Q
Quick Order
See Fill or Kill Order.
Quotation
The actual price or the bid or ask price of either cash commodities or futures or options contracts at a particular time.
Quote
An indicative market price, normally used for information purposes only.
Quote
An indication of current bids and offers in the market on a particular instrument or spread.
R
Rally
A prompt rise in prices (quotations) in the market.
Random Walk
An economic theory that price movements in the commodity futures markets and in the securities markets are completely random in character (i.e., past prices are not a
reliable indicator of future prices).
Range
The difference between the high and low price of a commodity during a given trading session, week, month, year, etc.
Range
The high and low prices or high and low bids and offers recorded during a specified time.
Rate
The price of one currency in terms of another, typically used for dealing purposes.
Ratio Hedge
The number of options compared to the number of futures contracts bought or sold in order to establish a hedge that is risk neutral.
Ratio Spread
This strategy, which applies to both puts and calls, involves buying or selling options at one strike price in greater number than those bought or sold at another strike price.
Reaction
The downward price movement tendency of a commodity after a price advance.
Receiver
A person appointed by the court to receive and preserve the property or funds that are the subject of litigation.
Recession
Decrease in business activity.
Reciprocal of European Terms
One method of quoting exchange rates, which measured the U.S. dollar value of one foreign currency unit, i.e., U.S. dollars per foreign units. See European Terms.
Recovery
An upward price movement after a decline. Registered Representative A person employed by, and soliciting business for, a commission house or futures commission merchant. See also Associated Person.
Registrant
A person or firm who had properly applied for and received approval to operate in one or more of the following capacities: futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, leverage transaction merchant, agricultural trade option merchant, floor broker, floor trader, or associate person.
Registration Action Type
A violation arising from failing to properly register with a regulatory body or being statutorily disqualified from registration.
Regulatory Action
A disciplinary or remedial action taken by a regulatory body, such as the exchanges, NFA and the CFTC in enforcing its rules and the requirements of the Commodity Exchange Act.
Remand
When an appellate body sends a case back to a lower body for further proceedings.
Reparations
Compensation payable to a wronged party in a futures or options transaction. The term is used in conjunction with the CFTC's customer claims procedure to recover civil damages.
Reply
A written response to a counterclaim or a cross-claim.
Reportable Position
The number of open contracts specified by the CFTC at which one must begin reporting total positions by delivery month to the authorized exchange and/or the CFTC.
Reporting Level
Sizes of positions set by the exchanges and/or the CFTC at or above which commodity traders or brokers who carry these accounts must make daily reports about the size of the position by commodity, by delivery month, and whether the position is controlled by a commercial or non-commercial trader.
Representative
An attorney or other person who assists a party in an arbitration.
Repurchase Agreements or (Repo)
An agreement between a seller and a buyer, usually in U.S. government securities, in which the seller agrees to buy back the security at a later date.
Reserve Requirements
The minimum amount of cash and liquid assets as a percentage of demand deposits and time deposits that member banks of the Federal Reserve are required to maintain.
Resistance
A term used in technical analysis indicating a specific price level at which analysis concludes people will sell.
Resistance line
A price level above which prices tend not to rise due to selling pressure.
Respondent
A person or firm named in a disciplinary or remedial action; a person or firm alleged to have been the cause of rule violations; a person or firm against whom a claim is asserted in an arbitration or reparations matter.
Response to Notice of Intent
A written response to a Notice of Intent submitted by the named applicant or registrant.
Resting Order
An order to buy at a price below or to sell at a price above the prevailing market that is being held by a floor broker. Such orders may either be day orders or open orders.
Restitution - The act of making good, or of giving the equivalent, for any loss, damage or injury.
Restraining Order - An order often granted without notice or hearing, requiring the preservation of the status quo until a hearing can be held to determine the propriety of any injunctive relief, temporary or permanent. A restraining order is always temporary in nature and thus is often called a TRO or Temporary Restraining Order.
Resumption
The reopening the following day of specific futures and options markets that also trade during the evening session at the Chicago Board of Trade.
Retender
In specific circumstances, some contract markets permit holders of futures contracts who have received a delivery notice through the clearing house to sell a futures contract and return the notice to the clearing house to be reissued to another long; others permit transfer of notices to another buyer. In either case, the trader is said to have retendered the notice.
Retracement
A level of possible returning (correction) of the price (Forex rate) counted in a technical analysis after the occured growth or falling.
Revaluation
An increase in the exchange rate for a currency as a result of central bank intervention. Opposite of Devaluation.
Revaluation Rates
The revaluation rates are the market rates used when a trader runs an end-of-day to establish profit and loss for the day.
Reversal
A change of direction in prices. In a legal context, when an appellate body sets aside the decision of a body because of an error. A reversal is often followed by a remand.
Reverse Conversion
With regard to options, a position created by buying a call option, selling a put option, and selling the underlying futures contract. Also referred to as Reversal.
Reverse Crush Spread
The sale of soybean futures and the simultaneous purchase of soybean oil and meal futures. See Crush Spread.
Revoke
To recall a power or authority previously conferred, or annul, repeal, rescind or cancel privileges or registration. In the case of Commodity Futures Trading Commission registration proceedings, to take away a previously granted registration.
Riding the Yield Curve
Trading in interest rate futures according to the expectations of change in the yield curve.
Ring
A circular area on the trading floor of an exchange where floor traders and floor brokers stand while executing futures trades.
Risk
Possibility of suffering loss.
Risk
Exposure to uncertain change, the variability of returns significantly the likelihood of less-than-expected returns.
Risk Capital
The amount of money that an individual can afford to invest, which, if lost would not affect their lifestyle.
Risk Management
To hedge one’s risk they will employ financial analysis and trading techniques
Risk Management
The employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.
Risk/Reward Ratio
The relationship between the probability of loss and profit. This ratio is often used as a basis for trade selection or comparison.
Roll-Over
Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies.
Rollover Rate
The daily rollover interest rate is the amount a trader either pays or earns, depending on the established margin and position in the market. To avoid rollovers simply make sure positions are closed at the established end of the market day
Round Lot
A quantity of a commodity equal in size to the corresponding futures contract for the commodity.
Round Turn
A completed futures transaction involving both a purchase and a liquidating sale, or a sale followed by a covering purchase.
Round turn
Refers to the purchase or sale of a futures contract and the subsequent sale or purchase, which closes out the position.
Runners
Messengers who rush orders received by phone clerks to brokers for execution in the pit.
S
Satisfactorily Subordinated Liabilities
Liabilities of an FCM or IB which are subordinated to the claims of all general creditors of the FCM or independent IB pursuant to subordination agreements which meet certain standards.
