|
Abandon
|
|
To elect not to exercise or offset a long option position.
|
| |
|
Accommodation Trading
|
|
Non-competitive trading entered into by a trader, usually to assist another with illegal trades.
|
| |
|
Accounts payable
|
|
Invoiced amounts owed by a business to its suppliers. In UK accounting known as creditors. Included amongst current liabilities in the companys balance sheet.
|
| |
|
Accounts receivable
|
|
Invoiced amounts that are owed to a business. In UK accounting known as debtors. Included amongst current assets in the companys balance sheet.
|
| |
|
Acquisition
|
|
The act of one company acquiring control of another. In "/unfriendly takeover bids the potential buyer may offer a price well above current market value. A bidder may also offer its own shares as part of the purchase price./"
|
| |
|
Actuals
|
|
The physical or cash commodity, as distinguished from a futures contract. See Cash and Spot Commodity.
|
| |
|
Actuary
|
|
A specialist in statistics and financial mathematics responsible for estimating the future claims on insurance companies and pension schemes. Nowadays firms of consulting actuaries are used by the trustees of pension funds to help evaluate the performance of investment managers and to help allocate investment management mandates.
|
| |
|
Aftermarket
|
|
Dealings in a security after it has been launched in the primary market.
|
| |
|
Agency Bond
|
|
A debt security issued by a government-sponsored enterprise such as Fannie Mae or Freddie Mac, designed to resemble a U.S. Treasury bond.
|
| |
|
Agency cross
|
|
When a broker acts as agent of both the buyer and the seller in a share transaction.
|
| |
|
Agency Note
|
|
A debt security issued by a government-sponsored enterprise such as Fannie Mae or Freddie Mac, designed to resemble a U.S. Treasury note.
|
| |
|
Agent
|
|
Someone authorised to transact business on behalf of a client.
|
| |
|
Aggregation
|
|
The principle under which all futures positions owned or controlled by one trader (or group of traders acting in concert) are combined to determine reporting status and compliance with speculative position limits.
|
| |
|
AGM
|
|
Annual general meeting.
|
| |
|
Agricultural Trade Option Merchant
|
|
Any person that is in the business of soliciting or entering option transactions involving an enumerated agricultural commodity that are not conducted or executed on or subject to the rules of an exchange.
|
| |
|
Allowances
|
|
The discounts (premiums) allowed for grades or locations of a commodity lower (higher) than the par (or basis) grade or location specified in the futures contract. See Differentials.
|
| |
|
Alpha
|
|
A share or portfolio with returns that exceed its required return adjusted for beta (i.e. its risk adjusted return) is said to have positive alpha. In some investment management firms the fund managers who are responsible for picking shares likely to outperform are known as alpha managers.
|
| |
|
American Depository Receipt (ADR)
|
|
A receipt issued by a US bank against shares in a foreign company held overseas. A US investor wishing to invest in a foreign market may find it easier to buy ADRs than to buy the shares direct. ADRs are priced in dollars and settlement procedures are the same as those for any other US security. ADRs may trade on the OTC market or on an exchange such as the NYSE.
|
| |
|
American option
|
|
An option which can be exercised at any time until its expiry.
|
| |
|
American Option
|
|
An option that can be exercised at any time prior to or on the expiration date. See European Option.
|
| |
|
Amortization
|
|
(1) The repayment of the principal on a loan in instalments over a period of time rather than all at the maturity of the loan.(2) Depreciation of an intangible asset such as goodwill.
|
| |
|
Amortizing Swap
|
|
A swap in which the principal is reduced in each time period.
|
| |
|
Analyst
|
|
A specialist with expertise in a particular economy, market or class of securities who advises investors, traders and salespeople.
|
| |
|
Approved Delivery Facility
|
|
Any bank, stockyard, mill, storehouse, plant, elevator, or other depository that is authorized by an exchange for the delivery of commodities tendered on futures contracts.
|
| |
|
Arbitrage
|
|
Buying and selling in different marketplaces and making money from the disparity in market prices. For example, if an investor could buy a currency in one market and immediately sell it in another market at a better rate he or she would make an arbitrage profit. Sometimes used in a looser sense to include speculative deals such as buying shares in an IPO in the hope of selling them after the issue at a profit.
