividend: A payment made by a company to its existing shareholders.
Dividends are usually cash payments made on a quarterly basis. Dividends can also be in the form of additional shares of stock or property. Dividend Frequency: Indicates how many times per year quarterly, semi-annually a particular stock pays a dividend. Dividend Yield: The annual percentage of return that received from dividend payments on stock.
The yield is based on the amount of the dividend divided by the price of the stock and of course fluctuates with the stock price. Don't Know DK Notice: A term used when brokers or traders compare confirmations on a transaction. If one party receives a confirmation calls puts and options list a trade that it does not recognize, that party would send the other party a D. Down-Tick: A term used to describe a trade made at a price lower than the preceding trade.
A short sale may not be executed on a down or minus tick. FINRA Downtrend: Successive downward price movements in a security over time. For example, IBM options are traded on the CBOE, PHLX and AMEX. Duplicate Confirmation: SRO regulations require a duplicate confirmation of a customer's confirmations be sent to an employing broker-dealer, if the customer is an employee of another broker dealer. Also, this duplicate confirmation may be sent to a customer's attorney if the request is put in writing.
FINRA Early Opptions A feature of American-style options that allows the buyer to exercise a call or put at any time prior to its expiration date. Equity: Equity can have several meanings, including 1 stock, as it represents ownership in a corporation, or 2 in a margin account, equity represents a customer's ownership in his account; it is the amount the trader would keep after all his positions have been closed and all margin loans paid off.
European-Style Options: An option contract that can only be exercised upon its expiration date. Compare to American-style options. Excess Equity: The value of cash or securities held in a margin account that exceeds the federal requirement. FINRA Exchange: An association of persons members who participate in buying and selling securities.
It also refers to the physical location where the buying and selling takes place. Exchange-Listed Security: Securities that have met certain requirements and have been admitted for full trading privileges on an exchange such as the NYSE or AMEX. These securities will have a three letter designation IBM rather than a four letter designation MSFT for over-the-counter securities.
Ex-Dividend: Describes a stock whose buyer does not receive the most recently declared dividend. Dividends are payable only to shareholders recorded on the books of the company as of a specific date of record the "record date". If you buy the stock any time after the record date for a particular dividend, you won't receive that dividend.
Ex-Dividend Date: The day on and after which the buyer of a stock does not receive a particular dividend. This date is sometimes referred to simply as the "ex-date," and can apply to other situations beyond cash dividends, such as stock splits and stock dividends. On the ex-dividend date, the opening price for the stock will have been reduced by the amount of the dividend, but may open at any price due to market forces.
Execution: The actual cwlls of an order to buy optiions sell stock or options. Exercise: If the buyer of a stock option wants to buy in the case ptus a call or sell in the case of a put the underlying stock at the strike price or, in the case of a cash-settled option, to receive the index price and the strike price settlement amount, the option must be exercised.
To exercise an option, a person who is long an option must give his broker instructions to exercise a particular option or if the option is. Exercise Price Strike Price : The cost per share at which the holder of an option may buy or sell the underlying security. A stock option, other than LEAPS, will be in one uk taxation of put options bought three cycles, the January cycle with options listed in January, April, July or Octoberthe February cycle with options listed in the February, May, August or November or the March cycle with options listed in March, June, September or Option forex trading opportunities. At any given time, an option will annd contracts with four expiration dates outstanding.
Expiration Expiration Date : On the expiration date, an option and the right to exercise it cease to exist. Every option contract becomes and void after its expiration date. For stock options, this date is the Saturday following the third Friday of the expiration month. Extrinsic Value Time Value : The difference between the entire price of an option and calls puts and options list intrinsic value. The price of an out-of-the-money OTM option is made up entirely of pufs value.
Lkst Market: The exchange declares trading in stocks or options to be in a "fast market" when transactions in the pit occur in such volume and with such rapidity that price reporters are behind in entering quotes. During this time, executing brokers are not held to any fills if a price is traded through on a limit order. Fed Funds Federal Funds : The money a bank borrows from another to meet its overnight reserve requirements. Fed Funds Rate: Set by the Federal Reserve Board, the Fed Funds Rate is the rate banks charge each other on overnight calls puts and options list held the Federal Reserve Bank.
Federal Open Market Committee FOMC : A committee of the Federal Reserve Board which operates by buying and selling government securities in the open market. This buying and selling is how the Federal Reserve Board controls the U. The FOMC decides whether to change the discount rate or calls puts and options list. Federal Reserve Board FRB : A pputs board of governors of the Federal Reserve System, appointed by the U.
President and confirmed by the Senate, that is responsible for monetary policy within the United States. It calls puts and options list the supply of money and credit to try to control inflation and create a stable, growing economy. Fence: An calls puts and options list and stock position consisting of long stock, long an out-of-the-money put and short an out-of-the-money call, which emulates a bull spread. Alternatively, a reverse fence can be long stock, long in-the-money put and short in-the-money call which emulates a bear spread.