Scalp
To trade for small gains. Scalping normally involves establishing and liquidating a position quickly, usually within the same day, hour or even just a few minutes.
Scalper
The Forex market trader earning profit on insignificant (minimal) changes of the price (Forex rate).
Secondary Market
Market where previously issued securities are bought and sold.
Security
Common or preferred stock; a bond of a corporation, government, or quasi-government body.
Segregated Account
A special account used to hold and separate customers' assets from those of the broker or firm.
Segregated Funds
The amount of money, securities and property due to commodity futures or options customers which is held in segregated accounts in compliance with Section 4d of the Commodity Exchange Act and CFTC Regulations. Such money, securities or property may not be commingled with the money, securities and property of the FCM.
Self Regulatory Organization (SRO)
Self-regulatory organizations (i.e., the futures exchanges and National Futures Association) enforce minimum financial and sales practice requirements for their members. See also Designated Self-Regulatory Organization.
Sell on Close
To sell at the end of the trading session within the closing range price.
Sell on Opening
To sell at the beginning of a trading session within the open price range.
Seller's Market
A condition of the market in which there is a scarcity of goods available and hence sellers can obtain better conditions of sale or higher prices.
Seller's Option
The right of a seller to select, within the limits prescribed by a contract, the quality of the commodity delivered and the time and place of delivery.
Selling Hedge
Selling futures contracts to protect against possible decreased prices of commodities.
Selling Rate
Rate at which a bank is willing to sell foreign currency.
Settlement
The process by which a Forex market trading is entered into the books and records of the counterparts to a transaction. The settlement of currency Forex market trades may or may not involve the actual physical exchange of one currency for another.
Settlement Agreement
A document that spells out the terms of a resolution by the parties without an adjudication.
Settlement Date
It means the business day specified for delivery of the currencies bought and sold under a forex contract.
Settlement Price
The daily price at which the clearing house settles all accounts between clearing members for each contract month. Settlement prices are used to determine both margin calls and invoice prices for deliveries. The term also refers to a price established by the clearing organization to calculate account values and determine margins for those positions still held and not yet liquidated.
Settlement price
A figure determined by the closing range that is used to calculate gains and losses in futures market accounts, performance bond calls and invoice prices for deliveries. The official daily closing prices of a futures contract.
Short
A market position where the client has sold a currency he does not already own. Usually expressed in base currency terms. Or One who has sold futures contracts or plans to purchase a cash commodity. (verb) Selling futures contracts or initiating a cash forward contract sale without offsetting a particular market position.
Short Covering
Purchasing futures to offset a short position.
Short Hedge
Selling futures contracts to protect against possible declining prices of commodities. Opposite of Long Hedge.
Short Position
An investment position that benefits from a decline in market price.
Short Selling
Selling a futures contract with the idea of delivering on it or offsetting it at a later date.
Short Squeeze
A market situation in which the lack of supplies tends to force shorts to cover their positions by offset at higher prices.
Short the Basis
The purchase of futures as a hedge against a commitment to sell in the cash or spot markets. Opposite of Long the Basis.
Side
A side counts the buy and the sell as separate events. Each matched trades, and each contract, has two sides — the buyer side and the seller side. Taken together, these two sides equal one round turn per unit of volume. Measuring matched trade volume “per side” counts volume on each side of the trade.
SITC
Standard International Trade Classification. A system for reporting trade statistics in a common manner.
Slippage
A situation when Stop -order is carried out at more worst Forex rate, than it has been reserved at its exhibiting to the broker. Such phenomenon meets during quickly varying market. For example, it can occur after an output of the important fundamental data, during performances of known politicians. To execute the order at the set Forex rate it is not obviously possible, if the quotation overcomes the set level sharp jump. The size of slippage can vary from one item up to several tens items. Often slippage takes place at opening Forex market trading on Sunday in the evening when rates of opening differ from rates of closing.
SOFFEX
Swiss Options and Financial Futures Exchange, a fully automated and integrated trading and clearing system.
Soft
A description of a price which is gradually weakening. Also refers to commodities such as sugar, cocoa, and coffee.
Soft currency
the currency exchanged for other currencies with some restrictions.
Soft Market
More potential sellers than buyers, which creates an environment where rapid price falls are likely.
Sold Out Market
When liquidation of a weakly held position has been completed, and offerings become scarce, the market is said to be sold out.
Sole Proprietorship
A form of business organization in which an individual is fully and personally liable for all the obligations (including debts) of the business, is entitled to all of its profits and exercises complete managerial control.
Specialist System
A type of trading commonly used for the exchange trading of securities in which one individual or firm acts as a market-maker in a particular security, with the obligation to see that trading in that security is fair and orderly by offsetting temporary imbalances in supply and demand by trading for his own account.
Speculative Limit
The maximum position, either net long or net short, in one commodity future (or option) or in all futures (or options) of one commodity combined which may be held or controlled by one person as prescribed by an exchange and/or by the CFTC.
Speculative Position Limit
The maximum position, either net long or net short, in one commodity future (or option) or in all futures (or options) of one commodity combined which may be held or controlled by one person as prescribed by an exchange and/or by the CFTC.
Speculative Position Limit Action Type
A violation arising from exceeding limitations placed upon the number of contracts that may be held by a party at one time.
Speculator
The person, ready to risk means at fulfilment of trading operations for the sake of reception of profit.
Speculator
One who attempts to anticipate price changes and, through buying and selling futures contracts, aims to make profits. Does not use the futures market in connection with the production, processing, marketing, or handling of a product. The speculator has no interest in taking delivery.
Spike
Significant difference of the subsequent quotation from previous. A graphic representation of the culmination moment in the market, describing most rigid "collision" of buyers and sellers. Characterizes nervousness of the market. Spikes can appear during the moments of an output especially important news for the market. However there are situations when spikes appear on the screen without the weighty reasons; such meets in the narrow market. It either "overindulgence" of operators, or special shaking of the market.
Spot
(1) The most common foreign exchange transaction.
(2) Spot refers to the buying and selling of the currency where the settlement date is two business days forward.
Spot Commodity
Usually refers to a cash market price for a physical commodity that is available for immediate delivery.
Spot Date
In the Forex market - a delivery date of currencies for the second working day from the moment of the conclusion of the transaction.
Spot Month
The futures contract which matures and becomes deliverable during the present month.
Spot month
The nearest trading month which may or may not be the current calendar month. Usually used as the current delivery month for a commodity.
