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Glossary
100% Equities Strategy
100% equities strategy is a strategy where individuals, mutual funds, or hedge funds choose to invest only in equity securities, which are considered riskier than bonds. In order to warn investors of the risk associated with this strategy, companies will advertise in their prospectus that their fund is 100% placed in equities.
As with most risky investments, the potential returns from a 100% equity strategy can be quite significant. This is especially true when you invest over a long period of time and can handle the ups and downs of the market. A mixed portfolio safeguards your money from certain risks (i.e. sector, company), but there are market risks out there that can always impact equities.
Like all stocks, equities respond to the conditions of the economy. Higher inflation and a struggling economy hinder the flow of cash of equities, but when the GDP is up and the inflation rate is lower, equity investments will thrive.
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19c3 Stock
The 19c3 stock is classified according to the time of its listing and qualifies any stock in an equity exchange past April 26, 1979. The specific name derives from SEC rule 19c3, which stipulates the allowance of making off-board transactions. With this type of stock, exchange members are able to trade off the board rather than at the exchange. This regulation, especially in the modern age of online trading, allows investors the access to complete exchanges away from the physical location. With the 19c3 stock, the National Market System began to emerge.
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2 Day Trading
It’s high time you test your day trading knowledge. You may very well be surprised by what you learn beyond these 2 day trading essential facts from the Gryphon Daily website. This particular stock market practice is challenging, in-the-moment, and not for anyone. Those who do undertake day trading with 1) awareness and 2) disciplined determination, however, win big.
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3 Hidden Penny Stocks
A well-diversified portfolio captures market gains whenever the opportunity exists. Never limit your investing vehicles just because you don’t understand them. Do your research to put your money at work for you. Penny stocks reduce downside risk, teach you how to identify undervalued companies, and can potentially multiply your investment return. These are just 3 hidden penny stocks benefits for your profiting portfolio system.
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3-6-3 Rule
The 3-6-3 Rule is an “unofficial rule” that the banking industry operated under at one time that depicted the industry as being simplistic and lacking competition. The rule states that bankers receive 3% interest on a depositor’s account, lend deposits cash with 6% interest and then are off to play golf by 3 p.m. This basically states that banks only make money by loaning money at a higher rate than what it pays to depositors. Now, loose regulations and technological advances have made banks more competitive and complex in their business practices.
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5 Trading Tactics That Beat The Market
Looking for at least 5 trading tactics that beat the market? The more you research and attain market knowledge, the better equipped you will be to outperform the average traders and gambling guessers. Read more about risk management, diversification, penny stocks, day trading, and stop loss orders as just 5 trading tactics that beat the market with consistent, lucrative returns. Get smarter with your nest egg today.
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52 Week High/low
This common term refers to the highest or lowest price a particular stock reached in a single day of trading within a one year period. This number is extremely important to investors and market analysts as it is a strong indicator of the overall performance of the stock.
When a stock reaches a new 52 week high, it is a good sign that the company is doing good business and will continue to be on the right track. Traders recognize this and are instantly drawn to the stock since it guarantees regular profits, at least for the time being. If new 52 week highs occur in a lot of stocks, the market as a whole will experience a big upswing and a bull market could potentially emerge as a result.
Unfortunately, stocks are also subject to reaching new lows within the period of a year. This negatively affects the stock and can even mean bad things for the broader market. When a new low is announced, people selling off shares and short sellers trying to make a profit only force the price of the stock down even lower.
New 52 week highs and lows occur every single day. Market analysts pay attention to the number of new highs and new lows and use that information, along with other tools, to make predictions about the direction of the market as a whole.
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52 Week Range
The 52 Week Range displays the lowest and highest trading prices for a stock over the year. This data can be used by technical analysts to identify price patterns within a particular stock that can be used to determine future trends.
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8 Things You Must Know About The Market Now
The broad market is constantly in flux, and your due diligence will really pay off as you stay up on the latest trend. There are at least 8 things you must know about the market now. The more you read, pay attention, and stay aware, the closer your trading system will resemble the success of the stock market professionals and Wall Street bests.
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911 Insider Trading
“911 Insider Trading Hotline, how can I help you?”
“Help! My broker is taking advantage of me, my profit margins are scant, and I’m not getting anywhere with my strategies. Where’s the money?”
“You don’t need to cheat the markets to make money. You can legitimately sweep up enormous profitable returns. Start evaluating your trading system to turn objective decision-making into a winning process today.”
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A Ton Of Money Rule
A Ton of Money Rule is a term that is used in reference to a substantial amount of money. While the concept of a ton of money may vary, the Bureau of Engraving and Printing reports that a ton of $1 bills would add up to $908,000.
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Abandoned Baby
Abandoned baby is an infrequent type of candlestick with a reversal pattern. The pattern is used to illustrate the gap followed by a Doji. After the Doji, an additional gap will appear in the opposite direction. The Doji shadows must gap above or beneath the shadows for the first and third day.
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Abc Agreement
This lays down certain terms and conditions between a purchasing member with a NYSE seat and that person’s place of employment. When the NYSE supports these conditions, the firm is A) Able to shift the seat to another employee, B) Keep the seat and buy another for someone else working there, or C) Sell the seat and shift the profits to the company. These three conditions comprise the ABC in the name.
These are important because the firm is paying for the seat that the individual is using. By making an ABC agreement, the firm insures that the employee can’t hurt the company’s ability to trade on the NYSE if he/she leaves the business.
The Exchange creates these restrictions so dishonest brokers from the firm are not representing these seats. This targets the company, not the individual. As a result, the firm wants to finance the seats to watch the activity of employees. If they don’t abide by the restrictions, the seat can be lost and other penalties may be imposed.
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Abnormal Returns
Abnormal returns are not a result of systematic factors – influences market-wide. The abnormal returns are beyond what is expected by the market movement. This is shown as the difference between the security’s expected return and what the return actually is.
The abnormality can be the result of events such as dividends, announcements, mergers, company earning announcements, increases in the interest rate, lawsuits, and so forth. All of these could create an abnormal return situation.
Financial events can be categorized as information that has not yet been factored into market prices. Specific to the stock market, the abnormal return represents the discrepancies in the performance of an individual stock or a portfolio over time compared to average market performance. The average market performance can be determined using a broad index like S&P 500 or by an index that’s national such as the Nikkei 225.
Say a stock increases by 6% because some event triggered the stock price changing. If the average market only increased by 2%, then 4% would be the amount of the abnormal return. If the average of the market does better than the individual stock or portfolio, then the abnormal return is a negative amount.
AbnormalReturn = ActualReturn − NormalReturn
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About Offshore Banking
What do you know about offshore banking? The mainstream media has given this sophisticated investing process a bad rep, so forget the misconceptions about offshore banking. Opening an account outside of the jurisdiction you live expands profitable opportunities legally and strategically. The globe is shrinking with each modern invention, and the global investors are making the most money.
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About Online Trading
The more you know about online trading, the better prepared you will be to face the market’s challenges. The fast-paced instant access of online trading elicits emotional and nonsensical decisions from all levels of traders. When you know more about online trading, this familiarity can help you hone a trading system with reliable, calculated results.
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About Options Trading
You need to learn all about options trading because your money management plan is incomplete without it. Anyone who would dismiss options trading as too risky or not worthwhile knows little about options trading. For a fraction of the price to buy the stock outright, you can leverage greater market access with a bird’s eye view of how prices are moving with this investing vehicle.
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Accounting Cost
Accounting cost refers to the total amount of money or wares that are spent in an endeavor.
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Accounting Noise
Accounting noise is a term that refers to a misinterpretation of company financial statements as a result of accounting rules and regulations. Accounting noise has the potential to make financial reports look better or worse. It can also make it difficult for investors to easily determine a company’s actual financial situation. It is always helpful to pay close attention to footnotes on financial reports to look past potential accounting noise.
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Accounting Profit
Accounting profit is a company’s total earnings that is determined by Generally Accepted Accounting Principles (GAAP). This includes the costs of operating the business, such as interest, taxes and depreciation. Compared to economic profits, accounting profits are usually higher because they omit implicit costs, such as opportunity costs.
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Accumulation
Accumulation is amassing assets or preserving the gains a corporation earns and re-employing them within the company.
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Accumulation Swing Indicator
Accumulation swing indicator is a barometer traders employ to predict the direction will take over an extended duration.
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Acquisition
An acquisition is when an acquiring company buys most of a target company's ownership stakes to gain controlling interest of the target company. Acquisitions fall into one of two categories - friendly or hostile. In the case of a friendly acquisition, the target company is in agreement with the acquisition. In a hostile acquisition, the acquiring company will purchase large stakes in the target company to gain controlling interest. Acquisitions are usually paid in cash and/or the acquiring company's stock.
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Across- Commodity Spillover
Across-commodity spillover effect happens when the technology developed can be applied to other commodities.
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Across- Location Spillover
Across- location spillover can also be referred to as an across-environmental spillover. This affects the circumstances in which a technology is developed for one crop in a precise location that can be implemented to improve the production efficiency of the same crop at another location.
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Active Box
The term active box refers to the location where a brokerage firm keeps collateral that is used to secure margin positions or loans that are issued to brokers. The collateral has to be owned by the firm or held on behalf of the customer and is usually in form of securities.
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Active Portfolio Strategy
Active portfolio strategy forecasts techniques by utilizing information with the goal of maximizing portfolio performance. A titled portfolio is a common index method in active management. Key economic issues like interest rates and inflation, taken with performance factors enable investors to read the market.
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Actively Managed Etf
Actively managed ETF is an exchange-traded fund whose blueprint for management goes outside the scope of a standard index to pursue profits. Actively managed ETFs are overseen by real people who rely on intuition, research and real-time happenstance to make investment decisions.
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Actual Market
An actual market is where commodities are bought and sold for cash and has immediate delivery. Commodities are tangible goods, and involve such various types of products such as grain, gold, crude oil or RAM chips.
In an actual market, a seller has goods to sell for cash and looks for a buyer who has cash. There are no lengthy processes to go through, no financing to arrange, and no delay while funds are obtained and transferred. It is a quick and easy exchange where the seller releases the goods to the buyer and the buyer delivers the agreed amount of cash to the seller.
There are advantages of the actual market for both the buyer and the seller. For buyers, they can quickly secure what is desired, with no need to go through any type of background checks or verification of credit rating and for sellers, the return on the goods is realized immediately.
With the actual market, there are basic rules of operation that are obligatory by both governmental agencies and the trading industry and are in place for the protection of both the buyer and the seller in an actual market.
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Adr Advantages And Disadvantages
ADR Advantages:
ADRs are bought and sold as traded through the U.S. market and then settled in U.S. dollars.
Before receiving your dividends or other cash payments, the depositary bank will convert the return into U.S. dollars. If specified by the investor, the depositary bank may vote your shares for you.
ADR Disadvantages:
Information may not be received on time since it passes through an extra set of hands. In this case, you may find out too late about a meeting you needed to attend because you could have voted your shares.
Obviously, the depositary bank will charge a fee in return for performing its services. The fee will be deducted from the dividends and other distribution on your shares.
Top 10 predictive codes of behavior in ADRs:
1. Earnings trend past 6 quarters
2. Institutional ownership
3. Number of shares outstanding
4. Technical strength price breakout
5. Insider buying
6. Option liquidity
7. Cash
8. Price to book ratio
9. Bug information
10. Product pipeline
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Adr's - Why Invest In Foreign Markets?