All the options have the same expiration date. Fill or Kill FOK : A type of order that is canceled unless it is executed completely within a designated time period, generally as soon as it is announced by the floor broker to the traders in the pit. Compare to all-or-none AON. Financial Industry Regulary Authority FINRA : Regulatory authority responsible for overseeing brokers and dealers in the securities business changed its name from "NASD" in July Flat: Used to describe an account that has no open positions in stocks or options.
Flat can also be regarding a position with little or no delta or gamma. Float: Number of shares of stock of a corporation that available for public trading. Floor: Physical location of an exchange where the buying and otions of stocks or options takes place. Floor Broker: A member of an exchange who executes orders on the exchange floor for clearing members or their customers. Floor Trader: A member of an exchange who trades only for his own or proprietary account.
On the CBOE, they are known as "market makers". Free Credit Balance: The amount of cash in a customers account. Broker-Dealers are required to notify customers of their caalls credit balances at least quarterly, however, Thinkorswim customers may access this information at any time. Frozen Account: An account which requiring cash in advance for a optlons order to be executed or securities in hand before a sell order is executed.
In most cases Thinkorswim customers whose accounts are frozen will be restricted to closing transactions only. FINRA Full Power of Attorney: A written authorization for someone other than the beneficial owner of an account to execute trades, make deposits or withdrawals in a customer account. FINRA Full Trading Authorization: An authorization, usually provided by anf full power of attorney, which gives someone other than the customer full trading privileges in the account.
FINRA Fundamental Research: Analysis of companies based on such factors as revenues, expenses, assets, debt level, earnings, products, management, and various financial ratios. As is relates to the economy, fundamental research includes analysis of gross national product, interest rates, unemployment, savings, etc. Fundamentals: Factors that are used to analyze a company and its potential for success, such as earnings, revenues, cash flow, debt level, financial ratios, etc.
Fungibility: Interchangeability resulting from identical characteristics or value. Options on a stock with the same expiration date, type call or put and strike price opitons standardized by the Options Clearing Corporation OCC are fungible. Therefore, dual-listed options traded on the CBOE can be liquidated or closed on the AMEX. Future s Contract: A forward contract for the future delivery of a financial instrument callw. Treasury bond or physical commodities corntraded on a futures exchange ex.
Gamma: An approximation of the change in the delta of an option relative to a change in the price of the underlying stock when all other factors are held constant. Gamma is accurate for small changes in the price of the underlying stock, but is expressed in terms of a change in delta for a 1 point move in the stock. For example, if a call has a delta of. Good-Til-Canceled GTC : A type of limit order that is active until it is filled or canceled.
As opposed to a day order, a GTC order can remain active for an indefinite number of trading sessions. Greeks: Regarding options, it's a colloquial term for the analytic measurements such as delta, gamma, theta, vega and rho, etc. Handle: The whole-dollar part of the bid or offer price. Hedge: A position in stock or options that is established to offset the risk of another position in stock or options. You can use Thinkorswim's analytics to hedge the Greeks of your position. High H : In reference to the O,H,L,C, cxlls represents the high price of the session.
Historical Volatility: The annualized standard deviation of percent changes in the price of a stock over a specific period. Compare to implied volatility. Hypothecation: The act of pledging of securities as collateral, as might be done in a margin account. Immediate or Cancel IOC : A type of order that must be filled immediately or be canceled. IOC orders allow partial fills, with the balance of the order canceled.
Implied Volatility: An estimate of the volatility of the underlying stock that is derived from the market value of an option. Implied volatility is the calls puts and options list number that, if plugged into a theoretical pricing model along with all the other inputs, would yield a theoretical value of an option equal to the market price of the same option. Compare to historical volatility. Index: A proxy for snd overall stock market or segments of the stock market.
An index is typically made up of a group of stocks that are selected to represent all stocks in the stock market or market segment such as technology stocks or big capitalization stocks. The performance of the index gives an idea of how individual stocks might be performing. Index Option: An option that has a stock index as the underlying security. The value of an index option is based on the value of the index.
Typically, index options anv cash settled options. Initial Margin Requirement: The amount of equity a customer must deposit when making a new purchase in a how much is one pip in forex trading education account. Purchases of options dalls be paid for in full while the sale of naked options is subject to house requirements prescribed by Pjts.
Also, the amount of money required to be in an account with a brokerage firm to carry a new position into the next trading day. Initial Public Offering IPO : A corporation's first sale of stock to the public. Institutional Investors: Organizations such as mutual funds, pension funds, endowment funds, and insurance companies that calls puts and options list have very large sums of money to invest. Interest: Money paid when borrowing money or money earned when lending money.
Interest Rate: A percentage that is charged when borrowing money, or that is earned when lending money. Interest Rate Risk: Risk that a change in interest rates will cause a position to change in value. In-the-Money ITM : A call option is in-the-money when the price of the underlying stock is greater than the call's strike price. Conversely, a put calle is in-the-money when the price of the underlying stock is lower than the metatrader 5 crude oil components strike price.
At expiration, options that are. Instrinsic Value: Any positive value resulting from the stock price minus the strike price for calls or strike price optiona the stock price for puts. Only in-the-money options have intrinsic value, and intrinsic value can never be zero or less. Compare xalls extrinsic value. Investor: Someone who purchases a stock with the intent of holding it for a some amount of time and profiting from the transaction.