Spot/Next
A currency deposit transaction or the simultaneous purchase and sale of currency, or vice versa by means of swap for spot value day against the next working day.
Spot Next
The overnight swap from the spot date to the next business day.
Spot Price
The current market price. Settlement of spot transactions usually occurs within two business days.
Spot price
The actual current price for a currency, where it can be bought or sold in the over-the-counter market. Spot currency transactions usually settle within two business days of the trade.
Spot Trade
When you trade foreign exchange you are always quoted a spot price 2 business days in advance. This is under normal conditions where there are no bank holidays in the traded currencies countries or is not over a weekend.
Spread
The price difference between two contracts. Holding a long and a short position in two related futures or options on futures contracts, with the objective of profiting from a changing price relationship.
Spread
(1) The difference between the bid and ask price of a currency.
(2) The difference between the price of two related futures contracts. (3) For options, transactions involving two or more option series on the same underlying currency.
Spreading
The simultaneous buying and selling of two related markets in the expectation that a profit will be made when the position is offset. Examples include: buying one futures contract and selling another futures contract of the same commodity but different delivery month; buying and selling the same delivery month of the same commodity on different futures exchanges; buying a given delivery month of one futures market and selling the same delivery month of a different, but related, futures market.
Squeeze
A market situation in which the lack of supplies tends to force shorts to cover their positions by offset at higher prices.
Stable Market
An active market which can absorb large sale or purchases of currency without having any major impact on the interest rates.
Stagflation
Recession or low growth in conjunction with high inflation rates.
Standard and Poors (S&P)
A US firm engaged in assessing the financial health of borrowers. The firm also has generated certain stock indices i.e. S&P 500.
Stay
An order whereby some action is forbidden or held in abeyance until some event occurs or the issuing body lifts its order. Frequently, an order preventing the enforcement of a Decision or Order in a matter while it is on appeal.
Steer/Corn Ratio
The relationship of cattle prices to feeding costs. It is measured by dividing the price of cattle ($/hundredweight) by the price of corn ($/bushel). When corn prices are high relative to cattle prices, fewer units of corn equal the dollar value of 100 pounds of cattle. Conversely, when corn prices are low in relation to cattle prices, more units of corn are required to equal the value of 100 pounds of beef. See Feed Ratio.
Sterilization
Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the forex market.
Sterling
Slang for British Pound.
Stock Index
An indicator used to measure and report value changes in a selected group of stocks. How a particular stock index tracks the market depends on its composition; the sampling of stocks, the weighing of individual stocks, and the method of averaging used to establish an index.
Stock Market
A market in which shares of stock are bought and sold.
Stop limit order
An order that becomes a limit order only when the market trades at a specified price.
Stop Loss Order
Order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor’s position. As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49.
Stop order
An order which specifies a price at which the order is activated and becomes a limit order. A buy stop is entered above the current market and becomes a limit order when the commodity trades at or above the specified stop trigger price. A sell stop is entered below the current market. It becomes a limit order when the commodity trades at the stop price or below. The stop can immediately execute up to the limit price.
Stop with a price limit
A stop order with a specified worst price at which the order can be filled.
Stop Close Only Order
A stop order which can only be executed, if possible, during the closing period of the market.
Stop Out Price
US term for the lowest accepted price for Treasury Bills at auction.
Straddle
The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date. See spread.
Strangle
An option position consisting of the purchase or sale of put and call options having the same expiration but different strike prices.
Strike Price
The price at which the buyer of a call (put) option may choose to exercise his right to purchase (sell) the underlying futures contract.
Strip
A combination of two puts and one call.
Structural Unemployment
Unemployment levels inherent in an economic structure.
Summary Action
An action that is taken quickly and without a hearing before the action is taken.
Summary Judgment
A decision made on the basis of statements and evidence presented for the record without a trial. It is used when there is no dispute as to the facts of the case, and one party is entitled to judgment as a matter of law.
Summary Proceeding
A form of adjudication in which ordinary legal procedures are disregarded so that the issue at hand may be resolved in a timely fashion. Usually, a summary proceeding is limited to a single issue.
Supply
The quantity of a commodity that producers are willing to provide to the market at a given price.
Support
The place on a chart where the buying of futures contracts is sufficient to halt a price decline.
Support Levels
A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange Forex rate will automatically correct itself. Opposite of resistance.
Support Levels
A term used in technical analysis indicating a specific price level at which a currency will have the inability to cross below. Recurring failure for the price to move below that point produces a pattern that can usually be shaped by a straight line. It is the opposite of Resistance levels.
Suspension
The end of the evening session for specific futures and options markets traded at the Chicago Board of Trade.
Swap
The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another. A swap can be a swap against a forward. In essence, swapping is somewhat similar to borrowing one currency and lending another for the same period. However, any rate of return or cost of funds is expressed in the price differential between the two sides of the transaction.
Swap
A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.
Swaption
An option to enter into a swap ( i.e., the right, but not the obligation, to enter into a specified type of swap at a specified future date).
Swift
Society of Worldwide Interbank Financial Telecommunications. It is a dedicated computer network that is set up to support fund transfer messages between member banks worldwide.
Swissy
Market slang for Swiss Franc.
Switch
Offsetting a position in one delivery month of a commodity and simultaneous initiation of a similar position in another delivery month of the same commodity.
Systemic Risk
Risk that the financial markets as a whole will cease to operate or will operate inefficiently.
T
Technical analysis
The study of historical price patterns to help forecast futures prices.
Technical Analysis
An effort to forecast prices by analyzing market action through chart study, volume, trends, moving averages, patterns, formations and many other technical indicators.
Technical Indicators
The mathematical formulas used for construction of auxiliary schedules, facilitating the analysis of the market.
Temporary License
If certain conditions are met, an applicant for registration as an associated person, floor broker, floor trader or introducing broker may be granted a temporary license (TL) which allows them to conduct business in that capacity while the application is being considered.
Tender
To give notice to the clearing house of the intention to initiate delivery of the physical commodity in satisfaction of the futures contract.
Tenderable Grades
Those grades of a commodity which have been officially approved by an exchange as deliverable in settlement of a futures contract.
Terminal Elevator
An elevator located at a point of greatest accumulation in the movement of agricultural products which stores the commodity or moves it to processors.
Terminal Market
Usually synonymous with commodity exchange or futures market, specifically in the United Kingdom.
Theta
The derivative of the option price equation with respect to the remaining time to expiration of the option. A measure of the sensitivity of the value of the option to the passage of time.
Tick
The smallest allowable increment of price movement allowed for a product during a trading session. Ticks are established by the Exchange. See “minimum price fluctuation.”