Diversification: You want to diversify your portfolio by spreading your investment risk across foreign industries. It is beneficial to expand to other markets with a different economy from the financial climate of the United States.
Growth: Investors benefit from the potential growth of foreign economies, particularly emerging markets.
Exposing your portfolio to both domestic and foreign stocks reduces your risk of money loss, and your portfolio on the whole will have smoother investment returns. International investment market returns can move in a different direction than the U.S. market.
Individual ADRs correspond to one or more shares of foreign stock or a portion of the share. It is more convenient to own the ADR than to obtain the foreign stock the ADR represents even though you do have to right to do so. ADR prices correspond to the price of the stock in its home market.
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Advanced Options Trading
Any trader can decide to buy an option. Advanced options trading occurs when the trader is aware of the necessary research, diligence, and training necessary to select the right side of the winning trade. When you are able to predict how the future price action will move, you gain the stock market edge to speculate the winners with less guesswork and more market expertise. With the right resources, you could begin advanced options trading.
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Advanced Technical Analysis
How challenging do you think advanced technical analysis actually is? If you feel daunted by the task ahead, remember that only a solid education separates you from the professionals. When you are serious about this undertaking, advanced technical analysis can be a skill acquired effectively for your portfolio’s growth.
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Adx
ADX gauges the durability and longevity of a market tendency.
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Affluenza
Affluenza refers to a social condition characterized by a strong desire to be wealthy or successful. This usually occurs throughout cultures that boast financial success as a high achievement. Some critics would say that the United States is affected by affluenza because the culture takes pride in possessions and financial success.
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After Hours Best Ask
The best ask is the established price for a Nasdaq asset during the After Hours market. This price represents how much the owner is willing to sell the security for and may also be referred to as the ask price.
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After Hours Best Bid
When trading Nasdaq assets in the After Hours market, the best bid represents the amount that the buyer agrees to pay to obtain the security.
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After Hours High
During after hours trading, the after hours high stands for the maximum price paid by a security purchaser during that session.
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After Hours Last Sale
The Nasdaq member firm reports the transaction prices to the Nasdaq via this electronic entry, indicating pricing during the after hours session. This trade report has to be turned in to the Nasdaq no later than 90 seconds following the trade’s execution.
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After Hours Low
During after hours trading, the after hours low stands for the minimum price paid by a security purchaser during that session.
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After Hours Percentage Change
In this after hours measurement, the percentage change signifies the increase or decrease between the most recent sale and the market close.
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After Hours Stock Trading
Don’t forget a crucial part of after hours stock trading – the careful research to bolster your positions and the analysis of your techniques to find improvement. Once you have completed a trade, you can look back on how the price action moved to better understand the market’s direction. Especially when you evaluate your losses, you limit downside loss in the future and strengthen your abilities as a smart money trader.
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After Hours Trading
After hours trading refers to the purchasing, selling or dealing of a stock after the exchange has officially shut down for the day. These deals are still subject to the exchange’s rules.
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After Hours Volume
The number of securities traded after hours indicates the After Hours volume, measured electronically by a Nasdaq member’s entry. The trade report is given to the Nasdaq no later than 90 seconds after the trade is executed by this member firm. The purpose of this report is to refresh the amount of shares that comprise each transaction.
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After The Bell
After the bell is a phrase that refers to the period of time after the formal close of an exchange’s trading hours. The phrase originates from the bell that is rung at the end of each trading day on the New York Stock exchange. Corporations may announce important information or news “After the bell.”
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Aggregate Demand
Aggregate demand is a representation of the total amount of services and goods that are demanded in an economy at a specific overall price level during a specified time frame. This model can be seen as a way of identifying the relationship between the quantity of output that a company is willing to produce and the price levels.
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Aggregate Market
Aggregate market is an economic model that relates the price level and real production used to analyze gross production, inflation, unemployment, business cycles, stabilization policies and pertinent macroeconomic phenomena. This model captures the relation between aggregate demand and short-run and long-run aggregate supply.
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Aggregate Stop Loss
Stop Loss coverage allows employers to regulate their health insurance commitment within self-insurance plans through Specific and Aggregate Stop Loss coverage. Stop Loss insurance shields the employer from shouldering the heavy financial burden of unforeseen medical costs.
Unlike the Specific Stop Loss, this self-insurance coverage incorporates every employee in the overall threshold. The coverage protects the business from unusual high-cost claims that are outside of the standard or expected medical expense bracket. The Aggregate, then, represents the quantity of claims as opposed to the quality of one astronomically high claim.
Aggregate Stop Loss protects the employer when the group has collectively reached this maximum. The stop loss policy takes effect when the employer’s threshold has been met by the collective workspace. For Aggregate, the threshold is calculated based on the employer’s estimated group health claim cost annually. The annual aggregate deductible can also be referred to as the Aggregate Attachment Point.
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Aggregate Stop Loss Coverage
Stop Loss coverage allows employers to regulate their health insurance commitment within self-insurance plans through Specific and Aggregate Stop Loss coverage. Stop Loss insurance shields the employer from shouldering the heavy financial burden of unforeseen medical costs.
Unlike the Specific Stop Loss, this self-insurance coverage incorporates every employee in the overall threshold. The coverage protects the business from unusual high-cost claims that are outside of the standard or expected medical expense bracket. The Aggregate, then, represents the quantity of claims as opposed to the quality of one astronomically high claim.
Aggregate Stop Loss protects the employer when the group has collectively reached this maximum. The stop loss policy takes effect when the employer’s threshold has been met by the collective workspace. For Aggregate, the threshold is calculated based on the employer’s estimated group health claim cost annually. The annual aggregate deductible can also be referred to as the Aggregate Attachment Point.
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Aggregate Supply
Aggregate supply refers to the total supply of goods that are produced by an economy at a specified overall price level within a given time frame. This is represented by the aggregate-supply curve that describes the relationship between price levels and the amount of output that a company is willing to provide.
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Aggregate Supply Curve
The aggregate supply curve displays the amount that will be supplied by a company in the economy at each price level. Many economists argue that the shape differs between short-run and long-run. There may be an increase in output with increased demand in the short-run. However, in the long-run, increases in demand are inflationary.
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Aggressive Growth Fund
Aggressive Growth Fund is a type of mutual fund that is also referred to as a performance fund. This fund aims to realize the maximum capital gains possible by investing in companies that show the potential to experience very rapid growth over a long period of time. Aggressive growth funds tend to perform proportionally to the general market. Large profits are very likely during economic upswings, but in an economic downturn, aggressive growth funds can plummet.
Aggressive growth funds can invest in a company’s initial public offering with the hope of reselling those shares quickly for a larger profit. This strategy is particularly risky since no one can predict how a new company’s stocks will perform in the early stages. Investing in options is one other way aggressive growth funds try to maximize the potential for big returns. Some aggressive growth funds even utilize hedging and short selling strategies to reduce risk.
Aggressive growth funds are not designed for the risk-averse investor. The prospect of long term capital gains comes with a lot of uncertainty and there are no guarantees.
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Air Pocket Stock
The term air pocket stock is used to describe an unanticipated drop in the price of a stock. The falling stock price associated with an air pocket stock tends to occur after negative news is released about a company to its shareholders. Shareholders are very sensitive to both positive and negative news regarding a company. The air pocket stock got its name because the falling price pattern is likened to when an airplane hits an air pocket during flight and drops suddenly.
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Algorithmic Trading
Algorithmic trading is a trading structure that uses mathematical equations to decipher the appropriate approach to take in the financial market. The built in restrictions to the system assist in establishing an optimal time period. The algorithmic trading is characterized by dividing the smaller lots of shares by the large blocks of shares. Large institutional investors frequently use the algorithmic trading system.
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All About Market Timing
The best traders are all about market timing. It is not enough to separate the bulls from the bears to land the right side of the trade. As you speculate about the movement of a price, you must consider when to enter and exit positions. Gryphon Daily can help you understand exactly how to utilize entry and exit strategies for maximum investment returns all about market timing.
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All Weather Fund
All Weather Fund is a term that describes a mutual fund built to perform well regardless of the market conditions. Portfolio diversification is the biggest key to weathering poor economic conditions and, in turn, thriving in a good economy. A healthy combination of asset classes must be present in an all weather fund in order to perform up to expectation. All weather mutual funds also protect themselves with hedging strategies.
There is no real formula for creating an all weather mutual fund portfolio. The most important thing is to research fund types to make sure that their characteristics balance one another out. For example, a good All Weather Fund can be a solid mixture of equity stocks and fixed income funds.
While combining asset classes is the most direct way to achieve the ultimate all weather fund, hedging has also become a popular strategy among investors seeking protection from market volatility. By mixing long and short positions that adjust to the conditions of the market, investors improve their chances of creating an all weather mutual fund.
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Alligator Spread
Despite indicating positive trends in the market, the alligator spread is still unprofitable because of the size of clients’ commissions. The commissions are so elevated because the put options and call options are together. Imagine the alligator swallowing up its meal because that is how the investors’ profits get absorbed. See Box Spreads.
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Alphabet Rounds
This is the name given to the initial phases of funding for a startup company. The phases are broken out into specific terms starting with ‘Series A’ financing, followed by ‘Series B’, ‘Series C’ and so on.
These first rounds of funding are financed by early investors and Venture Capital firms who are willing to take big risks on new companies in the hope of realizing big future gains. These firms invest in new companies with a plan to exit in about 3 to 7 years.
Series A marks the first round of financing for a company after the initial seed money. Financing at this stage can occur in the form of preferred stocks with anti-dilution protection for the investor. At this point, the business should be earning revenue from its business model, but not necessarily be generating cash flow.
Series A financing may be all that is required for a company to get off the ground and start bringing in revenue on its own. In the event that further rounds of financing are needed, the company will need to prove that it will provide a solid return on investment for the original Venture capitalists.
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Alternative Energy Etf
An alternative energy ETF is a specific type of sector fund that invests only in companies that are involved in the research and development of alternative energy sources. As the world’s natural resources face supply issues, people will need to start relying on non-traditional energy sources. This means that the popularity of alternative energy investments can only get stronger.
Alternative energy ETFs are considered a narrow investment, but also one that is in high demand. These factors taken together make alternative energy ETFs a highly profitable investment option. However, the narrow focus of alternative energy ETFs puts investors at risk for major losses.
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Alternative Energy Investing
In this day and age, the hottest trends and international buzzwords create massive movements in the stock market’s action. When you are in-the-know, you can get ahead of the trend to achieve enormous returns. Alternative energy investing is the new wave of hype, as countries spanning the globe seek environmentally friendly “go green” solutions. Put the green back in your pockets with alternative energy investing.
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Alternative Energy Investment
Have you considered an alternative energy investment to catapult your profiting portfolio? If not, you are missing out on a major emerging trend and an investing vehicle that should not be ignored. Learn more about how you can energize your portfolio with an alternative energy investment in solar, wind, and other eco-friendly power solutions.
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Alternative Energy Investment Act
The Alternative Energy Investment Act was introduced by Senator Mary Jo White to ‘fuel’ the development of renewable energy. With the absence of new taxes, the Alternative Energy Investment Act intended to encourage consumers to use less energy. This $650 million program went toward alternative energy technology development, and the funding of initiatives to help consumers cover more energy-efficient costs.
