OEX This
term, pronounced as three separate letters, is Wall Street shorthand for Standard & Poor's 100 stock index.
Odds Odds
is the predicted profits divided by the predicted losses
obtained by
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.
Offer The
lowest price at which a person is willing to sell.
Off-floor
Trader A trader who does not trade on the actual floor of an organized futures of stock exchange.
Offset To
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.
On-the-Money The
option in question is trading at its exercise price (also referred to as at-the-money)..
Open
Order An order to buy or sell a security at a specified price, valid until executed or canceled.
Open
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.
Open
Trades A current trades that is still held active in a customer's account.
Opening The
period at the beginning of the trading session at an exchange.
Opening
Call A period at the opening of a futures market in which the price for each contract is established by outcry.
Opening
Price The range of prices at which the first bids and offers were made or first transactions were completed.
Opportunity
Costs The theoretical cost of using your capital for one investment versus another.
Option A
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.
Option
Holder The buyer of either a call or put option.
Option
Premium This is the price of an option.
Option
Writer The seller of either a call or put option.
Order A
ticket or voucher representing long or short securities and options.
Order
Flow The volume of orders being bought or sold on the exchanges.
Out-of-the-Money An
option whose exercise price has no intrinsic value.
Out-of-the-Money
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
ty.
Overvalued A term used to describe a security or option whose current price is not justified.
P
Paper
Trading The ability to simulate a trade without actually putting up the money for the purpose of gaining additional trading experience.
Par The
stated or "nominal" value of a bond (typically $1,000) that is paid to the bondholder at maturity.
Perceived
Risk The theoretical risk of a trade in a specific time frame.
Performance
Based A system of compensation in which a broker receives fees based on their performance in the marketplace
Points Points
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.
Point
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).
Position The
total of a trader's open contracts.
Position Delta The
sum of all positive and negative deltas in a hedged position.
Position
Limit The maximum number of open contracts in a single underlying instrument.
Premium The
amount of cash that an option buyer pays to an option seller
Price Price
of a share of common stock on the date shown. Highs and lows are based on the highest and lowest intra-day trading price.
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.
Private
Company A company that issues private stock and is not publicly traded.
Probability
of Profit Probability
of Profit is the probability that the predicted stock
price falls
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.
Put
Option An
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.
Q
Quickie An
order that must be filled as soon as it reaches the trading floor at the price specified, or be canceled immediately.
Quote The
price being offered or bid by a market maker or broker-dealer for a particular security.
Quoted
Price Refers to the price at which the last sale and purchase of a particular security or commodity took place.
R
Ratio
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.
Ratio
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.
Ratio
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.
Real-time Data
received from a quote service as the prices change.
Relative
Strength A stock's price movement over the past year as compared to a market index.
Relative
Strength Index (RSI) An indicator used to identify price tops and bottoms.
Resistance A
price level the market has a hard time breaking through to the upside.
Return The
income profit made on an investment.
Reward-Risk Ratio The
mathematical relationship between the maximum potential risk and maximum potential reward of a trade.
Reversal
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.
Rich Priced
higher than expected.
Risk The potential financial loss inherent in the investment.
Risk
Graph A graphic representation of risk and reward on a given trade as prices change.
Risk
Manager A person who manages risk of trades in a portfolio by hedging their trades.
Risk
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.
Round-turn Procedure
by which a long or short position is offset by an opposite transaction.
Running
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.