Time and Sales Ticker
Part of the Chicago Board of Trade Market Profile
system consisting of an on-line graphic service that transmits price and time information throughout the day.
Time Limit Order
A customer order that designates the time during which it can be executed.
Time Spread
The selling of a nearby option and buying of a more deferred option with the same strike price.
Time Stamp
Part of the order-routing process in which the time of day is stamped on an order. An order is time-stamped when it is
(1) received on the trading floor, and
(2) completed.
Time Value
The amount of money options buyers are willing to pay for an option in anticipation that over time a change in the underlying futures price will cause the option to increase in value. In general, an option premium is the sum of time value and intrinsic value. Any amount by which an option premium exceeds the option's intrinsic value can be considered time value. Also referred to as Extrinsic Value.
Time of Day Order
This is an order which is to be executed at a given minute in the session.
To Arrive Contract
A transaction providing for subsequent delivery within a stipulated time limit of a specific grade of a commodity.
Tomorrow Next (Tom/Next)
Simultaneous buying and selling of a currency for delivery the following day.
Trading
Buying or selling of goods and services among countries called commerce. Forex Trading is the trading of Foreign Currencies.
Trade Balance
The difference between a nation's imports and exports of merchandise.
Trade Option
An off-exchange option offered to a commercial producer or user of the commodity.
Trade Practice Action Type
A violation arising from the manner of execution of trades on the floor of an exchange but not including decorum or recordkeeping matters.
Traders
Generally people who trade for their own account or employees or institutions who trade for their employer's accounts.
Trading Advisor
See Commodity Trading Advisor.
Trading Ahead
A dual trader executes a trade for his personal account prior to executing an elected customer order.
Trading Limit
The maximum number of speculative futures contracts one can hold as determined by the CFTC and/or the exchange upon which the contract is traded. Also referred to as Position Limit.
Transaction Cost
The cost of buying or selling a financial instrument.
Transaction Date
The date on which a trade occurs.
Transfer Notice
A term used on some exchanges to describe a notice of delivery.
Transfer Trades
Entries made upon the books of futures commission merchants for the purpose of:
(1) transferring existing trades from one account to another within the same office where no change in ownership is involved;
(2) transferring existing trades from the books of one futures commission merchant to the books of another futures commission merchant where no change in ownership is involved. Also called Ex-Pit Transactions.
Transferable Option (or Contract)
A contract which permits a position in the option market to be offset by a transaction on the opposite side of the market in the same contract.
Treasury Bill
See U.S. Treasury Bill.
Treasury Bond
See U.S. Treasury Bond.
Treasury Note
See U.S. Treasury Note.
Trend
The general direction of the market.
Trend Line
This is a Technical Analysis indicator also called or linear regression, which is a statistical tool used to uncover trends. It is calculated by using the "Least Squares" method. There are two ways to use the linear regression line:
a. Trade in the direction of the Trend line.
b. Construct a parallel trend channel above and below the Trend line to be used as support and resistance levels.
Turnover
The total money value of all executed transactions in a given time period; volume.
Two-Way Price
When both a bid and offer rate is quoted for a FX transaction.
U
Uncovered Option
A short call or put option position which is not covered by the purchase or sale of the underlying futures contract or physical commodity.
Underlying Futures Contract
The specific futures contract that the option conveys the right to buy (in case of a call) or sell (in the case of a put).
Unrealized Gain/Loss
The theoretical gain or loss on Open Positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains' Losses become Profits/Losses when position is closed.
Up Front Fees
Fees charged to a pool or a managed account prior to commencement of trading for the pool or account.
Uptick
A new price quote at a price higher than the preceding quote.
Uptick Rule
In the U.S., a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.
US Prime Rate
The interest rate at which US banks will lend to their prime corporate customers
U.S. Treasury Bill
A short-term U.S. government debt instrument with an original maturity of one year or less. Bills are sold at a discount from par with the interest earned being the difference between the face value received at maturity and the price paid.
U.S. Treasury Bond
Government-debt security with a coupon and original maturity of more than 10 years. Interest is paid semiannually.
U.S. Treasury Note
Government-debt security with a coupon and original maturity of one to 10 years.
Uptrend
A price trend characterized by a series of higher highs and higher lows.
V
Value Date
The date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally two business days forward. Also known as maturity date.
Variable Price Limit
A price limit schedule, determined by an exchange, that permits variations above or below the normally allowable price movement for any one trading day.
Variation Margin
Funds a broker must request from the client to have the required margin deposited. The term usually refers to additional funds that must be deposited as a result of unfavorable price movements.
Vertical Spread
Buying and selling puts or calls of the same expiration month but having different strike prices.
Versus Cash
A transaction generally used by two hedgers who want to exchange futures for cash positions. Also referred to as Against Actuals or Exchange for Physicals.
Volatility
An annualized measure of the fluctuation in the price of a futures contract. Historical volatility is the actual measure of futures price movement from the past. Implied volatility is a measure of what the market implies it is, as reflected in the option’s price.
Volume
The number of contracts in futures or options on futures made during a specified period of time. At CME, it refers to “aggregated quantity” (e.g. Total traded volume of the day).
W
Warehouse Receipt
Document guaranteeing the existence and availability of a given quantity and quality of a commodity in storage; commonly used as the instrument of transfer of ownership in both cash and futures transactions.
Wash Sale
Transactions that give the appearance of purchases and sales but which are initiated without the intent to make a bona fide transaction and which generally do not result in any actual change in ownership. Such sales are prohibited by the Commodity Exchange Act.
Wash Trading
Entering into, or purporting to enter into, transactions to give the appearance that purchases and sales have been made, without resulting in a change in the trader's market position.
Weak Dollar/ Strong Dollar
Dollar is said to be weak (relative to a previous time period) against another currency when more dollars are required to buy one unit of another currency. The dollar is strong or has gained in strength when fewer dollars are required to buy one unit of another currency. For example, if $1 buys 10 FF in 1989 but today $1 buys only 6 FF then the dollar has weakened against the franc.
Whipsaw
Slang for a condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.
Wire House
See Futures Commission Merchant.
Writer
An individual who sells an option.
Writer
The issuer, grantor, or maker of an option contract. See Option Seller.
Y
Yard
Market slang for a billion.
Yield
Return on capital investment.
Yield Curve
A chart in which yield level is plotted on the vertical axis, and the term to maturity of debt instruments of similar creditworthiness is plotted on the horizontal axis.
Yield to Maturity
The rate of return an investor receives if a fixed-income security is held to maturity.
Quick Order
See Fill or Kill Order.