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Alternative Energy Investment Fund
The benefits of an alternative energy investment fund are multifaceted and should be explored for maximum investing results. The recent international trends have favored the alternative energy investment fund, and you need to know what and why before the most ‘empowering’ opportunities disappear.
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Alternative Energy Investment Funds
Alternative energy investment funds is a professionally managed collection of money placed in stocks, bonds, short-term money market or other securities geared toward environmentally impacted companies specializing in alternative energy. Investment funds can generate a substantial amount of profit over time and is regulated by a professional within the field.
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Alternative Energy Investment Opportunities
So many investors are completely unaware of the astounding alternative energy investment opportunities available today. Find out how to gain the edge on the Wall Street action today, and how you can enter the realm of alternative energy investment opportunities to capitalize on the worldwide “going green” campaign.
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American Depositary Receipt - Adr
This system, first implemented in 1927, allows investors to purchase shares of foreign companies and trade them on the NYSE, AMEX or Nasdaq. Because foreign stocks trade at different prices and in different currencies, American investors were finding it very difficult and expensive to expand into the global markets.
As a result, American banks began buying large amounts of foreign shares to reissue to investors in the United States. With the introduction of the American Depositary Receipt, investors started reaping the benefits of diversifying their portfolios with foreign stocks without having to deal with hefty transaction fees and other administrative costs.
American Depository Receipts open up a world of trading opportunities for investors. Since these stocks are traded on U.S. Exchanges, investors have the ability to realize returns from foreign investments in U.S. dollars.
While American Depository Receipts provide a relatively easy avenue for investing abroad, there are always risks to consider. Political and economical events in the home country of the ADR can adversely affect its performance. Fluctuating currency and exchange rates can also impact the price of the stock.
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Angel Bond
An angel bond is a term that is used to describe an investment-grade bond that pays a lower interest rate because of the issuing company’s high credit rating. This is in direct contrast to a fallen angel bond which is often called a junk bond due to the high risk nature.
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Angel Investor
An angel investor is a wealthy individual who provides financial capital from personal funds for smaller startup companies. Angel investors differ from venture capitalists or other institutional investors because they focus a lot on the success of the business as opposed to the potential profit. For this reason, angel investors tend to be a little more lenient than traditional lenders.
Angels, like all investors, will want something in return for their investment. Since angel investors operate as individuals, each one will have different expectations regarding their involvement in the company. Some will insist on practically running the company while others will provide the capital and take a backseat. It all depends on the individual.
Since angel investors can potentially be very involved in the business, it is very important for a business owner to feel comfortable with their investor. The relationship has to endure the ups and downs associated with a new business endeavor. It is also important for the business owner to keep the investor happy in the event that future funding is required.
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Anglo Irish Bank Offshore
When most investors evaluate offshore banking, they think of offshore accounts in the Caribbean, reminiscent of a James Bond 007 blockbuster movie. The European jurisdictions, especially the opportunity for an Anglo Irish Bank Offshore, provide a range of opportunities most investors can’t even fathom. Your Anglo Irish bank offshore could be your passport to bigger and better profit-building in the markets.
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Ankle Biter
An ankle biter refers to a stock that possesses a market capitalization below $500 million. While these particular issues give the appearance of being more speculative than those with higher market capitalization, ankle biters are actually considered to have a significant growth potential and usually outperform the larger stocks. It is said that small cap stocks bite at the ankles of large cap stocks and will eventually transcend the larger market cap stocks.
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Annual Earnings
Annual earnings are the revenue received from earnings or investments in a calendar year.
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Annuity
An insurance company pays annuity out consistently to a policyholder. The financial institution takes in and expands individual funds. When this sum of money undergoes annuitization, the institution then pays back out to the individual over time. A primary function of annuity is to create a stable cash flow or allowance for a person who has retired.
Many factors can affect how the annuity is structured. These details can include the length of time that the institution will have to pay out. When annuitization occurs, the terms can be drawn up such that payments will continue for the annuitant and his/her spouse’s entire life. On the other hand, the annuity can occur over a fixed time frame unrelated to the life span of the annuitant.
Variable annuities serve as a type of investment because the amount of money changes over time. The annuitant may enjoy a higher payment because the annuity fund profited. Conversely, the payments could be low if the investment does not do well. When the investment performs poorly, the cash flow is less reliable than in a fixed annuity.
Fixed annuity minimizes this kind of risk but does not give the option to grow the investment. The type of contract selected will best represent the needs of the annuitant. The flexibility to work with these needs is addressed when the annuity contract is drawn up.
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Annuity Certain
The annuitant selects an annuity plan that pays out every month. The financial institution will keep paying on this regular basis for an established period of time. This gives the individual a certain monthly amount of income, and the time frame is typically a decade.
The terms of this agreement guarantees these funds to the annuitant with no exceptions. If the individual passes away, designated beneficiaries will inherent the remainder of the annuity. The annuity certain offers a higher amount of payment than the Life Annuity. This is because the insurance company understands the details of the liability. Payments depend on how long the annuitant lives with the Life Annuity.
When the fixed time period expires, the individual stops receiving the payments. The person may opt to buy gradually through regular payments or by paying out in one bulk sum. The payments made all at one time are typically right at or around the retirement of the annuitant. This may also be referred to as Certain Annuity or Term Certain Annuity.
Purchasing this product poses the risk that the annuitant will live longer than the fixed payment plan. This can result in running out of money. This product does have a major benefit through its tax break. The status is tax-deferred, so the wealthier investors can buy these to get a bit of a break on taxes.
Term certain annuities make periodic payments to the annuitant over time, but once they're done, they're done. The main risk involved in purchasing a product like this is that you may outlive your annuity and be left with no money to live off of. For this reason, term certain annuities should only be purchased under the guidance of a reputable financial professional.
Because of the tax-deferred status of insurance products, many wealthy investors or above-average income earners choose to purchase term certain annuities for the tax advantages they offer. See fixed annuity for the opposite scenario.
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Annuity Due
This type of annuity specifies that immediate payments must be made. The annuity will not be dispensed at the end of a given timeframe but instead at the very beginning. It’s basically like paying your mortgage or your car payment by the first of every month. Other examples of annuities due are savings deposits and insurance premiums.
The payment of the annuity compounds for one additional period. Therefore, the annuity due value equals the value of the regular annuity (i) times (1+i).
A regular annuity is distributed at the end of each period. Individual finance utilizes annuity due and reverses the typical timeframe. Another example of annuity due is lottery payments, which are also allocated to the winner on the first of the month for a fixed period of time. In contrast, the annuitant could establish annuity in arrears.
Annuity in arrears: This involves the regular payment that’s due at the end of the period.
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Annuity Factor
This is an arithmetic calculation that figures how much the annuitant could withdraw without incurring a penalty. The annuity factor method is somewhat similar to the amortization method. The value of the annuity is divided into the balance within the account.
Figures are based on how old the annuitant was when the account was created with another unit tacked on each year thereafter. The figure will tell the individual in the plan how much can be withdrawn once a year without penalty. The primary factor in this particular calculation is age and time duration.
Without the penalty, the investment is not harmed. Freeing up money when necessary will mean that the person won’t need to take out a loan. That type of borrowing can lead to a monetary setback. After that time of financial difficulty, the individual can put back those funds with no harm done.
Even still, calculating the annuity factor and withdrawing money should be done conservatively. Depleting funds definitely goes against saving for the future time, and often, these funds will not be replaced. Withdrawing money from a retirement account should be a carefully weighted decision. The annuity factor shouldn’t be used as a tool to take as much out of the account as possible.
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Anonymous Trading
Anonymous trading refers to the practice of making bids and offers on a market without revealing the identity of the bidder and seller that is involved. The practice of anonymous trading is generally performed by well-known investors who wish to carry out trades without any speculation and scrutiny from others.
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Anti- Dilution Provision
If a company decides to issue new shares of stock at a lower price at a later round of financing, the value of the existing shares is reduced. An anti-dilution provision is a common contract associated with venture capitalism and convertible preferred stock that protects investors against this type of stock dilution.
There are two types of anti-dilution provisions: full ratchet and weighted average. Full ratchet anti-dilution provisions protect the ownership percentage of the existing shareholders. Through this clause, they have the ability to purchase more company shares at the lower offering price up to their original percentage of ownership.
Investors obviously view anti-dilution provisions as a necessary component when getting involved with start-ups, but some critics feel that it provides a little too much protection. Anti-dilution protection reduces a lot of the risk involved with investing in new companies.
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Appreciation
Appreciation is the upward trend in the value of an asset over a period of time. This increase can be triggered by numerous factors, including increased demand, weakening supply or it can result from changes in inflation or interest rates.
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Arbitrage
Arbitrage is a specific kind of portfolio or transaction that theoretically produces risk-free profits. Arbitrage strategies may be employed when two similar stocks show slight price differences. These exchanges can be minimal profitable once the cost of the transaction is deducted. That’s why arbitrage is primarily utilized by businesses with small transaction costs. Larger quantity arbitrage transactions bring these small profits up since the individual exchanges are low.
Arbitrage is technically an ideal strategy when used correctly because no capital needs to be invested, and therefore money cannot be lost but can be gained. When the price discrepancies do not occur, the market is Arbitrage Free or a No Arbitrage Market.
Arbitrage may also refer to a speculative transaction or portfolio that is leveraged.
Arbitrage strategies are typically implemented in connection with hedge funds. Speculative trading strategies make use of four main arbitrage approaches: statistical, merger, fixed income, and convertible. These strategies are all associated with speculative arbitrage versus the true arbitrage involved in profiting from minor price discrepancies. True arbitrage is a much less common practice because, in reality, the risks increase as factors like credit exposure, timing, and liquidity come into play.
Theoretical finance theories speculate that true arbitrage would not be possible in a market at equilibrium. Arbitrage-free pricing refers to the notion that prices are always established such that no true arbitrage can occur. Theories about the market will most likely be referencing true arbitrage opportunities – not the speculative strategy. The speculative is going to be the relevant topic when related to trading or managing a portfolio. The two types of arbitrage get confused because the difference is rarely specified, so it is up to the investor to understand whether the situation is true or speculative.
Connected to the topic of the Zero-Investment Portfolio, the arbitrage process is the purchasing of securities and simultaneous selling of those similar securities, same quantity but different market. Arbitrage may also encompass buying and selling securities within the same market, but importantly, the securities must be equivalent in value.
Arbitrage essentially reduces the risk of financial loss - much as the zero-investment portfolio does. Also similarly, this equalizing movement safeguards the investment from sudden shifts in the market. Ultimately, these securities are virtually unaffected by taxes, and the investor can enjoy the safety of this low-risk situation.
This kind of investment involves a keen eye for stock market trends, so the investor may ascertain the value of securities. For the individual looking to minimize risk and avoid sudden market shifts, the zero-investment portfolio and arbitrage process will be a viable investing route.
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Arbitrage Strategy
Connected to the topic of the Zero-Investment Portfolio, the arbitrage process is the purchasing of securities and simultaneous selling of those similar securities, same quantity but different market. Arbitrage may also encompass buying and selling securities within the same market, but importantly, the securities must be equivalent in value.
Arbitrage essentially reduces the risk of financial loss - much as the zero-investment portfolio does. Also similarly, this equalizing movement safeguards the investment from sudden shifts in the market. Ultimately, these securities are virtually unaffected by taxes, and the investor can enjoy the safety of this low-risk situation.