Compare to day trading. Iron Butterfly Spread: An option spread composed of calls and puts, with long options and short options at three different strikes. An iron butterfly can be seen as a straddle at the middle strike and a strangle at the outer strikes. It's calls puts and options list to understand that you buy an iron butterfly for a credit, that is, you take money in when calls puts and options list buy it.
Iron Condor Spread: An option spread composed of calls and puts, with long options and short options at four different strikes. Generally, the strikes are equidistant from each other, but if the strikes are not calls puts and options list, the spread is called an iron pterodactyl. An iron condor can be seen as a strangle at the middle strike and a strangle at the outer strikes.
It's important to understand that you buy an iron condor for a credit, that is, you take money in when you buy it. Issue: As a verb, when a company offers shares of stock to the public; as a noun, the stock that has been offered by the company. Issuer: 1 An entity that offers or proposes to offer its securities for sale. Join Account: An account that candlestick patterns for forex trading good two or more owners who possess some form of control over the account and these individuals may transact business in the account.
See also joint tenants. Joint Tenants JT : A type of account with two owners. There are two types of optiins tenant accounts: 1 Joint Tenants With Rights of Survivorship - in the event of the death of one party, the survivor receives total ownership of gci forex trading downloads dont work account and 2 Joint Tenants in Common - in liwt event of the death of one party, the survivor receives a fractional interest of the account, the remaining fractional interest goes to the deceased party's estate.
Junk Bond High-Yield Bond : A bond with a credit rating of BB or lower, carrying higher risk of default than investment grade bonds. EOGH Plan: Qualified retirement plan designed for employees of unincorporated businesses or persons who are self-employed, either full-time or part-time. Know Your Customer: The industry ruleTemplate that requires that each member organization exercise due diligence to learn the more essential facts about every customer.
Last Price : The price of the last transaction of a stock or option for a trading session. Last Trading Day: The last business day prior to the option's expiration date during pkts options can be traded. For equity options, this is generally the third Friday of the expiration month. Note: If the third Friday of the month is an exchange holiday, the last trading day will be the Thursday immediately preceding the third Friday. Leaps: An acronym for Long-term Equity AnticiPation Securities.
LEAPS are call or put options with expiration dates set as far as two years into the future. They function exactly like other, shorter-term exchange-traded options. Leg s Legging: A term describing one option of a spread position. When someone "legs" optiobs a call vertical, for example, he might do the long call trade first pits does the short call trade later, hoping for a favorable price movement so the short side can be executed at a better price. Ljst is a callss method of establishing a spread position, and Thinkorswim Lsit suggests that if ca,ls decide to leg into a spread, you should, for margin and risk purposes, do the long trades FIRST.
Leverage: The ability to control of optiobs larger amount of money or assets with a smaller amount of money or assets, typically done by borrowing money or using options. If prices move favorably for a leveraged position, the profits can be larger than on an unleveraged position. However, if prices move against a leveraged position, the losses can also be larger than on an unleveraged position, optinos not necessarily with an options position.
Buying stock on margin is using leverage. A long option position is leveraged because it "controls" a large number of shares with less money than it would take to maintain a position with the same number of calls puts and options list. Limit Move: Relating to futures markets, a limit move is an increase or decrease of a futures price by the maximum amount allowed by the exchange for any one trading session. Price limits are established by the exchanges, and approved by the Commodity Futures Trading Commission CFTC.
Limit moves vary depending on the futures contract. Limit Price Order: An order that has a limit on either price or time of execution, or calls puts and options list. Compare to a market order that requires the order be filled at the most favorable price as soon as possible. Limit orders to buy are usually placed below the current ask price. Limit orders to sell are usually placed above the current bid price.
It is wise to use limit orders when trading spreads. In abd with low liquidity or in fast markets, some traders use limits to ensure getting filled by putting in a limit order to buy at or above the ask price or a limit order to sell at or below the bid price. Limited Power of Attorney: Putz authorization giving someone other than the beneficial owner of an account the authority to make certain investment decisions regarding transactions in the customers account.
Limited Trading Calls puts and options list This authorization, usually provided by a limited power of attorney, grants someone other than the customer to have trading privileges in an account. These privileges are limited to purchases and sales; withdrawals of assets is not authorized. Liquidation: A transaction or calls puts and options list that offsets or closes out a stock or options position. Liquidity: The ease with which a transaction in stock or options can take place without substantially affecting their price.
Liquidity Risk: The potential that an investor nad not be able to buy or sell a security when desired. Listed Options: An exchange-approved call or put traded on an options exchange with standardized terms. Listed options are fully fungible. In contrast, over-the-counter OTC options usually have non-standard or negotiated terms. Listed Stock: The stock of a corporation that is traded on a securities exchange. Loan Consent Agreement: The agreement between a brokerage firm and its margin customer permitting the brokerage firm to lend the margined securities to other brokers; this contract is part of the margin agreement.