Quotation
The actual price or the bid or ask price of either cash commodities or futures or options contracts at a particular time.
Quote
An indicative market price, normally used for information purposes only.
Quote
An indication of current bids and offers in the market on a particular instrument or spread.
R
Rally
A prompt rise in prices (quotations) in the market.
Random Walk
An economic theory that price movements in the commodity futures markets and in the securities markets are completely random in character (i.e., past prices are not a
reliable indicator of future prices).
Range
The difference between the high and low price of a commodity during a given trading session, week, month, year, etc.
Range
The high and low prices or high and low bids and offers recorded during a specified time.
Rate
The price of one currency in terms of another, typically used for dealing purposes.
Ratio Hedge
The number of options compared to the number of futures contracts bought or sold in order to establish a hedge that is risk neutral.
Ratio Spread
This strategy, which applies to both puts and calls, involves buying or selling options at one strike price in greater number than those bought or sold at another strike price.
Reaction
The downward price movement tendency of a commodity after a price advance.
Receiver
A person appointed by the court to receive and preserve the property or funds that are the subject of litigation.
Recession
Decrease in business activity.
Reciprocal of European Terms
One method of quoting exchange rates, which measured the U.S. dollar value of one foreign currency unit, i.e., U.S. dollars per foreign units. See European Terms.
Recovery
An upward price movement after a decline. Registered Representative A person employed by, and soliciting business for, a commission house or futures commission merchant. See also Associated Person.
Registrant
A person or firm who had properly applied for and received approval to operate in one or more of the following capacities: futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, leverage transaction merchant, agricultural trade option merchant, floor broker, floor trader, or associate person.
Registration Action Type
A violation arising from failing to properly register with a regulatory body or being statutorily disqualified from registration.
Regulatory Action
A disciplinary or remedial action taken by a regulatory body, such as the exchanges, NFA and the CFTC in enforcing its rules and the requirements of the Commodity Exchange Act.
Remand
When an appellate body sends a case back to a lower body for further proceedings.
Reparations
Compensation payable to a wronged party in a futures or options transaction. The term is used in conjunction with the CFTC's customer claims procedure to recover civil damages.
Reply
A written response to a counterclaim or a cross-claim.
Reportable Position
The number of open contracts specified by the CFTC at which one must begin reporting total positions by delivery month to the authorized exchange and/or the CFTC.
Reporting Level
Sizes of positions set by the exchanges and/or the CFTC at or above which commodity traders or brokers who carry these accounts must make daily reports about the size of the position by commodity, by delivery month, and whether the position is controlled by a commercial or non-commercial trader.
Representative
An attorney or other person who assists a party in an arbitration.
Repurchase Agreements or (Repo)
An agreement between a seller and a buyer, usually in U.S. government securities, in which the seller agrees to buy back the security at a later date.
Reserve Requirements
The minimum amount of cash and liquid assets as a percentage of demand deposits and time deposits that member banks of the Federal Reserve are required to maintain.
Resistance
A term used in technical analysis indicating a specific price level at which analysis concludes people will sell.
Resistance line
A price level above which prices tend not to rise due to selling pressure.
Respondent
A person or firm named in a disciplinary or remedial action; a person or firm alleged to have been the cause of rule violations; a person or firm against whom a claim is asserted in an arbitration or reparations matter.
Response to Notice of Intent
A written response to a Notice of Intent submitted by the named applicant or registrant.
Resting Order
An order to buy at a price below or to sell at a price above the prevailing market that is being held by a floor broker. Such orders may either be day orders or open orders.
Restitution - The act of making good, or of giving the equivalent, for any loss, damage or injury.
Restraining Order - An order often granted without notice or hearing, requiring the preservation of the status quo until a hearing can be held to determine the propriety of any injunctive relief, temporary or permanent. A restraining order is always temporary in nature and thus is often called a TRO or Temporary Restraining Order.
Resumption
The reopening the following day of specific futures and options markets that also trade during the evening session at the Chicago Board of Trade.
Retender
In specific circumstances, some contract markets permit holders of futures contracts who have received a delivery notice through the clearing house to sell a futures contract and return the notice to the clearing house to be reissued to another long; others permit transfer of notices to another buyer. In either case, the trader is said to have retendered the notice.
Retracement
A level of possible returning (correction) of the price (Forex rate) counted in a technical analysis after the occured growth or falling.
Revaluation
An increase in the exchange rate for a currency as a result of central bank intervention. Opposite of Devaluation.
Revaluation Rates
The revaluation rates are the market rates used when a trader runs an end-of-day to establish profit and loss for the day.
Reversal
A change of direction in prices. In a legal context, when an appellate body sets aside the decision of a body because of an error. A reversal is often followed by a remand.
Reverse Conversion
With regard to options, a position created by buying a call option, selling a put option, and selling the underlying futures contract. Also referred to as Reversal.
Reverse Crush Spread
The sale of soybean futures and the simultaneous purchase of soybean oil and meal futures. See Crush Spread.
Revoke
To recall a power or authority previously conferred, or annul, repeal, rescind or cancel privileges or registration. In the case of Commodity Futures Trading Commission registration proceedings, to take away a previously granted registration.
Riding the Yield Curve
Trading in interest rate futures according to the expectations of change in the yield curve.
Ring
A circular area on the trading floor of an exchange where floor traders and floor brokers stand while executing futures trades.
Risk
Possibility of suffering loss.
Risk
Exposure to uncertain change, the variability of returns significantly the likelihood of less-than-expected returns.
Risk Capital
The amount of money that an individual can afford to invest, which, if lost would not affect their lifestyle.
Risk Management
To hedge one’s risk they will employ financial analysis and trading techniques
Risk Management
The employment of financial analysis and trading techniques to reduce and/or control exposure to various types of risk.
Risk/Reward Ratio
The relationship between the probability of loss and profit. This ratio is often used as a basis for trade selection or comparison.
Roll-Over
Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies.
Rollover Rate
The daily rollover interest rate is the amount a trader either pays or earns, depending on the established margin and position in the market. To avoid rollovers simply make sure positions are closed at the established end of the market day
Round Lot
A quantity of a commodity equal in size to the corresponding futures contract for the commodity.
Round Turn
A completed futures transaction involving both a purchase and a liquidating sale, or a sale followed by a covering purchase.
Round turn
Refers to the purchase or sale of a futures contract and the subsequent sale or purchase, which closes out the position.
Runners
Messengers who rush orders received by phone clerks to brokers for execution in the pit.
S
Satisfactorily Subordinated Liabilities
Liabilities of an FCM or IB which are subordinated to the claims of all general creditors of the FCM or independent IB pursuant to subordination agreements which meet certain standards.