This kind of investment involves a keen eye for stock market trends, so the investor may ascertain the value of securities. For the individual looking to minimize risk and avoid sudden market shifts, the zero-investment portfolio and arbitrage process will be a viable investing route.
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Are Bonds A Good Investment
If you have to ask, “Are bonds a good investment,” then you need to brush up on your bond basics. Bonds provide a solid investing opportunity for you to minimize downside risk and maximize your growth potential. Government bonds are especially secure, so you should be proactive about growing your lucrative nest egg into this new decade.
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Are Bonds A Good Investment Now
A lot of cautious investors are asking the question, “Are bonds a good investment now?” Simply stated, the answer is absolutely yes. In fact, given the uncertainty of the markets and the conditions in the U.S., a sound bond investment can help you get out of the recession climate ahead once and for all. If you still wonder if bonds are a good investment now, you should expand your knowledge on this topic now.
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Are Bonds A Safe Investment
You may be wondering, “Are bonds a safe investment for my financial betterment?” Many traders disregard the benefits of a bond investment, and this lack of research and understanding can cost your profit potential dearly in the end. Bonds are absolutely a safe investment when you have the resources and know-how to manage your funds effectively.
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Are I Bonds A Good Investment
Well, are I bonds a good investment? I bonds actually entail less risk than certain other investing vehicles, and this should be something you familiarize yourself with as you strive to build your nest egg. This liquid savings holding accrues interest and safeguards your capital from the effects of inflation. If you knew the current state of inflation, you wouldn’t have to ask the question, “Are I bonds a good investment?”
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Ascending Tops
Ascending tops are, in succession, the highest points that a stock hits over a set period of time.
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Ascending Triangle
The ascending triangle is a bullish pattern that is exceedingly dependable. There are two approaches with the ascending triangle:
1. You can jump in while the breakout pattern is occurring.
2. Or, for the risk takers, enter during the pattern, hold on and sit tight.
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Ascending, Descending Tops And Bottoms
Ascending, descending tops, and bottoms are mounting and cascading crests in reference to the direction of a security’s price.
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Asian Market Trading
In this modern time, growing your nest egg has taken on a larger-than-life scope. You literally have a world of opportunities to turn your investment into a multiplied return, but you must understand the available options. Asian market trading is not just a tool to speculate about the price action overseas. With Asian market trading, you can hedge against conditions in the U.S. for more lucrative profits.
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Asian Option
An Asian option is an exotic option in which the difference between the purchase price and the exercise price is based on the average price of the underlying asset over a pre-set period of time. The Asian option can reduce the risk of market manipulation of the underlying stock at maturity. The Asian option can also be known as The Asian Style Option, Average Option, Average Price Option, Average Rate Option and Average Style Option. The Asian option is appealing to the investor because it tends to be inexpensive compared to the American options. Another advantage that the Asian Option has to offer is protection from the volatility risk of the market place.
The Asian Option has two basic forms: (both can be structured as puts or calls)
1. An Average Rate Option/ Average Price Option: pay off is based on the difference between the average value of the asset during the existence of the option and the fixed strike.
2. An Average Strike Option: is structured similar to a standardized option; cash or physically settled option. The strike is set equal to the average value of the asset over the existence of the option.
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Aspirin Count Theory
The Aspirin count theory is a financial theory that suggests that stock prices and aspirin production are correlated with one another. The theory states that the production of aspirin will increase during the fall of stock prices because investors need more pain relievers to make it through rough days. This theory is considered by most to be more humorous than serious.
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Asset Allocation
A significant part of financial planning is finding an asset allocation that is appropriate for a given person in term of their appetite for and ability to shoulder risk. This can depend on various factors.
It is a term used to refer to how an investor distributes money amongst assets (equities, fixed-income, cash and equivalents), various cash investments, bonds and stocks. The investor aims to balance risk and reward.
Life-cycle or target-date fund are other terms used to express Asset-allocation mutual funds. The portfolio structure addresses concerns of risk, inclination and investment objectives. Individual investors require an individual solution since problems can differ, a standardized solution for allocating assets is inefficient.
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Asset Ratios
Asset Ratios are used to analyze a company's financial performance in terms of the return generated by sales for a financial period. The better these ratios are, the better it is for shareholders.
• Fixed-Asset Turnover Ratio –measure of how efficiently a company uses its fixed assets to generate sales. The higher the yearly turnover rate, the less money a company has tied up in fixed assets.
Fixed Asset Turnover Ratio = Sales ÷ Average Fixed Assets
• Total-Asset Turnover Ratio - measure of how efficiently and effectively a company uses its assets to generate sales. The higher the total asset turnover ratio, the more efficiently a company’s assets have been used.
Total-Asset Turnover Ratio = Sales ÷ Total Assets
• Inventory Turnover - measures the amount of times during a year that a company replaces its inventory. The turnover is only meaningful when comparing it to other company’s prior inventory turnover.
Inventory Turnover = Cost of Goods ÷Total Inventory
• Sales/Revenue Per Employee – measures the dollar amount of sales generated per employee. The higher the dollar amount is the better.
Sales/Revenue per Employee = Sales ÷ Average Number of Employees
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Asset Stripper
An asset stripper refers to a company or individual that purchases companies with the goal of breaking the company into sections and then selling the sections separately in order to maximize profits. An asset stripper will find companies that they believe will be more profitable by liquidating the sections in comparison to the company’s regular business operations. For example, an asset stripper could purchase a food production company and sell the distribution service separately from the rest of the company if it would prove to be more profitable.
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Assets
A business or individual’s assets refer to everything owned with value. The asset simply has to hold value in any transaction. It becomes identified as a source of possible cash flow whether directly or indirectly. For non-profit organizations, the assets are a promise for services instead of funds. Assets are catalogued on a balance sheet. Below is the list of the categories of assets.
Tangible asset: Tangible assets have a physical property, as the name suggests. Real estate and equipment are two examples of tangible assets.Current and fixed assets are the two different types.
Current asset: Current assets are defined as those that could be turned into cash, sold, or used within a given cycle or year. These include cash and cash equivalents, short-term investments, receivables, inventory, and prepaid expenses.
Cash and cash equivalents: Contains mainly the liquid assets – currency, deposit accounts, and the negotiable instruments such as money orders, bank drafts, and cheque.
Short-term investments: When trading securities, these are the stocks purchased so that they can be sold with a price difference profit in the short-term future.
Receivables: Uncollected accounts’ net of allowance
Inventory: The lowest market cost whether that be historical or fair market value
Prepaid expenses: Written as assets before being used and paid in cash
Fixed asset: Fixed assets consist of buildings and equipment.
Intangible asset: These describe resources that have value but cannot be physically touched. Such rights of value would be goodwill, trademarks, copyrights, computer programs, and patents. Accounts receivable, stocks, and bonds also count as financial assets.
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At-The-Close Order
An at-the-close order is a type of order that is characterized by trades that are exercised at the close of the market or as close as possible to the closing price. Basically, an at-the-close order does not get carried out until the last moments of the trading day.
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Atlas Option
Atlas Options is a type of equity-based exotic option from the family of options based on multiple underlying securities. This option has a payout that is based on the performance of the underlying securities, which consist of stocks. At maturity, some of the best- and worst-performing stocks are removed from this group of underlying securities, at which point the payout is calculated on the remainder of the securities.
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Atlas Options
Atlas Options - A type of equity-based exotic option from the family of options based on multiple underlying securities. This option has a payout that is based on the performance of the underlying securities, which consist of stocks. At maturity, some of the best- and worst-performing stocks are removed from this group of underlying securities, at which point the payout is calculated on the remainder of the securities.
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Atm - At The Money Options
For both call or put: When the option’s strike price is approximately the same as the current market price of the underlying security.
This would be the break-even point (transaction costs not included).
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Auction Market
An auction market is where buyers enter competitive bids and sellers enter competitive offers at the same time on the floor of an exchange. Matching bids and offers are then paired together and the orders are executed. Buyers obtain shares at a unit price that is considered to be competitive and fair, while sellers often leave with a price that is acceptable.
The auction market provides a way for buyers and sellers to compete in a real time environment, usually with the stocks and bonds going to the highest bidder. Since everyone on the floor of the stock exchange have to meet strict criteria in order to participate in the bidding process, competitive bids for available stocks and bonds can be accepted and approved immediately allowing quick trading.
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Audit Trail
An audit trail is the gradual recording progress used to trace the sources of documented accounting information. The NYSE and the SEC utilize an audit trail to decipher whether an accounting figure is accurate, step-by-step reconstructing the trade to prove the legitimacy.
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Auditing Essentials
When conducting either an external or an internal audit, there are certain auditing essentials that auditors must always follow. Some auditing essentials include proper reporting procedures, timing standards, and the handling of sensitive materials. By adhering to auditing essentials, auditors ensure that they stay in line with generally accepted auditing standards.
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Authorized Participant
Authorized participant is a body elected to govern an ETF and make all financial acquisitions for said ETF.
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Authorized Stock
Authorized stock is the maximum number of shares a company is allowed to issue as determined by the company’s charter. This number can be changed at any time, barring shareholder approval. Authorized stock is also referred to as authorized shares or shares authorized. A company’s management team usually maintains a higher amount of authorized shares than the number that is actually issued. This way the company can sell more shares if they need to raise additional capital.
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Automated Day Trading
Emotional trading will surely sabotage an investor, irregardless of the trader’s level of experience. Automated day trading eliminates this risk through preset computerized trading interface. This kind of automated day trading does not require human input. Rather than run on autopilot with automated day trading, why not become the better trader executing the best plays for yourself?
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Automated Options Trading
Why would anyone choose automated options trading instead of hands-on active money management? Well, time is certainly money in this business, and automated options trading frees up a great deal of a trader’s time and energy. Because options trading requires less initial capital, this investing vehicle is gaining popularity in the financial realm. Decide whether automated options trading could add value to your options trading approach.
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Automated Stock Trading
The decision to utilize automated stock trading depends on the objectives and trading style of the individual investor. Automating the trade comes with both benefits and drawbacks, but ultimately, you have to decide how actively you wish to manage your stock trading system. Automated stock trading appeals to traders who want to relinquish control, maintain objectivity, and free up more time. Building your lucrative trading system involves deciphering what your priorities are.
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Automatic Day Trading
For some serious day traders, automatic day trading systems replace the human touch in each transaction. This can be quite helpful considering the high volume of buying and selling for the short-term trade. Nevertheless, whether you opt for an automatic day trading system or not, remember to avoid emotional trading and continue honing your strategies to achieve maximum results.
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Automatic Exercise
Automatic exercise is a safety measure put in place by options holders in case the 3rd Friday of the month catches them off guard. During this time, the “in the money” options are exercised automatically on behalf of the shareholder.
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Baby Bells
Baby Bells is a terms that refers to regional telephone companies created through the 1984 breakup of AT&T as a result of antitrust legislation that was created in order to promote industry competition. At the time, the Baby Bells created by AT&T included Southwestern Bell, Nynex, Bell Atlantic, Ameritech, BellSouth, U.S. West and Pacific Telesis. Since 1984, there have been numerous acquisitions and mergers that have since consolidated the industry into a small number of domestic telephone providers.