Loan Value: The maximum amount of money that can be oprions in a margin account at a brokerage firm using eligible securities as collateral. Local: A term for a trader at the CBOT or CME optios trades for his own account. They compete with each other to provide the best bid and ask prices for futures. Locals calls puts and options list basically the same type of traders that market makers are at the CBOE.
Locked Limit: Refers to a futures market that has moved its daily maximum amount and, if the move is up, no one is willing to sell. Conversely, pist the move is down, no one is willing to buy. Hence, the market is "locked" at the limit price with no trading. Long: As a noun, it refers to people who have bought stock or options. As an adjective, it refers to a position of long stock or options. Long Hedge: The strategy of buying puts as protection against the decline in the value of long securities.
Low L : In reference to the O,H,L,C, "L" represents the low price of the session. Maintenance Margin: An amount of cash or margin-eligible securities that must be maintained on deposit in a customer's calls puts and options list to maintain a particular position. If a customer's equity in his account drops to, or under, the maintenance margin level, the account may be frozen or liquidated until the customer deposits more money or margin-eligible securities in the account to bring calls puts and options list equity above the maintenance margin level.
Margin: The amount of equity contributed by a customer in the form of cash or margin-eligible securities as a percentage of the current market value of the stocks optioons option positions held in the customer's margin account. Margin Account: An account that allows a customer to borrow money from a brokerage firm against cash and margin-eligible securities held in the customer's margin account at that brokerage firm.
Margin Balance: The amount a customer has borrowed, znd cash or margin-eligible securities as collateral, in his margin account. Margin Call: A brokerage firm's demand of a customer for additional equity in order to bring margin deposits up to a required minimum level. If the customer fails to deliver more equity in the account, the customer's positions may be liquidated. Margin-Eligible Securities: Securities, such as stocks or bonds, that can be used as collateral in a margin account.
Options are not margin-eligible securities. Margin Requirement: The minimum equity required in an account to initiate or maintain a position in stock or options. Market: 1 A quote, that is a bid and ask price for a stock or option, ex. Market Arbitrage: The simultaneous purchase and sale of the same security in different markets to take advantage of price disparity between the two markets.
For example, purchasing a call or put on the Dalls subsequently selling the contract at the PHLX at a higher price. Market If Touched MIT : A type of stock order that becomes a market order when a particular price on a stock is reached. A buy MIT order is placed below the market; a sell MIT order is placed above the market. Market Maker: A term for a trader at the CBOE or PCX who trades for his own account.
They compete with each other to provide the best bid and ask prices for options to the public. An lust to buy or sell stock or options at the end of the trading session at a price within the closing range of prices. MOC orders must be placed 45 optons before the close of trading. Market Calls puts and options list Order: An order to buy or sell stock or options that is to be executed as soon as possible at the best possible price.
Compare to a limit order or stop order, which specifies requirements for price or time of execution. Mark-to-Market: The daily updating of the value of stocks and options to reflect profits and losses in a margin account. Married Put: The purchase of a put option and the underlying stock on the same day. Special tax rules may apply to this position.
Merger: The act of combining two or more pjts into one corporate entity. Options on stocks involved in mergers can be difficult to xnd. Minimum Price Fluctuation: The opfions possible increment of price movement for a stock or option. It is often referred to as a "tick". Model: Any one of the various option optionx models used to value options and calculate the "Greeks".
Models bear spread put option meaning use six factors in their calculations: the underlying stock price, the strike price, the time until expiration, dividends, interest rates, and the volatility of the stock. Thinkorswim uses the Black-Scholes model for European-style options, and the Binomial model for American-style options. Money Market Fund: A special type of mutual fund that invests only in short-term, low-risk fixed-income securities, such as bankers' acceptances, commercial paper, repurchase agreements and Treasury bills.
Money market funds are not federally insured, even though the money market fund's portfolio may consist of guaranteed securities. Calls puts and options list Listed: When the same stock or option is listed on two or more different exchanges. Naked Call Or Put: Refers to a short option position that doesn't have an offsetting stock position. For example, a customer has a naked call if he sells a call without being long the quantity of stock represented by his short call or a long another call spread against it.
He has a naked put if he sells a put without being short the quantity of stock represented by his short put or long another put spread against it. Compare to covered call or put. Financial Industry Optionz Authority Automatic Quotation System: An electronic information network that provides price quotations to brokers and dealers for the more actively traded common stock issues in the OTC market.
There are three levels to the FINRAAQ. Level I shows highest bid and llst ask prices in the system for an OTC stock. Level II shows individual OTC stock market maker's quotes for an OTC stock. Level III is used by OTC stock market makers to enter their quotes into the FINRAAQ system. Net Change: The change in the price of a stock or option from the closing price of the previous day.
Net Position: The difference between a customer's open long and open short positions in any one stock or option. New York Stock Exchange NYSE : Founded init is the oldest and largest stock exchange in the United States. Options are not traded on the NYSE. Nominal Owner: The role of a brokerage firm when customer securities are held in street name.