Scalp
To trade for small gains. Scalping normally involves establishing and liquidating a position quickly, usually within the same day, hour or even just a few minutes.
Scalper
The Forex market trader earning profit on insignificant (minimal) changes of the price (Forex rate).
Secondary Market
Market where previously issued securities are bought and sold.
Security
Common or preferred stock; a bond of a corporation, government, or quasi-government body.
Segregated Account
A special account used to hold and separate customers' assets from those of the broker or firm.
Segregated Funds
The amount of money, securities and property due to commodity futures or options customers which is held in segregated accounts in compliance with Section 4d of the Commodity Exchange Act and CFTC Regulations. Such money, securities or property may not be commingled with the money, securities and property of the FCM.
Self Regulatory Organization (SRO)
Self-regulatory organizations (i.e., the futures exchanges and National Futures Association) enforce minimum financial and sales practice requirements for their members. See also Designated Self-Regulatory Organization.
Sell on Close
To sell at the end of the trading session within the closing range price.
Sell on Opening
To sell at the beginning of a trading session within the open price range.
Seller's Market
A condition of the market in which there is a scarcity of goods available and hence sellers can obtain better conditions of sale or higher prices.
Seller's Option
The right of a seller to select, within the limits prescribed by a contract, the quality of the commodity delivered and the time and place of delivery.
Selling Hedge
Selling futures contracts to protect against possible decreased prices of commodities.
Selling Rate
Rate at which a bank is willing to sell foreign currency.
Settlement
The process by which a Forex market trading is entered into the books and records of the counterparts to a transaction. The settlement of currency Forex market trades may or may not involve the actual physical exchange of one currency for another.
Settlement Agreement
A document that spells out the terms of a resolution by the parties without an adjudication.
Settlement Date
It means the business day specified for delivery of the currencies bought and sold under a forex contract.
Settlement Price
The daily price at which the clearing house settles all accounts between clearing members for each contract month. Settlement prices are used to determine both margin calls and invoice prices for deliveries. The term also refers to a price established by the clearing organization to calculate account values and determine margins for those positions still held and not yet liquidated.
Settlement price
A figure determined by the closing range that is used to calculate gains and losses in futures market accounts, performance bond calls and invoice prices for deliveries. The official daily closing prices of a futures contract.
Short
A market position where the client has sold a currency he does not already own. Usually expressed in base currency terms. Or One who has sold futures contracts or plans to purchase a cash commodity. (verb) Selling futures contracts or initiating a cash forward contract sale without offsetting a particular market position.
Short Covering
Purchasing futures to offset a short position.
Short Hedge
Selling futures contracts to protect against possible declining prices of commodities. Opposite of Long Hedge.
Short Position
An investment position that benefits from a decline in market price.
Short Selling
Selling a futures contract with the idea of delivering on it or offsetting it at a later date.
Short Squeeze
A market situation in which the lack of supplies tends to force shorts to cover their positions by offset at higher prices.
Short the Basis
The purchase of futures as a hedge against a commitment to sell in the cash or spot markets. Opposite of Long the Basis.
Side
A side counts the buy and the sell as separate events. Each matched trades, and each contract, has two sides — the buyer side and the seller side. Taken together, these two sides equal one round turn per unit of volume. Measuring matched trade volume “per side” counts volume on each side of the trade.
SITC
Standard International Trade Classification. A system for reporting trade statistics in a common manner.
Slippage
A situation when Stop -order is carried out at more worst Forex rate, than it has been reserved at its exhibiting to the broker. Such phenomenon meets during quickly varying market. For example, it can occur after an output of the important fundamental data, during performances of known politicians. To execute the order at the set Forex rate it is not obviously possible, if the quotation overcomes the set level sharp jump. The size of slippage can vary from one item up to several tens items. Often slippage takes place at opening Forex market trading on Sunday in the evening when rates of opening differ from rates of closing.
SOFFEX
Swiss Options and Financial Futures Exchange, a fully automated and integrated trading and clearing system.
Soft
A description of a price which is gradually weakening. Also refers to commodities such as sugar, cocoa, and coffee.
Soft currency
the currency exchanged for other currencies with some restrictions.
Soft Market
More potential sellers than buyers, which creates an environment where rapid price falls are likely.
Sold Out Market
When liquidation of a weakly held position has been completed, and offerings become scarce, the market is said to be sold out.
Sole Proprietorship
A form of business organization in which an individual is fully and personally liable for all the obligations (including debts) of the business, is entitled to all of its profits and exercises complete managerial control.
Specialist System
A type of trading commonly used for the exchange trading of securities in which one individual or firm acts as a market-maker in a particular security, with the obligation to see that trading in that security is fair and orderly by offsetting temporary imbalances in supply and demand by trading for his own account.
Speculative Limit
The maximum position, either net long or net short, in one commodity future (or option) or in all futures (or options) of one commodity combined which may be held or controlled by one person as prescribed by an exchange and/or by the CFTC.
Speculative Position Limit
The maximum position, either net long or net short, in one commodity future (or option) or in all futures (or options) of one commodity combined which may be held or controlled by one person as prescribed by an exchange and/or by the CFTC.
Speculative Position Limit Action Type
A violation arising from exceeding limitations placed upon the number of contracts that may be held by a party at one time.
Speculator
The person, ready to risk means at fulfilment of trading operations for the sake of reception of profit.
Speculator
One who attempts to anticipate price changes and, through buying and selling futures contracts, aims to make profits. Does not use the futures market in connection with the production, processing, marketing, or handling of a product. The speculator has no interest in taking delivery.
Spike
Significant difference of the subsequent quotation from previous. A graphic representation of the culmination moment in the market, describing most rigid "collision" of buyers and sellers. Characterizes nervousness of the market. Spikes can appear during the moments of an output especially important news for the market. However there are situations when spikes appear on the screen without the weighty reasons; such meets in the narrow market. It either "overindulgence" of operators, or special shaking of the market.
Spot
(1) The most common foreign exchange transaction.
(2) Spot refers to the buying and selling of the currency where the settlement date is two business days forward.
Spot Commodity
Usually refers to a cash market price for a physical commodity that is available for immediate delivery.
Spot Date
In the Forex market - a delivery date of currencies for the second working day from the moment of the conclusion of the transaction.
Spot Month
The futures contract which matures and becomes deliverable during the present month.
Spot month
The nearest trading month which may or may not be the current calendar month. Usually used as the current delivery month for a commodity.
Spot/Next
A currency deposit transaction or the simultaneous purchase and sale of currency, or vice versa by means of swap for spot value day against the next working day.