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Baby Bills
Baby Bills refers to a nickname of hypothetical companies that would have resulted from a breakup of Microsoft Corporation by the Justice Department. The name is derived from Microsoft founder, Bill Gates, combined with the term “Baby Bells,” which was used to reference companies created by the breakup of AT&T in 1984.
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Back Months
The commodities’ futures contracts that have expiration dates the furthest into the future are known as back months, deferred futures, or forward months. The contract price will depend on how the price action develops during that time.
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Back Office
A financial service company’s administration staff is known as the back office. The back office is responsible for accounting, settlements, clearances, maintaining records, and so forth.
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Back Pricing
Back pricing is the method of pricing futures contracts that begins after the position opens, when the commodity is already set for delivery on a specified future date. The price will be determined in relation to the futures market conditions during that particular month and time.
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Back Up The Truck
Back up the truck is a slang phrase that used to describe the act of purchasing a large position in an asset. When an analyst recommends to 'back up the truck' on a particular asset, they are usually very confident about the future potential of the asset.
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Back-End Load
Funds with share classes carry sales charges. On which class you prefer will determine how much and when you pay them. A back-end load is a sales charge that the individual must pay when selling investments within a specified amount of time (usually 5-10 years). This applies to a mutual fund or an annuity. This tactic is used to discourage withdrawals.
The concept of a back-end load is there is no point in charging a fee until the investment has begun to grow and the investor possess a threat of pulling out all or part of the funding.
The sales charge is a percentage of the value of the share being sold. Within the first year the fee percentage is at its highest and will decrease yearly until the period ends. Back-end load is also known as a “contingent deferred sales charge or load”. The load is paid to a financial liaison and is not included in a fund’s operating expenses. In employer-sponsored retirement plans, the loads are generally waived.
Not all investments will be charged with a back-end load. Normally, investments that incorporate the payment with an up-front sales charge or commission will not be charged with back-end loads.
Calculating the amount of back-end loads involves several factors:
1.The total amount of funds being withdrawn
2.The amount of time the investment has been in place. If the investment has a longer time period, there will be a lower back-end load.
3.Investment style may have influence on the back-end load that is obtained at the time of withdrawal. Mutual funds are rather stable with the fee amount while annuities may fluctuate somewhat.
The back-end load ensures that the investor does not feel taken advantage of, while the investment firm still manages to receive compensation for their management efforts.
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Backspread
(See Reverse Ratio Spread)
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Backspread (reverse Ratio Spread)
In the ratio backspread, the investor has more long options than short. As credit spreads, money from short options is involved versus using money options. The other ratio spreads are normally neutral and bordering on slightly bullish or bearish. The ratio backspread, on the other hand, is capable of profit if the underlying moves significantly up or down. Unlike the ratio spread, the backspread is employed when the underlying stock price is predicted to significantly move. The call backspread utilizes calls in a bullish strategy unlike the put strategy, the put backspread.
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Backwardation
Backwardation is a theory that states that as a contract nears expiration, the futures contract will sell at a higher price in comparison to when the contract was further away from its expiration date. This occurs because the convenience yield is higher than the prevailing risk free rate.
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Bad Check
A bad check, also known as a hot check, is a check written from a nonexistent account or an account that lacks the sufficient funds to honor the signified amount on the check. In many cases, writing a bad check can result in legal implications.
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Badwill
Badwill refers to the negative fallout that a company feels when investors and the general public find out about something the company has done that does not fall in line with society’s standards for business practices. The negative result can be seen in a loss of revenue or market share and if laws are broken, legal actions can be taken.
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Bag Holder
A bag holder refers to an investor that holds onto a stock that falls in value until it is eventually worthless. In most cases, a bag holder will ignore convincing reports and evidence that would suggest selling an asset.
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Bagel Land
Bagel land is a slang term that is used to describe a stock or asset that is nearing $0 in value. Unlike penny stocks, the term bagel land is used to reference once-reputable companies that have fallen in value and consumer confidence. Investors will generally lose their entire investment as companies in bagel land generally do not return to prominence.
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Bailout
During a bailout, the government, a person, or other financial body provides monetary assistance to a business on the brink of failure. The mentality behind the bailout is that saving the business will result in positive consequences that trickle down to affect more than just the struggling business itself.
Loans, bonds, stocks, and cash are all types of bailout possibilities, and whether this sum is paid back depends on the specific type of bailout. The bailout will generally assist businesses in industries that have undergone significant losses, employ many, and hold a substantial position in the economic status quo.
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Bank Of Scotland Offshore
The Bank of Scotland offshore prospects are highly appealing to investors seeking additional benefits outside of their banking jurisdiction. A practice both sophisticated and widely-used by the professionals, now the newer wave of investors and traders can take their money overseas for additional monetary benefits.
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Bankers Acceptance
Bankers acceptance happens when a non-financial business establishes this temporary credit investment. These are endorsed by a bank and traded at a reduced rate on secondary markets.
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Baptism Of Fire
Baptism of fire is a situation that an individual or company goes through that result in one of two options: success or failure. Situations such as corporate shakeups, risky ventures and entering new markets are just a few of the possible situations that can put a company through a baptism of fire.
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Bar Charts
Bar charts show the high, low, open and close prices for a specific period of time. Each trading period is shown as a vertical line (bar) ranging from the low price to the high price. Most bar charts also include two small marks on either side of the bar. The mark on the left of the bar indicate the opening price and the mark on the right indicates the closing price.
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Barclays Bank Offshore
Barclays Bank is an international financial service with a focus on offshore accounts. Barclays Bank offshore locations are situated in North America, Europe, Australia, Asia, Latin America, Middle East, and Africa. Barclays offers an array of offshore saving products, accounts, and investments in a range of currencies. The Barclays Bank offshore provides investors with flexibility in markets, strategies, and currencies.
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Barclays Offshore Banking
Barclays offshore banking is a global service provider within the financial industry that specializes in excellent offshore banking and worldwide banking facilities. Barclays offshore banking facilities associate with clientele in over 200 countries concerning their offshore banking accounts.
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Barometer Stock
A barometer stock is also called a bellwether stock. As the name suggests, a barometer stock is viewed as an indicator of the overall condition of the Stock Market. The price trend of a barometer stock over a certain period of time can potentially forecast economic growth or an economic downturn.
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Barrier Option
A barrier option is similar to other exotic options that are path-dependent. When certain prices have been reached this exotic option will come in or out of existence. The pay offs are determined whether or not the primary stocks have reached or exceeded the prearranged price.
A similar option with out a barrier would be more expensive than one with a barrier. The purpose of the barrier option was to provide insurance value without having to charge a high premium.
There are both put and call for a barrier option. If the underlier reaches the ‘barrier’ than the stock will either become activated or unacceptable and voided. A barrier option can be a ‘knock-in’ or a ‘knock- out’.
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Barriers To Entry
Barriers to entry refer to hindrances that keep a company from easily entering the market. Such barriers include government interventions such as regulation and taxation and naturally occurring barriers such as prior patents and strong customer loyalty. While these barriers can be harmful to new businesses, they can help veteran businesses out by decreasing competition.
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Base Currency
Otherwise known as the primary currency, the base currency is the currency listed to the left of the slash in a currency pair. Typically, the base currency is the domestic currency in a currency pair. The base currency always represents one unit. This means that if you are looking at the currency pair USD/EUR, you are looking for how many euros are needed to purchase one US dollar.
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Basics Of Investing
Investing is placing your money to work for you in the hopes of making more money. It is an action that is based on long-term goals. By investing, you may look to beat inflation, possibly reach objective goals -like buying a car, pay for school, even a house, or maybe for your retirement. We offer daily stock tips, trading newsletters and also give you access to a virtual trading game. There are many options for investing your money. To know what you’re buying is a better way to invest.
Here are three ways you can invest:
•Stocks – When a company trades publicly, its shares are sold to individual investors on a particular market. The share’s worth is based on how well the company does.
•Bonds – When a government agency, municipality or corporation is in agreement with the bondholder: one who purchases bonds from a Issuer. The Issuer is lent a certain amount of money that has a fixed rate and expires on the specified maturity date. During the life of the bond, the issuer pays interest to the bondholder and is liable to pay the face value of the bond at the maturity date.
•Mutual Funds – When a pool of funds are collected from many investors to create a large variety of investments so everyone benefits from bigger profits. Since there is different investments within one mutual fund, if one investment has a bad return another will cover that loss. The fund pays out its profits from earning dividends or interest on its investment and by selling investments that have increased.
Things you should keep in mind:
1.Over the long term, stocks have in the past, done better than all other investments.
2.Over the short term, stocks can be risky for your portfolio.
3.Investments that are risky usually pay more than safe ones unless they fail.
4.The largest influences of stock prices are earnings.
5.When interest rates rise, bonds usually do poorer than usual.
6.Inflation may be the largest threat to your long-term investments.
7.U.S. Treasury bonds are the safest investment an investor can own.
8.A diversified portfolio is less risky than a portfolio that is concentrated on one or a few investments.
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Basing
Basing happens during the times when no substantial trending is affecting the price of a security. The chart formation shows a flat line, so the visual representation of basing is clearly recognizable as a straight horizontal line. Basing typically follows a long stock market decline or a major increase, signifying the need for the market to have a break in the action.
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Basis
Basis is a general term that has multiple definitions in the investment world. Across all of its meanings, however, basis always refers to the price or value of something that is being traded, bought, or sold.
In futures trading, basis refers to the difference in the current price of a commodity versus the future price of that same commodity. Basis helps investors determine the profitability upon the delivery of the commodity when the futures contract expires. However, the basis is not always an accurate assessment of a commodity’s value due to conditions that can arise in the gap of time between the expiration of the futures contract and the delivery of the good.
In general trading terms, basis is the price an investor pays for a security adjusted for any commissions or other out-of-pocket expenses paid by the investor. Otherwise known as cost basis or tax basis, this figure is used to determine both capital gains and losses upon the sale of the security.
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Basis Grade
A basis grade is the smallest acceptable standard that a deliverable commodity is required to meet in order to be used as the actual of a futures contract. Because a commodity may vary drastically in quality, basis grade is important for futures investors to maintain uniformity.
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Basis Point
The basis point is a unit of measure for a financial instrument showing change in 1/100 of 1%. This calculation shows the rate of fluctuation in interest, equity indices, and fixed-income security yields.
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Basis Quote
The basis quote truncates the futures contract price quote. This quote provides the variation of the futures contract over or under a price.
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Basis Risk
When establishing a hedging strategy, the investor takes the basis risk that prices could shift in completely opposite directions. The risk comes from the increased capacity for gains or losses – should these offsetting bets create this correlation.
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Basket Option
The basket option is an exotic option with an underlying asset linked to a ‘basket’, in the basket is commodities, securities or currencies. A basket option is usually cash settled.
As long as the weights of the basket option are positive it can have any weighted sum of underlying worth. Hedging foreign exchange risk is popular with the Basket option especially for corporations. If dealing with a multinational corporation having a currency basket option will provide a less expensive method to buy and sell a basket of currencies for one specific currency.
Usually the basket value is treated as a single underlier in the basket option and a standardized pricing formula is applied.
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Bear And Bull Market
A market trend, an over-all direction of the stock market, commonly referred to a as bull or bear market.
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Bear Call Spread
The Bear Call Spread strategy profits when the underlying stock price decreases. This strategy has both limited profit potential and limited downside risk. To create this spread, an investor would buy (long) call option with a higher strike price, while simultaneously selling (short) call option with a lower strike price, with the same expiration date. To exit the trade, an investor needs to sell the higher strike call and buy the lower strike call or they can just let the options expire.