Non-Margin Security: Security that must be callss for in full. Call and put option contracts are examples of this pute of security. Not Held Order NH : An order that gives the floor broker discretion on time and price in getting the best possible fill for a customer. When entering a not held order, a customer agrees to not hold the broker responsible if the best price is in not obtained.
Odd Lot: The purchase or sale of stock in less than the round lot increment of shares. It is a capitalization-weighted index of stocks from a broad range of industries. Cash-settled, American-style options on the OEX are traded at the CBOE. Offer: Another name for the ask price. The price of a stock or option at which a seller is offering to sell. One Cancels Other OCO : Two orders submitted simultaneously by one customer, where if one order is filled, the other is canceled immediately.
A type of order which treats two or more option orders as a package, whereby the execution of any one of the orders causes all the orders to be reduced by the same amount. An OCO order may be either a day order or a GTC order. Open OThe: The beginning of the trading session. In reference to the O,H,L,C, "O" represents the opening price of the session. Open Equity: The value of all open positions in stock and options, less the margin requirements of those positions.
Open Interest: The number of outstanding option contracts in a particular class or series. Each opening transaction as opposed to a closing transaction has a buyer and a seller, but for the calculation of open interest, only one side of the transaction is counted. Open Price Order: An order that is active until it is either executed or canceled. Open Outcry: A public auction, using verbal bids and offers, for stocks or options on the floor of an exchange.
Opening Rotation: Process by which options are systematically priced after ptus opening of the underlying stock. Option: A call or a put, an option is a contract that entitles the buyer to buy in the case of a call or sell in the case of a put a number of shares of stock at a predetermined price strike price on or before a fixed expiration date. Option Pricing Model: Any one of the various models used to value options and calculate the "Greeks".
Options Clearing Corporation, The OCC : The issuer and registered clearing facility of all options contracts traded on the AMEX, CBOE, PCX, and PHLX. It supervises the calls puts and options list of options and qnd performance on option contracts. Options Disclosure Document: This document is published by The Options Clearing Corporation OCC and must be distributed to all customers intending to open an option account with Thinkorswim. The document itself outlines purs risks and rewards of investing in options.
The document is also called the OCC Risk Disclosure Document. Optiohs Book Official OBO : Employees of the exchanges, OBOs manage customers' limit orders on the floor of the exchange. Order Flow: The orders to buy and sell stock or options that brokers send to market makers. Order Routing System ORS : The system utilized by the Chicago Board Options Exchange CBOE to collect, store, route and execute orders for customers of the exchange. The ORS system automatically routes option market and limit orders to the various execution vehicles at the CBOE including the RAES cwlls.
OTC Option: Options traded in the OTC market. OTC options are not listed on or guaranteed an options exchange and do not have standardized terms, such as standard strike prices or expiration dates. Out-of-the-Money OTM : A call is out-of-the-money when the price of the underlying stock is lower than the call's strike price. A put is out-of-the-money when the price of the underlying stock is higher than the put's strike price.
Calls puts and options list options have zero intrinsic value. Out-Trade s : A situation that results when there is some error on a trade. Differences between the buyer and seller regarding option price, option strike price or expiration month, or underlying stock are some of the reasons an out-trade might occur. Other costly errors occur when there was a buy versus a buy or a sell versus a sell.
Over-the-Counter OTC Calls puts and options list A securities market made up of dealers who may or may not be members of a securities exchange. In the OTC market, there is no exchange floor, such as the NYSE or CBOE. Pacific Exchange PCX : Located in San Francisco, the Optoons is one of four U. Parity: A term used to describe an in-the-money option when the option's total premium is equal to its intrinsic value. Such an option moves 1 point for every 1 point move in the underlying stock, and is said to be "worth parity" or "trading for parity".
Partial Fill: A limit order that is only partially executed because the total specified number of shares of stock or options could not be bought or sold at the limit price. Payable Date: Date on which the dividend on a stock is optiond paid to shareholders of record. Compare to ex-dividend date and record date. Philadelphia Stock Exchange PHLX : Located in Philadelphia, the PHLX is one of four U. Pin Risk: The risk to a trader who is short an option that, at expiration, the underlying stock price is equal to or "pinned to" the short option's strike price.
If this happens, he will not know whether he will be assigned on his short option. The risk is that the trader doesn't know if he will have no stock position, a short stock position if he was short a callor a long stock position if he was short a put on the Monday following expiration and thus be subject to an adverse price move in the stock. Plus Tick or Up Tick: A term used to describe a trade made at a price higher than the preceding trade.
Plus Tick Rule: SEC regulation governing the market price at which a liist sale may be made. Meaning, no short sale may be executed at a price below the pyts of the last sale. See also down tick or minus tick. Point: The minimum change in the handle of a stock ane option price. For stock or options in the U. Position Limit: For a single trader, lkst, or firm, the maximum number of allowable open option contracts on the same underlying stock.
The limits are established by the exchanges. Position Trading: Establishing a position in stocks or options and holding it for an extended period of time. Preferred Stock: A class of stock as distinguished from common stock nad a claim on a company's earnings before dividends may be made on the common stock. Preferred stock usually has priority over common stock if the company is liquidated. You can see the current price for any stock or option in your position on the 'Position Falls.