Spot Next
The overnight swap from the spot date to the next business day.
Spot Price
The current market price. Settlement of spot transactions usually occurs within two business days.
Spot price
The actual current price for a currency, where it can be bought or sold in the over-the-counter market. Spot currency transactions usually settle within two business days of the trade.
Spot Trade
When you trade foreign exchange you are always quoted a spot price 2 business days in advance. This is under normal conditions where there are no bank holidays in the traded currencies countries or is not over a weekend.
Spread
The price difference between two contracts. Holding a long and a short position in two related futures or options on futures contracts, with the objective of profiting from a changing price relationship.
Spread
(1) The difference between the bid and ask price of a currency.
(2) The difference between the price of two related futures contracts. (3) For options, transactions involving two or more option series on the same underlying currency.
Spreading
The simultaneous buying and selling of two related markets in the expectation that a profit will be made when the position is offset. Examples include: buying one futures contract and selling another futures contract of the same commodity but different delivery month; buying and selling the same delivery month of the same commodity on different futures exchanges; buying a given delivery month of one futures market and selling the same delivery month of a different, but related, futures market.
Squeeze
A market situation in which the lack of supplies tends to force shorts to cover their positions by offset at higher prices.
Stable Market
An active market which can absorb large sale or purchases of currency without having any major impact on the interest rates.
Stagflation
Recession or low growth in conjunction with high inflation rates.
Standard and Poors (S&P)
A US firm engaged in assessing the financial health of borrowers. The firm also has generated certain stock indices i.e. S&P 500.
Stay
An order whereby some action is forbidden or held in abeyance until some event occurs or the issuing body lifts its order. Frequently, an order preventing the enforcement of a Decision or Order in a matter while it is on appeal.
Steer/Corn Ratio
The relationship of cattle prices to feeding costs. It is measured by dividing the price of cattle ($/hundredweight) by the price of corn ($/bushel). When corn prices are high relative to cattle prices, fewer units of corn equal the dollar value of 100 pounds of cattle. Conversely, when corn prices are low in relation to cattle prices, more units of corn are required to equal the value of 100 pounds of beef. See Feed Ratio.
Sterilization
Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the forex market.
Sterling
Slang for British Pound.
Stock Index
An indicator used to measure and report value changes in a selected group of stocks. How a particular stock index tracks the market depends on its composition; the sampling of stocks, the weighing of individual stocks, and the method of averaging used to establish an index.
Stock Market
A market in which shares of stock are bought and sold.
Stop limit order
An order that becomes a limit order only when the market trades at a specified price.
Stop Loss Order
Order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor’s position. As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49.
Stop order
An order which specifies a price at which the order is activated and becomes a limit order. A buy stop is entered above the current market and becomes a limit order when the commodity trades at or above the specified stop trigger price. A sell stop is entered below the current market. It becomes a limit order when the commodity trades at the stop price or below. The stop can immediately execute up to the limit price.
Stop with a price limit
A stop order with a specified worst price at which the order can be filled.
Stop Close Only Order
A stop order which can only be executed, if possible, during the closing period of the market.
Stop Out Price
US term for the lowest accepted price for Treasury Bills at auction.
Straddle
The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date. See spread.
Strangle
An option position consisting of the purchase or sale of put and call options having the same expiration but different strike prices.
Strike Price
The price at which the buyer of a call (put) option may choose to exercise his right to purchase (sell) the underlying futures contract.
Strip
A combination of two puts and one call.
Structural Unemployment
Unemployment levels inherent in an economic structure.
Summary Action
An action that is taken quickly and without a hearing before the action is taken.
Summary Judgment
A decision made on the basis of statements and evidence presented for the record without a trial. It is used when there is no dispute as to the facts of the case, and one party is entitled to judgment as a matter of law.
Summary Proceeding
A form of adjudication in which ordinary legal procedures are disregarded so that the issue at hand may be resolved in a timely fashion. Usually, a summary proceeding is limited to a single issue.
Supply
The quantity of a commodity that producers are willing to provide to the market at a given price.
Support
The place on a chart where the buying of futures contracts is sufficient to halt a price decline.
Support Levels
A technique used in technical analysis that indicates a specific price ceiling and floor at which a given exchange Forex rate will automatically correct itself. Opposite of resistance.
Support Levels
A term used in technical analysis indicating a specific price level at which a currency will have the inability to cross below. Recurring failure for the price to move below that point produces a pattern that can usually be shaped by a straight line. It is the opposite of Resistance levels.
Suspension
The end of the evening session for specific futures and options markets traded at the Chicago Board of Trade.
Swap
The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another. A swap can be a swap against a forward. In essence, swapping is somewhat similar to borrowing one currency and lending another for the same period. However, any rate of return or cost of funds is expressed in the price differential between the two sides of the transaction.
Swap
A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.
Swaption
An option to enter into a swap ( i.e., the right, but not the obligation, to enter into a specified type of swap at a specified future date).
Swift
Society of Worldwide Interbank Financial Telecommunications. It is a dedicated computer network that is set up to support fund transfer messages between member banks worldwide.
Swissy
Market slang for Swiss Franc.
Switch
Offsetting a position in one delivery month of a commodity and simultaneous initiation of a similar position in another delivery month of the same commodity.
Systemic Risk
Risk that the financial markets as a whole will cease to operate or will operate inefficiently.
T
Technical analysis
The study of historical price patterns to help forecast futures prices.
Technical Analysis
An effort to forecast prices by analyzing market action through chart study, volume, trends, moving averages, patterns, formations and many other technical indicators.
Technical Indicators
The mathematical formulas used for construction of auxiliary schedules, facilitating the analysis of the market.
Temporary License
If certain conditions are met, an applicant for registration as an associated person, floor broker, floor trader or introducing broker may be granted a temporary license (TL) which allows them to conduct business in that capacity while the application is being considered.
Tender
To give notice to the clearing house of the intention to initiate delivery of the physical commodity in satisfaction of the futures contract.
Tenderable Grades
Those grades of a commodity which have been officially approved by an exchange as deliverable in settlement of a futures contract.
Terminal Elevator
An elevator located at a point of greatest accumulation in the movement of agricultural products which stores the commodity or moves it to processors.
Terminal Market
Usually synonymous with commodity exchange or futures market, specifically in the United Kingdom.
Theta
The derivative of the option price equation with respect to the remaining time to expiration of the option. A measure of the sensitivity of the value of the option to the passage of time.
Tick
The smallest allowable increment of price movement allowed for a product during a trading session. Ticks are established by the Exchange. See “minimum price fluctuation.”