An investor receives a profit when the stock price falls below the lower strike price plus the net credit. The maximum profit would be equal to the difference between the amount paid from the long call option and the amount collected from the short call option. If the stock price rises above the higher strike price, then the investor has a loss. The maximum risk of this spread is equal to the difference between the strike prices minus the credit received when the spread was sold. A breakeven point would be the lower strike price plus the net credit.
Maximum Profit = Net Credit
Maximum Loss = Difference Between Strike Prices – Net Credit
Break Even Point = Lower Strike Price + Net Credit
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Bear Market
A bear market is a prolonged period in the market in which stock prices are declining faster than their past averages. It can last months or even years. It is defined by a price decline of least 15% in a key stock market index followed by a strong rally.
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Bear Market Protection
There are some ways to protect your portfolio until the bull market returns. The following are some ideas you might want to consider.
•Dividend Stocks - A dividend is a distribution of a portion of a company's earnings to its shareholders from the current or retained earnings on a quarterly basis. They are mostly paid in cash (which is taxable) but sometimes can be paid as additional shares. Regular dividends can provide you with income that you can receive while you own the stock. Returns from both consistent dividend returns and increasing stock prices beat all the major stock market averages over time.
•Preferred Stocks - A preferred stock is a class of ownership in a corporation. This type of stock does not allow you to vote but you have priority to receive dividends before common stock holders. This stock is also known as preferred shares. You receive a fixed dividend which is determined in advanced and given each year for the same amount regardless how the company is performing financially. You will receive the dividend unless the stock becomes retired or is called back. Preferred stocks have had an average yearly return of 7.4%, while corporate bonds have averaged 6.4% and common stocks have averaged 10%.
•Fixed Income - A fixed income refers to any type of investment that provides a regular or fixed income. Essentially with a fixed income security you are loaning money to a government entity, corporation, or financial and to receive interest on a regular basis. The rate of interest paid can either be fixed for the life of an investment or can fluctuate with the general movement of interest rates. The principal is then returned at maturity.
Those are just some of many ways you can try and balance your portfolio. Hopefully these suggestions will enable you to generate a consistent income and reduce volatility in your portfolio during bear markets.
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Bear Market Rally
A bear market rally is categorized by gains sustained during a bear market. Since bear market price action is lower, the rallies are typically temporary before the market begins falling again.
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Bear Market Stages
Primary Bear Market:
Stage 1- Distribution: The first sign that a bear market is starting is distribution. Business Conditions have somewhat declined, “smart money” begin to sell stocks. There is more of a willingness from the public to start buying stocks. Although stock do begin to loose their luster. A reaction rally caused by the decrease will retrace a portion of the decline swiftly and sharply. Within a few days to weeks a large percentage of the losses would be regained.
Stage 2- Big Move: the second stage has begun when a decrease is now increasing breaking below the previous low. This is classified as the largest move in the bear market. The trend is acknowledged as down and business conditions begin to depreciate. Some reactions from this drop are; shortfalls occur, profit margins minimize, estimates are downgraded and revenues dwindle, leading to several sell-offs.
Stage 3- Despair: During the final stage stocks are now frowned upon. Individuals continue to inquire about selling even though valuations are low. Unfortunately it is impossible to find a buyer at this time. Until all bad news stock are fully priced the market will continue to depreciate. The cycle will repeat itself when it has exposed the worst possible outcome.
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Bear Put Spread
The Bear Put Spread strategy profits when the underlying stock price decreases. This strategy has both limited profit potential and limited downside risk. To create this spread, an investor would buy a (long) put option with a higher strike price while simultaneously selling a (short) put option with a lower strike price, with the same expiration date. To exit the trade, an investor needs to sell the higher strike put and buy the lower strike put or they can just let the options expire.
An investor receives a profit if the stock price declines below the lower strike price. The maximum profit would be equal to the difference between the strike prices minus the net debit. If the stock price rises above the higher strike price on the expiration date, then the investor has a loss. The maximum risk of this spread is equal to the net debit. A breakeven point would be the higher strike minus the net debit.
Maximum Profit = Difference between Strike Prices – Net Debit
Maximum Loss = Net Debit
Break Even Point = Higher Strike Price - Net Debit
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Bear Raid
The bear raid strategy takes place when traders try to forcefully bring down a stock’s price. This is done so that a short position can be covered. The traders may create negative rumors concerning the company, which will inevitably bring down the price of the stock.
Bordering on securities fraud, the traders essentially make the market move. The traders can actually undertake short positions in such large volume that prices go down. This makes this type of strategy move in a circle. Heavy selling and short selling are the two methods to force down stock price. The trader is able to profit by buying cheaper stock to cover short positions when short selling.
Large groups of traders are able to execute successful bear raids. A single person wouldn’t have enough trading weight to have a great effect on the price of the stock. This technique is prohibited according to SEC regulations. This is considered a manipulative practice that exploits the difference between the original price of the security and the forced lower price. Bear raids have been occurring since the beginning of the 20th century.
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Bear Ratio Spread
A bear ratio spread is similar to the bull ratio spread, however, put options are used instead of call options. The bear ratio spread strategy attempts to obtain a higher profit as the underlying asset closes within strike prices of the long and short options. This method also tries to decrease risk by getting rid of upfront payments for the position. The bear ratio spread can also profit if the underlying stock price stays neutral upon its expiration date.
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Bear Tack
In conjunction with the bear market, the bear tack represents a downturn in the stock price, the value of the sector, or the overall market. This is on par with a general assumption that this stock, sector, or market will take a downturn over a short to medium timeframe.
Bear tack transferred into the finance realm from its origin as a sailing term. A tack is a motion that turns the boat’s bow such that the wind is on the boat’s other side in sailing. In finance, similarly, the bear tack describes a shifting movement – in this case referring to the security or index.
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Bearer Form
Bearer form is a type of security issued by a corporation that is not recorded in the corporation’s trading book. In contrast to registered form, which means the company keeps records of the security holder and mails them payments, a bearer form security is traded without record of who owns the security. The only way to prove ownership is through actual possession of the security (usually in the form of a stock certificate).
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Bearish Engulfing Pattern
The bearish engulfing pattern reverses a major uptrend. Like in the bullish engulfing candle, you do not have to include the shadows for the encompassing of the prior candle.
The engulfing candle is affected by two major factors: the candle’s size and the volume on that given day. The engulfing candle becomes increasingly important as the candlestick grows larger in size. With the very big bearish engulfing, you can assume that the bears have rallied the market after a significant upturn. And with increased volume, the signal takes on greater meaning.
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Bearish Harami
The Bearish Harami is a candlestick pattern that shows a bigger candlestick and then a smaller one that is engulfed within the bigger candle’s vertical body range. This particular pattern signals that the uptrend is about to undergo a key reversal to a downturn in price action. As that second candlestick shrinks in size, the odds of this bearish reversal become more likely.
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Beating The Gun
Beating the gun is a slang phrase used to describe a beneficial transaction made by an investor based on new information that the market has not yet had time to respond to. Beating the gun requires quick decision making on behalf of the trader in order to get ahead of other investors that will react when they find out the particular information.
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Before Market Trading
Before market trading is also referred to as pre-market trading. This is trading conducted prior to regular market hours. Regular market hours are from 9:30 a.m. to 4:00 p.m. eastern standard time. Before market trading hours, the trading patterns tend to be less liquid.
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Belize Offshore Bank
The Belize offshore bank is authorized as the primary Caribbean offshore bank located in northern Central America. Offshore banks have become increasing popular over the last few years, which will assist in international travel, income management, assets, and capital. One Belize offshore bank in particular would be the British Caribbean Bank, which is also located in the Turk and Caicos Islands.
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Bell Curve
The Bell Curve, also known as a normal distribution, is used to analyze economic data. Giving the appearance of the top of a bell, the high peak in the curve denotes the most probable event. All other possible occurrences are evenly distributed around the most probable event in the form of a downward-sloping line on both sides of the high point.
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Bellwether Issue
As a specific type of benchmark, the benchmark bond gives a control for how other bonds should be performing. This standard is typically government bonds. “Benchmark issue” and “bellwether issue” are the terminology that also mean benchmark bond.
The benchmark is going to be within the maturity period at the most recent issue. In order for the comparison to be accurate, the benchmark must possess a similar issue size, coupon, and liquidity as the compared asset.
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Benchmark
The benchmark is an index which is used to compare performance of an investment, portfolio, or fund. This provides a standard that measures the security, mutual fund, or investment manager performance. The broad market and the market-segment stock and bond indexes usually serve this purpose.
You can’t determine how well an investment is performing without a benchmark, the basis for comparison. Financially speaking, the benchmarks are comprised of the many indexes analysts use. These measures include the Dow Jones Industrial Average, the S&P 500, the Russell 2000, and the Lehman Brothers Aggregate Bond Index.
Securities within these indexes have preset performance expectations. As a result, they provide a stable and controlled factor from which to analyze the capability of an investment. By establishing a benchmark, the investor can create a successful investing strategy.
As a specific type of benchmark, the benchmark bond gives a control for how other bonds should be performing. This standard is typically government bonds. “Benchmark issue” and “bellwether issue” are the terminology that also mean benchmark bond.
The benchmark is going to be within the maturity period at the most recent issue. In order for the comparison to be accurate, the benchmark must possess a similar issue size, coupon, and liquidity as the compared asset.
A Bogey is a specific benchmark that shows how well a fund is performing. This particular buzzword is simply benchmark jargon. If you see the terms bogey or bogy, the investor is still hoping to ascertain the scope of the investment. The fund can only be evaluated in terms of how it is doing within the range of the market.
The benchmark error occurs when the mode of comparison is inaccurate. It is very important to choose the correct benchmark so that the analysis of a stock’s performance can be efficient. To make these calculations, the right market must be selected. This is why it is especially important to find a benchmark that has comparable issue size, coupon, and liquidity to the asset. A benchmark error can even occur for an entire portfolio, if the index has unrelated, dissimilar stocks.
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Benchmark Bond
As a specific type of benchmark, the benchmark bond gives a control for how other bonds should be performing. This standard is typically government bonds. “Benchmark issue” and “bellwether issue” are the terminology that also mean benchmark bond.
The benchmark is going to be within the maturity period at the most recent issue. In order for the comparison to be accurate, the benchmark must possess a similar issue size, coupon, and liquidity as the compared asset.
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Beneficiary
The inheritor of the annuitant’s contract, the beneficiary is entitled to take over property, assets, etc. upon the death of the owner. This person is named in the will as the legal recipient of these belongings. The beneficiary is typically the spouse, child, charity, or other individual in whom the owner would most wish to pass down his or her possessions.
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Bermuda Offshore Banking
Are you looking for a Bermuda offshore bank? Well, you are not going to find one unless you are a resident of Bermuda. Bermuda is not considered one of the operating international offshore banking facilities. The Bermuda banks are prohibited from registering and operating as a Bermuda offshore bank for the general population.
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Best Bid
Best bid is the highest price a prospective buyer is prepared to pay at a particular time for trading a unit of a given security. Please note that the New York Stock Exchange and the American Stock Exchange do not provide Bid information on a delayed basis. (See also "Bid".)