Prime Rate: Calls puts and options list lowest interest rate commercial banks charge their largest and most credit-worthy corporate customers. Put Option: A put option gives the buyer of the put the right, but not the obligation, to sell the underlying stock at the option's strike price. The seller of the put is obligated to take delivery of buy the underlying stock at the option's strike price to the buyer of the put when the buyer exercises his right.
Quote: The bid to buy and the offer to sell a particular stock or option at a given time. Rally: A rise in the price of a stock or the market as a whole. Range: The high and low prices of a stock or option recorded during a specified time. Ratio Spread: An option position composed of either all calls or all puts, with long options and short options at two different strike prices.
The options are all on the same stock and usually of the same expiration, with more options sold than purchased. A ratio spread is the purchase of an option s and the sale of a greater number of the same type of options that are out-of-the-money with respect to the one s purchased. Reaction: A decline in price of a stock or the market as a whole following a rise. Realized Gains or Losses: The profit or loss incurred in an account when a closing trade on a stock or option is made and matched with an currency option put call parity medical definition position in the same stock or option.
Record Date Date of Record : The date by which someone must be registered as a shareholder of a company in order to receive a declared dividend. Compare to ex-dividend date and payment date. Registered Options Principal: An employee of a brokerage firm who has passed the FINRA Series 4 exam, which provides in-depth pkts related to options. The registered options principal is an officer or partner in a brokerage firm who approves customer accounts in writing. Registered Optionss An employee of a brokerage firm who has passed the FINRA Series 7 and Series 63 calls puts and options list.
Regulation T Reg T : The regulation, established by the Federal Reserve Board, governing the amount pute credit that brokers and dealers may give to customers to purchase securities. It determines the initial margin requirements and defines eligible, ineligible, and iptions securities. Rehypothecation: The practice of pledging a customer's securities as collateral for a bank loan. Rejected Order: An order that is not executed because it is invalid or unacceptable in some way.
Restricted Account: A margin account in which the equity is less than the REG T initial requirement. A restricted account with Thinkorswim will be restricted to closing transactions only. Retail Automatic Execution System RAES : The system utilized by the CBOE to execute option market and executable limit orders for retail customers received by the exchange's ORS. Retail option orders executed via the RAES system are filled instantaneously at the prevailing market quote and are confirmed almost immediately to the originating firm.
Reversal Market Reversal : When a stock's direction of price movement stops and heads in the opposite direction. Reversal Reverse Conversion : A position of short stock, long a call, and short a put with the call and put having the same strike price, expiration date, and underlying stock. The long call and short put acts very much like long stock, thus acting as a hedge to the calls puts and options list stock. So, a reversal has a very small delta. A reversal is a way to exploit mispricings in carrying costs.
Reverse Split: An action taken by a corporation in which the puys of outstanding shares is reduced and the price per share increases. The value of the trader's position does not calls puts and options list unless the price purs the stock subsequently changes and his proportionate ownership in the company remains the same. Compare to stock split. RHO: An approximation of the change in putw price of an option relative to a change in interest rates when all other factors are held constant.
This is typically expressed for a one-percent basis point change in interest rates. Generated by a mathematical model, rho depends on the stock price, strike price, volatility, interest rates, dividends, and time to expiration. Roll, The: An option spread position composed of both calls and puts. The options are all on the same stock and strike price, but on two expirations.
The roll is long synthetic stock long call, short put at one expiration and short synthetic stock short call, long put at another expiration. The roll is usually executed when someone wishes to roll from a hedge in an expiring month to a hedge in a deferred month for added time. Roll, To: Adjusting or changing a position by closing out an existing option position and substituting it with an option on the same stock but with a different strike price or expiration date.
Round Lot: A standard quantity of trading. For example, in U. Secondary Market: Markets in which securities are bought and sold subsequent to their being sold to the public for the first time. Securities and Exchange Commission SEC : A government agency established by Congress to help protect investors. The SEC regulates the stock, stock options, and bond markets. Securities Investor Protection Corporation SIPC : This is a nonprofit corporation created by an act of congress to protect clients of a brokerage firms that iptions forced into bankruptcy.
This "Excess Callls protection is in addition to the protection provided by the Securities and Investors Protection Act, which is administered by SIPC and is subject to certain conditions and limitations, details of which are available upon request. Note SIPC and Excess SIPC provide coverage against loss of securities and cash, not against market depreciation, fluctuation in market value of your securities or a trading loss. Security: A generic term for investment or trading vehicles.
Securities can be stock, ane, or derivative securities such as options or futures. Segregation: The holding of customer-owned securities separate from securities owned by other customers and securities by the brokerage firm. Self Regulatory Organization SRO : Organizations accountable to the SEC for the enforcement of federal securities laws and the supervision of securities practices within their assigned fields of jurisdiction.
Examples of these organizations are: NASD, NYSE and the CBOE. Series: All option contracts of the same class that also have the same exercise price and expiration date. Settlement: The conclusion of a stock or options trade through the transfer of the security from the seller or cash from the buyer. Settlement Date: Date on which a transaction must be settled.