|
| |
|
Arbitrage
|
|
A strategy involving the simultaneous purchase and sale of identical or equivalent commodity futures contracts or other instruments across two or more markets in order to benefit from a discrepancy in their price relationship. In a theoretical efficient market, there is a lack of opportunity for profitable arbitrage. See Spread.
|
| |
|
Arbitration
|
|
A process for settling disputes between parties that is less structured than court proceedings. The National Futures Association arbitration program provides a forum for resolving futures-related disputes between NFA members or between NFA members and customers. Other forums for customer complaints include the American Arbitration Association.
|
| |
|
Artificial Price
|
|
A futures price that has been affected by a manipulation and is thus higher or lower than it would have been if it reflected the forces of supply and demand.
|
| |
|
Asian Option
|
|
An exotic option whose payoff depends on the average price of the underlying asset during some portion of the life of the option.
|
| |
|
Asian or Asiatic option
|
|
Another name for an average rate option.
|
| |
|
Ask
|
|
The price level of an offer, as in bid-ask spread.
|
| |
|
Asset allocation
|
|
The process in portfolio management of deciding how to allocate money between different classes of assets (shares, bonds etc.) and different geographical locations (US, Far East etc.).
|
| |
|
Asset-backed securities
|
|
Bonds backed by a pool of assets created by a bank, such as mortgages and credit card loans. The receipts from the loans are earmarked towards paying the bond holders. This means that the bonds are normally less risky than bonds not secured on any assets.
|
| |
|
Assets
|
|
A companys assets consist of fixed assets such as plant and machinery, current assets such as stock and cash, and intangible assets such as goodwill. Portfolio managers also manage assets such as cash, shares and bonds on behalf of individuals and institutions.
|
| |
|
Assignable Contract
|
|
A contract that allows the holder to convey his rights to a third party. Exchange-traded contracts are not assignable.
|
| |
|
Assignment
|
|
Formal notification from an exchange that the writer of a call (put) option must deliver (take delivery of) the underlying security at the exercise price.
|
| |
|
Assignment
|
|
Designation by a clearing organization of an option writer who will be required to buy (in the case of a put) or sell (in the case of a call) the underlying futures contract or security when an option has been exercised, especially if it has been exercised early.
|
| |
|
Associated Person (AP)
|
|
An individual who solicits or accepts (other than in a clerical capacity) orders, discretionary accounts, or participation in a commodity pool, or supervises any individual so engaged, on behalf of a futures commission merchant, an introducing broker, a commodity trading advisor, a commodity pool operator, or an agricultural trade option merchant.
|
| |
|
At best order
|
|
An order to a broker to buy or sell a security or derivative contract at the best price available on the market.
|
| |
|
At-the-Market
|
|
An order to buy or sell a futures contract at whatever price is obtainable when the order reaches the trading facility. See Market Order.
|
| |
|
At-the-Money
|
|
When an option's strike price is the same as the current trading price of the underlying commodity, the option is at-the-money.
|
| |
|
At-the-money option
|
|
An option whose exercise price is equal to the current market price of the underlying. It has no intrinsic value.
|
| |
|
Auction Rate Security
|
|
A debt security, typically issued by a municipality, in which the yield is reset on each payment date via a Dutch auction.
|
| |
|
Audit Trail
|
|
The record of trading information identifying, for example, the brokers participating in each transaction, the firms clearing the trade, the terms and time or sequence of the trade, the order receipt and execution time, and, ultimately, and when applicable, the customers involved.
|
| |
|
Automatic Exercise
|
|
A provision in an option contract specifying that it will be exercised automatically on the expiration date if it is in-the-money by a specified amount, absent instructions to the contrary.
|
| |
|
Average rate or average price option
|
|
In a fixed strike option the payout is based on the difference between the strike and the average price of the underlying during the life of the option. In a floating strike option the strike is based on the average price of the underlying during the life of the option and the payout is based on the difference between this and price of the underlying at expiry.
|
| |