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Best Fixed Income Investment
A fixed income investment is in reference to a well-protected investment opportunity utilized in the financial markets. If you are looking for the best fixed income investment, an investor must gather extensive amounts of research by financial analysts and an intermediary rating organization.
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Best Income Investment
Income investments are in reference to an income established through dividends, interest payments, capital growth on securities, and various other assets accumulated through investment instruments. The best income investment would be the fraction of the net income recorded in a report, acquired through excess capital in the investments.
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Best Investing Options
There is an endless amount of options for investors to embark on. The best investing options are those that fit the investor's personal criteria. Whether the investment is short-term or long-term, the opportunity to find the best investing options is obtainable.
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Best Market Timing
Market timing is a strategy used to make a financial decision regarding when to sell or purchase assets in attempt to forecast future movements in market prices. Typically, the best market timing is determined through either a fundamental analysis or technical analysis. The best market timing strategy is based upon the overview of the entire market and not just a specific sector.
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Best Of Breed
Taken from dog shows, best of breed is a phrase used to describe high quality investments. Some of the factors that are studied when identifying quality investments include market share and revenue growth. Because an investor may have a limited amount of capital, it is advised to go with the high quality investments that have a history of dependable returns.
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Best Offshore Bank
First, it is best to know what an offshore bank is. An investor will open an offshore bank account in a bank situated beyond the perimeters of the depositor's country residency. The best offshore bank will provide legal and financial benefits for an investor, such as tax jurisdiction and cost efficiency.
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Best Offshore Banking
Offshore banking can draw in several advantages to an individual's portfolio, as long as you look at the opportunities appropriately. Finding the best offshore banking is crucial. Typically, offshore banking is connected to tax evasion, underground economy, and money laundering. However, the best offshore banking system is legal and does not prohibit interest or personal income tax.
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Best Online Stock Trading
Online stock trading is taking the world by storm. More and more individuals are becoming familiar with the World Wide Web and conducting their stock trading in a more efficient and convenient manner. Some of the best online stock trading methods, techniques, and strategies can be found through the internet but investors need to conduct research to find them.
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Best Online Trading
There are a lot of online trading sites that offer a variety of products and services for traders, but how do you know which one is the best online trading site? There are a couple of standard features that every site will offer, but the best online trading sites will provide you with more tools and resources than you could ever imagine. The best online trading sites typically require a fee, so be prepared to pay up if you want to receive premium services.
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Best Online Trading Services
The internet will provide investors with a long list of online trading services. The best online trading service will provide investors with advice, recommendation, and suggestions on several different forms of trading. The assistance offered by the best online trading service should enhance the investor's portfolio.
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Best Online Trading Site
The best online trading site is the one that suits the individual's personal needs. Everyone has different requirements and there are several online trading sites that claim to be the best. Online trading site necessities are essential for the trader and must be found through research. The best online trading site offers you the insight to when you should partake or pull out of the particular stock while giving you all the necessary teaching information for trading.
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Best Online Trading Website
An online trading website presents investors with information on past and present trades, recommendations, current stock market data, much like Gryphon Daily. The best online trading website will assure that the information is accurate and update. In addition, the best online trading website will provide traders with an easy navigational site.
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Best Options Trading
Options' trading is presumably the least comprehended methods for investing. All investors should be aware that the best options trading strategy would be the one that can generate a high potential of wealth for an individuals portfolio. Investors should consider looking into options trading websites to find the best options trading system.
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Best Options Trading Site
The best options trading site will provide investors with a system to enhance profits with the use of price movement, predictability, extensive amounts of education and research. The best options trading site should provide various situations, methods, and strategies to maneuver the market movement effects on the trader's options.
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Best Stock Tips
Wild Guess... you are looking for the best stock tips to use in the stock market. Aren't we all? Stock tips are summarized as helpful little hints to improve and advance your stock trading experience. The best stock tips will not only increase productivity but the profits that go alongside.
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Best Stock Trading
The best stock trading system is the one that suits the investor's needs. The best stock trading system for one person may not be the same for another. In order for it to clarify as the best stock trading system, it must be effective and efficient. The best stock trading system will provide the investor with the appropriate statistics, analysis, and research required.
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Best Stock Trading System
The best stock trading system is the one that suits the investor's needs. The best stock trading system for one person may not be the same for another. In order for it to clarify as the best stock trading system, it must be effective and efficient. The best stock trading system will provide the investor with the appropriate statistics, analysis, and research required.
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Best Technical Analysis Website
Reading a technical analysis can be overwhelming, which is why it is beneficial for traders to look into using a technical analysis website. The best technical analysis website will break down all the necessary information into comprehendible and easy to read data for individuals to utilize.
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Beta
Also known as the beta coefficient, beta measures the systematic risk of the security as compared to the broader market. Essentially, beta represents just how likely a stock is to respond to the movements in the market.
Beta is the key factor in the capital asset pricing model which computes the expected returns of an asset depending on its beta and the expected returns of the market. A beta greater than 1 indicates that the price of the asset will be more volatile than the market. The price of an asset with a beta equal to 1 will match the market. Finally, a beta less than 1 suggests that the price of an asset will be less volatile than the market.
Beta tends to be more useful to investors looking for short-term investments, since price and volatility are more applicable. For long-term investments, beta for a particular asset may lose relevance once the variables of the bigger picture are taken into account.
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Beyond Technical Analysis
A technical analysis is the research of price patterns and past trends. Technical analysts will study these movements through historical charts. 'Bed, Bath and Beyond' is not the only one with a beyond. Look beyond technical analysis to capture the gains of chronological movements.
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Bid
When purchasing a security, the bid is the investor’s price offering. The bid includes both the price and the quantity to buy.
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Bid And Ask
Which one should you pay? Well, the answer to that comes from understanding what these terms mean. If you are the buying the stock, you will be paying the ask price (higher price). If you are selling the stock, you will be paying the bid price (lower price). The difference between the two is the broker’s profit.
•Bid Price: the highest price a broker is willing to pay for a certain security.
•Ask Price: the lowest price being sought from the broker for a certain security.
The ask price will almost always be higher than the bid price because the difference, which is called the spread is how it is determined what a broker will make for handling the transaction. These quotes will generally stipulate the amount of security will to be sold at the specified price.
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Bid Price Or Ask Price
Which one should do you pay? Well, the answer to that comes from understanding what these terms mean. If you are the buying the stock, you will be paying the ask price (higher price). If you are selling the stock, you will be paying the bid price (lower price). The difference between the two is the broker’s profit.
•Bid Price: the highest price a broker is willing to pay for a certain security.
•Ask Price: the lowest price being sought from the broker for a certain security.
The ask price will almost always be higher than the bid price because the difference, which is called the spread is how it is determined what a broker will make for handling the transaction. These quotes will generally stipulate the amount of security will to be sold at the specified price.
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Bid Whacker
A bid whacker is a term that is used to describe an investor that sells a share at or below the bid price. This is considered an unusual practice because most sellers look to sell at a price between the bid and ask quotes. Bid whacking also has the potential to drive down the market price of a security as other investors may fall in suit and sell at low prices.
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Bid-Asked Spread
Bid-asked spread is an options strategy which indicates how much the ask price surpasses the bid. This disparity may be represented by the price difference between how much the buyer will spend and how little the seller will take for it.
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Big Board
Big board is a nickname for the New York Stock Exchange (NYSE). The NYSE is the world’s largest stock exchange in reference to its market capitalization. Founded in 1792, the NYSE has more than 2,000 preferred and common stocks that are regularly traded.
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Big Box Retailer
A big box retailer is a retail store that encompasses a large physical space and offers a wide range of products to its customers. These retailers focus on large sales volumes that lower the profit margin and give the retailer the ability to offer highly competitively priced goods. Such companies include Wal-Mart, Target and K-Mart.
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Big Mac Ppp
Big Mac PPP (purchase power parity) is a survey created by The Economist that displays what a country’s exchange rate would need to be in order for a Big Mac in that country to be equal in cost as it is in the United States. This measurement can give accurate look at how overvalued or undervalued a particular country’s currency is.
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Big Uglies
Big uglies is a slang term used to describe industrial companies in industries such as mining and oil that tend to be unpopular stocks. While these companies are not as coveted as tech stocks, they are generally solid long-term investments that have proven time and time again to generate profit.
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Bilateral J Curve (j Curve)
A Bilateral J Curve states that a trade deficit will become worse soon after the depreciation of its currency due to higher prices on imports that will be greater than the reduced number of imports. The effects of the deviation in the price of exports in comparison to imports will trigger an expansion of exports and a reduction in imports. This will bring about an overall improvement in the balance of payments
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Binary Betting
Binary betting is basically a bet on a proposition that has only two possible outcomes. For example, we could bet the New York Stock Exchange will end on a high note today. Either it will or it won’t.
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Binary Option
A binary option is an exotic option that is also known as a digital option or all-or-nothing option. This exotic option is a cash settled option with a discontinuous payoff. When the option expires in money the option will pay a structure or fixed amount of compensation or the value of the stock. The amount may be greater or less making the option a gap option. If the option expires out of money then there is no pay out.
This exotic option is slightly different from a standard option, in that, instead of the payout being based on how much the option is in the money, it relies on whether the option in on the money. In order for the option to be used efficiently the investor only needs to determine an expected direction and significance of the price movement.
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Binary Options: In And Out
Knock In and Knock Out:
In: begins worthless and becomes active when a predetermined knock-in boundary price is reached.
Out: begin active and become unacceptable and voided when a knock-out boundary price is breached.
Binary Options- Four Main Types: (Contains Barrier like features)
1. Up-and-Out: if the asset rises to a predetermined boundary price the option is knocked- out.
2. Down-and-Out: if the asset falls to a predetermined boundary price the option is knocked- out.
3. Up-and-In: if the asset rises to the predetermined boundary price the option is knocked- in.
4. Down-and-In: if the asset falls to a predetermined boundary price the option is knocked-in.
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Biodiesel
Biodiesel is a fuel that is created from organic oils, such as vegetable oil and animal fat that can be used in un-modified diesel engines. While this fuel is still catching on in the United States, biodiesel filling stations are a common sight throughout Europe.
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Black Box Model
Black box model is an approach to studying purchasing habits that surpasses consumer need and focuses on the catalysts of their behavior.
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Black Friday
1. Black Friday occurred on September 24, 1869 when gold speculators, Jay Gould and James Fisk, attempted to corner the gold market through political influence. When the attempt failed, a mass market panic occurred and investors began selling off large amounts of stocks at a rapid pace.
2. In retail, Black Friday is the day after Thanksgiving that most shoppers and business owners consider to be the beginning of the holiday shopping season. Many retailers open their doors early and offer special promotions and discounts to customers.
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Black Knight
A Black Knight is a corporation, private company, or person that makes a hostile takeover offer to a target company.
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Black Market
A black market is a form of economic activity that takes place under government radar. People that participate in black markets are generally looking for a way to avoid paying out government taxes and/or a way to obtain illegal goods. Common products sold on black markets include illicit drugs and firearms.
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Black River Commodity Clean Energy Investment Fund
The Black River Commodity Clean Energy Investment Fund is a fund controlled by Black River Asset Management, ALLCO Renewable Energy Limited, and Mission Point Capital Partners. All of black river funds have arranged investment strategies and risk management procedures for their clientele.