Buyers pay for securities with cash and sellers deliver securities. Settlement Price: The closing price of a stock or option used for account statements and to calculate gains and losses in an account. Short: As a noun, it refers to people who have sold stock or options without owning them first. As an adjective, it refers to a position of short stock or options.
Short Hedge: The selling of options as protection against a decrease in value of a long securities position. Short Interest: The number of shares of opttions that have calls puts and options list sold short is known as a stock's short interest. Short Seller: Someone who sells stock or options without owning them first. The short seller looks to profit from buying the stock or options back later at a price lower than where he sold it.
Short Squeeze: When traders who have sold a stock short start to ans profits or incur losses as the stock begins to rise, sometimes dramatically. The short sellers are forced to buy back their short stock positions in order to limit their losses. Single Account: An account type in which only one individual has control over the investments and may transact business.
Slippage: The difference between the price someone might expect to get filled at on an order, and the actual, executed price of the order. Sepcial Memorandum Account SMA : A line of credit in a customer's margin account, it's a limit on the amount of money a customer can borrow anv collateral in the account. Specialist: Members of the Otpions, PHLX, and AMEX whose function is to maintain a fair and orderly market by managing the limit order book and putw bids and offers in a particular stock or class of options.
Speculator: Someone who buys or sells stocks or options hoping to profit from favorable moves in their price or volatility. Generally, a speculator does not hedge his positions. Spin-Off: When a corporation divides its assets into two companies, one the original company and the other a new, independent company. Shares of stock in the new company are issued to stockholders of the original corporation.
Split: An action taken by a corporation in which calle number of outstanding shares is increased and the price per share decreases. Compare to reverse split. Spread: 1 a position or order involving two or more different options or stock and options see legor 2 the difference between the bid and offer prices of a stock or option. Spread Order: A type of order specifying two different option contracts on the same underlying security. Cash-settled, European-style options on the SPX are traded at the CBOE.
Stock: Another name for equity, it is a security that optilns ownership in a corporation. Stock Option: Calls or puts with the right to buy or sell individual stocks. Stop Limit Price Order: A type of order that turns into a limit order to buy or sell stock or options when and if a specified price is reached.
Stop limit orders to buy stock or options specify prices that are above their current market prices. Stop limit orders to sell stock or options specify prices that are below their current market prices. Stop Stop Loss Order: A type of order that turns into a market order to buy or sell stock or options when and if a specified "stop" calls puts and options list is reached. Stop orders to buy stock or putd specify prices that are above their current market prices.
Stop orders to sell stock or options specify prices that are below their current market prices. Straddle: An option position composed of calls and puts, with both calls and puts at the same strike. The options are on the same stock and of the same expiration, and either both long or both short with the quantity of calls equal to the quantity of puts with the exception of a ratioed straddle. A long straddle requires a large move in the stock price, an increase in implied volatility or both for profitability, while a short straddle performs well when the stock is in during a tight trading range, decreased implied volatility or both.
Strangle: An option position composed of calls and puts, with both out-of-the-money calls and out-of-the-money puts at two different strikes. The options are on the same stock and of the same expiration, and either both long or both short with the quantity of calls equal to the quantity of puts with the exception of a ratioed strangle.
A long strangle requires a large move, an increase in implied volatility or both for profitability, while a short strangle performs well during a tight trading range, decreased implied volatility or both. Street Name: Securities held in the name of a brokerage firm on behalf of a customer. This is required for margin accounts, and facilitates delivery for stock transactions.
Strike Price: The pre-determined price at which underlying stock is purchased in the case of a call or sold in the case pkts a put when an option is exercised. Symbols: Every corporation whose stock is traded on the NYSE, AMEX or NASDAQ, and every option traded on the CBOE, AMEX, PHLX, or PCX is given a unique identification symbol of up to five letters.
Generally, these symbols abbreviate the corporation's complete name and, in the case of options, their llist price, expiration date, and whether they are calls or puts. Synthetic: Creating a position that emulates another by combining at least outs of calls, puts or stock that acts very much like a position of outright stock, calls or calls puts and options list. Synthetic Long Call: An option position composed of long puts and long stock.
The quantity of long puts equals the number of round lots of stock. Synthetic Long Put: An option position composed of long calls and short stock. The quantity of long calls equals the number of round lots of stock. Synthetic Long Stock: An option position composed of long calls and short puts on the same stock, strike price and expiration.
Synthetic Short Call: An option position composed of short puts and short stock. The quantity of short puts equals the number of round lots of stock. Synthetic Short Put: An option position composed of short calls and long stock. The quantity of short calls equals the number of round lots of stock. Synthetic Short Stock: An option position composed of short calls and long puts on the same stock, strike price and expiration.
The quantity of long puts and the quantity of short calls nets to zero. Avoid Nifty trade stocks today >> Watch Video Risk: The broad macroeconomic factors that affect all companies in a stock market. It is also known as market risk. Theoretically, it's the risk in a portfolio that cannot be reduced through diversification.
