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Daily Range The
difference between the high and low price of a security in one trading day.
Day
Order An order to buy or sell a security which expires if not filled by the end of the day.
Day
Trade The purchase and sale of a position in the same day.
Day
Trading An approach to trading in which the same position is entered and exited within one day.
Debit
Spread The difference in value between 2 options, where the value of the long position exceeds the value of the short position.
Deep-in-the-Money A
deep-in-the-money call option has a strike price well
below the current price of the underlying instrument.
A deep-in-the-money put option has a strike price well
above the current price of the underlying instrument.
Both primarily consist of intrinsic
value.
Delayed Time Quotes from a data service provider which are delayed up to 20 minutes from real time quotes.
Delta The
amount by which the price of an option changes for every dollar move in the underlying instrument.
Delta-Hedged An
options strategy protecting an option against price changes in the option's underlying instrument by balancing the overall position delta to zero.
Delta
Neutral A position arranged by selecting a calculated ratio of short and long positions that balance out to an overall position delta of zero.
Delta
Position A measure of option or underlying securities delta.
Derivative Financial
instruments based on the market value of an underlying asset.
Discount
Brokers Brokerage firms that offer lower commission rates than full service brokers, but do not offer services such as advice, research and portfolio planning.
Divergence When
2 or more averages or indices fail to show confirming trends.
Dividend A
sum of money paid out to a shareholder from the stock's profits.
Dow
Jones Industrial Average (DJIA) Used as an overall indicator of market performance, this average is composed of 30 blue chip stocks which are traded daily on the New York Stock Exchange.
Downside The
potential for prices to decrease.
Downside Risk The
potential risk one takes if prices decrease in directional trading.
E
Each
Way The commission made by a broker for the purchase and sale sides of a trade.
End
of Day The close of the trading day when market prices settle.
EPS
Rank An Investor's Business Daily list of companies ranked from 0 to 100 by the strength of each company's earnings per share.
Equilibrium A
price level in a sideways market equal-distance from the resistance and support levels.
Eurodollar Dollars
deposited in foreign banks, with the futures contract reflecting the rates offered between US banks and foreign banks.
European
Style Option An option contract that can only be exercised on the expiration date.
Exchange An
area where an asset, option, future, stock or derivative is bought and sold.
Exchange
Rate The price at which one country's currency can be converted into another country's currency.
Execution The
process of completing an order to buy or sell securities.
Exercise Implementing
an option's right to buy or sell the underlying security.
Exercise
Price A price at which the stock or commodity underlying a call or put option can be purchased (call) or sold (put).
Expected
Profit The
stock price is randomly projected into the future using
the stock's
20-day statistical (historical) volatility (SV) in
the Optionetics option trade
ranker tool. The stock price projection stops at the
expiration of the earlist
expiring option leg. The stock price future statistical
distribution at option
expiration is used to compute possible profits and
losses. Expected Profit is
the predicted profits minus the predicted losses expressed in total dollars.
Expiration The
date and time after which an option may no longer be exercised.
Expiration
Date The last day on which an option may be exercised.
Explosive An
opportunity that can yield large profits with usually a limited risk in a short amount of time.
Extrinsic
Value The price of an option less its intrinsic value. An out-of-the money option's worth consists of nothing but extrinsic or time value.
F
Fade Selling
a rising price or buying a falling price.
Fair
Market Value The value of an asset under normal conditions.
Fair
Values The theoretical value of what an option should be worth usually generated by an option pricing model such as the Black-Scholes option pricing model.
Fast
Market A stock with so much volume that the order entry systems have difficulty processing all of the orders.
Fill An
executed order.
Fill Order An order that must be filled or canceled immediately.
Fill
or Kill Placing an order to buy or sell an exact number of units or none at all.
Financial
Instruments The term used for debt instruments.
Fixed
Delta A delta figure that does not change with the change in the underlying. A futures contract has a fixed delta of plus or minus 100.
Floor
Broker An exchange member who is paid a fee for executing orders.
Floor
Ticket A summary of the information on an order ticket.
Floor
Trader An exchange member who executes orders from the floor of the exchange only for his/her own account.
Fluctuation A
variation in the market price of a security.
Front
Month The first expiration month in a series of months.
Fundamental
Analysis An approach to trading research to predict futures and stock price movements based on a balance sheet and income statements, past records of earnings, sales, assets, management, products and services.
Futures All
contracts covering the purchase and sale of financial instruments or physical commodities for future delivery. These orders are transacted on a commodity futures exchange.
Futures
Contract Agreement to buy or sell a set number of shares of a commodity or financial instruments in a designated future month at a price agreed upon by the buyer and seller.
G
Gamma The
degree by which the delta changes with respect to changes in the underlying instrument's price.
Gap A
day in which the daily range is completely above or below the previous day's daily range.
Going
Ahead Unethical brokerage activity whereby the broker trades first for his or her own account before filling the customer's order(s).
Go
Long To buy securities, options or futures.
Good
Til' Canceled Order (GTC) Sometimes simply called "GTC", it means an order to buy or sell stock that is good until you cancel it.
Go
Short To sell securities, options or futures.
Guts A
strangle where the call and the put are in-the-money.
H
Hammering
the Market The intense selling of stocks by speculators who think the market is about to drop because they think prices are inflated.
Hedge Reducing
the risk of loss by taking a position through options or futures opposite to the current position they hold in the market.
High
(hi) The highest price that was paid for a stock during a certain period.
High
IV
This is the highest ATM IV found over a historical
time period for the stock.
The period chosen is a 6 month period.
High and Low Refers
to the high and low transactions prices that occur each trading day.
High
Flyer A speculative high-priced stock that moves up and down sharply over a short period of time.
High-tech
Stock Refers to the stock of companies involved in high-technology industries, such as computers, biotechnology, robotics, electronics, and semiconductors.
Historic
Volatility A measurement of how much a contract's price has fluctuated over a period of time in the past; usually calculated by taking a stand`ard deviation of price changes over a time period.