Time and Sales Ticker
Part of the Chicago Board of Trade Market Profile
system consisting of an on-line graphic service that transmits price and time information throughout the day.Time Limit Order
A customer order that designates the time during which it can be executed.
Time Spread
The selling of a nearby option and buying of a more deferred option with the same strike price.
Time Stamp
Part of the order-routing process in which the time of day is stamped on an order. An order is time-stamped when it is
(1) received on the trading floor, and
(2) completed.
Time Value
The amount of money options buyers are willing to pay for an option in anticipation that over time a change in the underlying futures price will cause the option to increase in value. In general, an option premium is the sum of time value and intrinsic value. Any amount by which an option premium exceeds the option's intrinsic value can be considered time value. Also referred to as Extrinsic Value.
Time of Day Order
This is an order which is to be executed at a given minute in the session.
To Arrive Contract
A transaction providing for subsequent delivery within a stipulated time limit of a specific grade of a commodity.
Tomorrow Next (Tom/Next)
Simultaneous buying and selling of a currency for delivery the following day.
Trading
Buying or selling of goods and services among countries called commerce. Forex Trading is the trading of Foreign Currencies.
Trade Balance
The difference between a nation's imports and exports of merchandise.
Trade Option
An off-exchange option offered to a commercial producer or user of the commodity.
Trade Practice Action Type
A violation arising from the manner of execution of trades on the floor of an exchange but not including decorum or recordkeeping matters.
Traders
Generally people who trade for their own account or employees or institutions who trade for their employer's accounts.
Trading Advisor
See Commodity Trading Advisor.
Trading Ahead
A dual trader executes a trade for his personal account prior to executing an elected customer order.
Trading Limit
The maximum number of speculative futures contracts one can hold as determined by the CFTC and/or the exchange upon which the contract is traded. Also referred to as Position Limit.
Transaction Cost
The cost of buying or selling a financial instrument.
Transaction Date
The date on which a trade occurs.
Transfer Notice
A term used on some exchanges to describe a notice of delivery.
Transfer Trades
Entries made upon the books of futures commission merchants for the purpose of:
(1) transferring existing trades from one account to another within the same office where no change in ownership is involved;
(2) transferring existing trades from the books of one futures commission merchant to the books of another futures commission merchant where no change in ownership is involved. Also called Ex-Pit Transactions.
Transferable Option (or Contract)
A contract which permits a position in the option market to be offset by a transaction on the opposite side of the market in the same contract.
Treasury Bill
See U.S. Treasury Bill.
Treasury Bond
See U.S. Treasury Bond.
Treasury Note
See U.S. Treasury Note.
Trend
The general direction of the market.
Trend Line
This is a Technical Analysis indicator also called or linear regression, which is a statistical tool used to uncover trends. It is calculated by using the "Least Squares" method. There are two ways to use the linear regression line:
a. Trade in the direction of the Trend line.
b. Construct a parallel trend channel above and below the Trend line to be used as support and resistance levels.
Turnover
The total money value of all executed transactions in a given time period; volume.
Two-Way Price
When both a bid and offer rate is quoted for a FX transaction.
U
Uncovered Option
A short call or put option position which is not covered by the purchase or sale of the underlying futures contract or physical commodity.
Underlying Futures Contract
The specific futures contract that the option conveys the right to buy (in case of a call) or sell (in the case of a put).
Unrealized Gain/Loss
The theoretical gain or loss on Open Positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains' Losses become Profits/Losses when position is closed.
Up Front Fees
Fees charged to a pool or a managed account prior to commencement of trading for the pool or account.
Uptick
A new price quote at a price higher than the preceding quote.
Uptick Rule
In the U.S., a regulation whereby a security may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.
US Prime Rate
The interest rate at which US banks will lend to their prime corporate customers
U.S. Treasury Bill
A short-term U.S. government debt instrument with an original maturity of one year or less. Bills are sold at a discount from par with the interest earned being the difference between the face value received at maturity and the price paid.
U.S. Treasury Bond
Government-debt security with a coupon and original maturity of more than 10 years. Interest is paid semiannually.
U.S. Treasury Note
Government-debt security with a coupon and original maturity of one to 10 years.
Uptrend
A price trend characterized by a series of higher highs and higher lows.
V
Value Date
The date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally two business days forward. Also known as maturity date.
Variable Price Limit
A price limit schedule, determined by an exchange, that permits variations above or below the normally allowable price movement for any one trading day.
Variation Margin
Funds a broker must request from the client to have the required margin deposited. The term usually refers to additional funds that must be deposited as a result of unfavorable price movements.
Vertical Spread
Buying and selling puts or calls of the same expiration month but having different strike prices.
Versus Cash
A transaction generally used by two hedgers who want to exchange futures for cash positions. Also referred to as Against Actuals or Exchange for Physicals.
Volatility
An annualized measure of the fluctuation in the price of a futures contract. Historical volatility is the actual measure of futures price movement from the past. Implied volatility is a measure of what the market implies it is, as reflected in the option’s price.
Volume
The number of contracts in futures or options on futures made during a specified period of time. At CME, it refers to “aggregated quantity” (e.g. Total traded volume of the day).
W
Warehouse Receipt
Document guaranteeing the existence and availability of a given quantity and quality of a commodity in storage; commonly used as the instrument of transfer of ownership in both cash and futures transactions.
Wash Sale
Transactions that give the appearance of purchases and sales but which are initiated without the intent to make a bona fide transaction and which generally do not result in any actual change in ownership. Such sales are prohibited by the Commodity Exchange Act.
Wash Trading
Entering into, or purporting to enter into, transactions to give the appearance that purchases and sales have been made, without resulting in a change in the trader's market position.
Weak Dollar/ Strong Dollar
Dollar is said to be weak (relative to a previous time period) against another currency when more dollars are required to buy one unit of another currency. The dollar is strong or has gained in strength when fewer dollars are required to buy one unit of another currency. For example, if $1 buys 10 FF in 1989 but today $1 buys only 6 FF then the dollar has weakened against the franc.
Whipsaw
Slang for a condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.
Wire House
See Futures Commission Merchant.
Writer
An individual who sells an option.
Writer
The issuer, grantor, or maker of an option contract. See Option Seller.
Y
Yard
Market slang for a billion.
Yield
Return on capital investment.
Yield Curve
A chart in which yield level is plotted on the vertical axis, and the term to maturity of debt instruments of similar creditworthiness is plotted on the horizontal axis.
Yield to Maturity
The rate of return an investor receives if a fixed-income security is held to maturity.