Compare to unsystematic risk. Technical Analysis: Calculations that use stock price calls puts and options list volume data to identify patterns helping to predict future stock movements. Some technical analysis tools include moving averages, oscillators, and trendlines. Tender Offer: An offer from one company to buy shares of stock of another company from that other company's existing stockholders. Those stockholders are asked to "tender" surrender their shares for a specific price represented by cash, shares in another company, or bothwhich is usually higher than the current market price of the stock.
Theoretical Value: An estimated price of a call or put derived from a mathematical model, such as the Black-Scholes or binomial models. Theta: An approximation of the decrease in the price of an option over a period of time when all other factors are held constant. Theta is generally expressed on a daily basis. Generated by a mathematical model, theta depends on the stock price, strike price, volatility, interest rates, dividends, and time to expiration. Ticker: The telegraphic system which prints or displays last sale prices and volume of securities transactions on exchanges on a moving tape within a minute after each trade.
Also known as the "tape". Time and Sales: A record of the time, price and volume of each transaction of every stock and option. Trading Authorization: Written permission from the owner of an account authorizing another person to enter trades on behalf of the owner. Also called Power of Attorney. Trading Floor: The part of an exchange where the stocks and options are calls puts and options list potions and sold. Trading Halt: A temporary suspension of trading in a particular stock due anticipation of a major news announcement or an imbalance of buy and sell orders.
Trading Pit: A particular location on the trading calls puts and options list of an opttions designated for the trading of a specific stock or options on a specific stock or index. Transfer Agent: Usually a division of a large bank or other financial institution that keeps records of the names of registered shareholders of a particular stock, the shareholders' addresses, the number of shares owned by each shareholder, and oversees the transfer of stock certificates from one shareholder to another.
Treasury Stock: Shares of stock issued by a company but later bought back by the company. These shares may be held in the company's treasury indefinitely, used for employee bonus plans, reissued to the public, or retired. Treasury stock is ineligible to vote or receive dividends. Trend: Either an uptrend or a downtrend, successive price movements in the same direction in a security over time Trust: A legal relationship in which a person or entity the trustee acts for the benefit of someone else.
Underlying Stock or Security : The stock or other security that determines the value of a derivative security and that with the exception of cash-settled options would be purchased or sold if an option on that underlying stock or security was exercised. Examples of underlying securities are stocks, bonds, futures and indices.
Unsystematic Risk: The company-specific microeconomic factors that affect an individual stock. Theoretically, it's the risk in a portfolio that can be reduced through diversification. Compare to systematic risk. Up-Tick: Ljst term used to describe a trade made at a price higher than the preceding trade. EGA: An approximation of the change in the price of an option relative to a change in the volatility of the underlying stock when all other factors are held constant. This is typically liat for a one-percent change in volatility.
Generated by a mathematical model, vega depends on the stock price, strike price, volatility, interest rates, dividends, and time to expiration. Vertical: An option position composed of either all calls or all puts, with long options and short options at two different strikes. A long call vertical bull spread is created by buying a call and selling a call optjons a higher strike price. A short call vertical bear spread cwlls created by selling a call and buying a call with a higher strike price.
A long put vertical bear spread is created by buying a put and selling a put with a lower strike price. A short put vertical bull spread is created by selling a put and buying a andd with a lower strike price. VIX Volatility Index : Created by the CBOE, the VIX is an index of volatility calculated lits the extrinsic value of out of the money SPX index options. Volatility: Generically, volatility is the size of the changes in the price of the underlying security.
In practice, volatility is presented as either historical or implied. Volatility Skew: Volatility skew, or just "skew", arises when the implied volatilities of options in one month on one stock are not equal across the different strike prices. If the implied volatilities of options in one month on one stock ARE equal across the different strike prices, the skew is said to be "flat". You should be aware of volatility skew because it can dramatically change the risk of your position when the price of the stock begins to move.
Volume: The total number of shares of stock or option contracts traded on a given day. Warrant: A security issued by a corporation that gives the holder the right to purchase securities at a specific price within a specified time limit or sometimes with no time limit. Warrants are sometimes like call options, but the main differences are that warrants typically have callz longer lives whereas options tend to expire relatively soon, and that warrants are issued by a company to raise money whereas options are created by the OCC.
CNBC contributor Mike Khouw takes a look at implied moves on Starbucks earnings in the options pit. CNBC contributor Mike Khouw takes a look at the implied move in the options pit for Las Vegas Sands and MGM Resorts ahead of earnings. Log In Register Log Out News. The Pulse 1 Market. EDITION Opyions Log In Profile Email Preferences PRO Sign Out. Options Action: Big move for Starbucks?
Options Action: Bet on the casino stocks.
Call and Put options for Dummies
Calls " Calls " is an option that gives the holder the right to buy the underlying asset. Option Trading: What is a Call Options? Introduction to Calls and Puts with clear examples, definitions, and trading tips for the beginner trader of Call and Put Options. Puts, calls, strangles and straddles. Confused by all these terms? Well, then click on the Options Action dictionary and learn all about them and other option.