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Black Scholes Model
Black Scholes Model is a tool used for pricing equity options. It calculates a derivative to measure how the discount rate of a warrant varies with time and stock price. There are five key variables of an option’s price which are stock price, strike price, volatility, time to expiration and the short term (risk free) interest rate, that are used to calculate a speculative call price.
The Black-Scholes Model assumes that the option can be exercised only at expiration. It requires that both the risk-free rate and the volatility of the underlying stock price remain constant over the period of analysis. These assumptions are combined with the principle that options pricing should provide no immediate gain to either seller or buyer.
There are 6 assumptions of the Black-Scholes Model:
1.Stock pays no dividends - Most companies pay dividends to their share holders, so this might seem to be a serious limitation to the model considering the observation that higher dividend yields elicit lower call premiums. A common way of adjusting the model for this situation is to subtract the discounted value of a future dividend from the stock price.
2.Option can only be exercised upon expiration – European exercise terms state that the option can only be exercised on the expiration date. American exercise term allow the option to be exercised at any time during the life of the option, making American options more valuable due to their greater flexibility. This limitation is not a major concern because very few calls are ever exercised before the last few days of their life. This is true because when you exercise a call early, you forfeit the remaining time value on the call and collect the intrinsic value. Towards the end of the life of a call, the remaining time value is very small, but the intrinsic value is the same.
3.Market direction cannot be predicted - This assumption suggests that people cannot consistently predict the direction of the market or an individual stock, hence "Random Walk" that at any given moment, they are as likely to move up as they are to move down.
4.No commissions are charged in the transaction - Usually market participants do have to pay a commission to buy or sell options. Even floor traders pay some kind of fee, but it is usually very small. The fees that Individual investor's pay is more substantial and can often distort the output of the model.
5.Interest rates remain constant – This Model uses the risk-free rate to represent this constant and known rate. In reality there is no such thing as the risk-free rate, but the discount rate on U.S. Government Treasury Bills with 30 days left until maturity is usually used to represent it. During periods of rapidly changing interest rates, these 30 day rates are often subject to change, thereby violating one of the assumptions of the model.
6.Stock returns are normally distributed, thus volatility is constant over time - This assumption suggests, returns on the underlying stock are normally distributed, which is reasonable for most assets that offer options.
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Black Swan
A black swan refers to an event or happening that comes about unexpectedly. The term was made popular by finance professor and former trader, Nassim Nicholas Taleb. Generally, a black swan is unpredictable and random.
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Black Swans And Market Timing
The term 'black swans' is in reference to an occurrence that differs from the normal anticipated situation. Expect the unexpected when it comes to the black swan. Black swans and market timing is the hardest concept to calculate, since market timing is precise and accurate each time whereas black swans is changeable.
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Blackberry Addiction
Blackberry addiction is a slang term that is used to describe a person that acts over dependently and obsessive over a Blackberry. The Blackberry phone has been extremely popular in the financial investment world because of its internet connection capabilities as well as the various applications a user can obtain.
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Blackboard Trading
Blackboard trading is the practice of commodity and futures trading on the commodity exchange’s blackboard instead of an electronic transaction.
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Blend Fund
A blend fund is a type of mutual fund that is formed from a number of various types of assets. The idea behind a blend fund is to enable an investor to alter the variety of his holdings with no need to organize various types of funds.
Typically referred to as a hybrid fund, there are no conditions on the different assets that can be incorporated in one blend fund. A blend fund is likely to possess a general mix of stocks and money market securities.
There are no percentages of the blend fund that have to be compiled of any one class of asset. A blend fund usually is made up of many stocks and only a couple of bonds and other securities.
There is no required balance between the risk value of one particular asset and other assets in a fund.
Blend funds can have a large mixture of assets that hold a big range of risk - from highly safe to incredibly risky. The creation of a blend fund depends on the individual investor and how much he wants to take in as part of the general course of action.
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Blind Pool
A blind pool refers to an investment where the firm or general partners offer limited partnership without an investment goal to investors. This form of investment has few restrictions and safeguards put in place to protect the investor. Often derived from greed, blind pools were very common during the 1980s and early to mid 1990s.
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Block Order
Block trades are bulk purchases of securities, typically at least 10,000 shares of stock or $200,000 in bonds. This is also known as a block trade.
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Block Trade
Block trades are bulk purchases of securities, typically at least 10,000 shares of stock or $200,000 in bonds. This is also known as a block order.
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Blue Book
A blue book is a handbook composed of quote values for used or new vehicles. The vehicles in the book come in a large variety of models, makes, and types. Originally, the book was referred to as the Kelley Blue Book and only accessible to the automotive industry. However, it became available to the public in the 1990's. North American consumers heavily rely on the price quotes for vehicle appraisal.
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Blue Chip Stocks
Blue chip stocks generally offered by well established leaders in their respective industries and are able to pay dividends regardless of good or bad times. They are thought to be among the safest of investments because Blue Chip companies have stable earnings without extensive liabilities. Blue chips are high priced, but are able to deliver regular dividends and reasonably low volatility.
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Blue Chip Trading Strategy
The blue chip trading strategy is an investment approach where the trader primarily deals with high-quality companies that have a history of profit and a track record of success even during times of economic downs and outs. The name “blue chip” is derived from the game of poker where the blue chip is the highest valued chip played with.
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Blue Ocean
Blue ocean is a term popularized by the book, “Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant” that is described as a market space for an unknown industry or innovation that has no competition. Blue oceans are commonly associated with profit potentials due to the fact that there are no competing companies to worry about.
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Blue Ridge Trading Market
Do you want your profits to soar as high as the Rocky Mountains or the Blue Ridge? Trading market strategies and investment ideas can be implemented into the financial markets through a fundamental analysis or technical analysis approach.
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Bogey
A bogey is a specific benchmark that shows how well a fund is performing. This particular buzzword is simply benchmark jargon. If you see the terms bogey or bogy, the investor is still hoping to ascertain the scope of the investment. The fund can only be evaluated in terms of how it is doing within the range of the market.
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Boiler Room
Boiler rooms are high-intensity call centers where salespeople emphatically pitch to potential clients. The pitch pushes securities that are very speculative in nature and may not be legitimate at all. The name “boiler room” connotes the tone and mood of the atmosphere.
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Bollinger Bands
Eponymously named after John Bollinger, bollinger bands is a chart that plots the mean price of a security, as well as a higher and lower price to put it in the context of its price range.
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Bond
A bond is a financial instrument issued by governments and corporations. This particular investment is offered with a predetermined interest rate. Bonds issued by governments are used to raise capital that can be used to fund day-to-day activities as well as infrastructure projects such as roadwork.
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Bond Etf
Bond ETF is an exchange-traded fund that is comprised entirely of bonds and traded like stocks.
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Bond Fund Investing
Bond fund investing possesses a long list of different funds, allowing investors to diversify their portfolio. Some forms of bond fund investing consist of bond index funds, government bond funds, state specific bond funds, and corporate, international bond funds. Bond funds are established by the average length of maturity, rating, and particular objectives.
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Bond Invest
A substantial way to generate more capital in the stock market is through a bond. Invest in a bond with high productivity, increasing yield, and low risk. Commonly, investors lean toward a fixed-income form of bond. This security will allow the individual to produce the same quantity of capital regardless of the outside influence.
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Bond Investing
Interested in learning more about bond investing? Perhaps you realize that now is the perfect time to diversify your portfolio, and bond investing offers tremendous growth potential. Join the market’s savviest system and learn how to invest like the Wall Street professionals. Bond investing is an investment vehicle that will accelerate your financial freedom and pave the road to your fortunes.
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Bond Investing Basics
Bond investing basics is in reference to the investment of bonds that are traded normally by institutions; for instance, insurance companies, pension funds, and banks. Bond investing basics for an individual is performed through bond funds. There are several types of bonds but the basic bond is a contract of debt security between two people that state the borrowed money will be repaid with interest by a maturity date.
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Bond Investing Books
To gather a more in-depth look into bonds, bond investing books will steer the investor in the right direction. Bond investing can be highly profitable and some books contain the necessary education and research needed. Bond investing books can easily be found through websites, bookstores, and even the good old library.
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Bond Investment
A bond investment is divided into four different types - federal government bond, corporate bond, state specific bond, and international bond. When comparing which bond investment to use, remember that each form of investment possesses a different level of yield. The bond investment yield is calculated by the bonds yield divided by the amount of interest.
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Bond Investments
Are you tired of falling short of your maximum profit potential when it comes to your bond investments? If your fixed-income securities are not meeting your expectations, chances are the only person to blame is yourself. How much do you actually know about managing your bond investments? Investing in bonds requires a well developed strategy and plan. Chances are you need to get more control over your bond investments before you lose any more money.
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Bond Market Investing
Does bond market investing sound like a snooze fest to you? Think again! There are plenty of exciting opportunities awaiting you in the bond markets as long as you know where to look. Forget everything you thought you knew about the bond market. Investing in fixed-income securities could be exactly the spark your portfolio has been lacking. It’s time for you to hop on the “bondwagon” today.
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Bond Market Timing
When you think of timing the market for maximum profits, I am sure the last place your mind travels is the bond market. Timing any market is a skill that will benefit any trader, regardless of what type of security you are dealing with. That’s just a fact. You need to dust off your bond investments so that you can start implementing bond market timing strategies into your investment plan.
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Bond Ratings
Bond Rating is a grade given to bonds that indicate their credit value. It is an evaluation of the possibility of non-payment by the bond issuer. The ratings are expressed as letters ranging from “AAA” which is the highest grade to “C” which is the lowest grade.
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Bonds A Good Investment
Are bonds a good investment? Let’s put an end to this timeless question once and for all. The answer is yes, bonds are a good investment for any well-rounded portfolio! Here’s the thing, any investment is only as good as the investor behind it. In order to realize the full potential of your bonds, you need to equip yourself with the proper knowledge and skills to achieve the maximum results from your bond investments.
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Bonds As An Investment
Most people don’t usually consider bonds as an investment vehicle that will bring them big profits. The truth is that bonds, if used properly, can add a certain degree of stability to your portfolio. As long as you recognize that bonds, as an investment type, are best used alongside other investments, such as equities or commodities.
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Bonds For Investment
People have been using bonds for investment purposes for a long time. Bonds are highly valued as investments because they offer fixed returns, which can be substantial depending on certain economic factors like interest rates and inflation. Are you recognizing bonds for their investment value in your overall investment plan?
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Bonds Good Investment
What’s the big deal about bonds? Good investment instincts should kick in and tell you that bonds are a worthwhile addition to a balanced investment portfolio. Bonds have garnered a reputation for being ultra conservative investments reserved for only for risk-averse investors. Gryphon Daily recognizes the major profit potential in bonds. Good investment strategies incorporate both high risk and low risk securities. How does your portfolio stack up?
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Bonds Investments
There are four specific forms of bonds investments. These investments include the federal government bond, corporate bond, state specific bond, and international bond. Generally, individuals lean toward bonds investments for the safety and protection of the portfolio. However, like most investments (other than the government bond) bonds hold a substantial amount of risk by default.
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Book Transfer
A book transfer occurs when funds are transferred from one account to another within the same banking institution. Book transfers allow the check writer to avoid the float of transferring between banks for immediate clearance.
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Book Value Vs. Market Cap
Market cap is a synopsis of market capitalization. Market cap is associated to the appraisal or capitalization the market places on a business. It is estimated by calculating the financial value of a stock by the amount of stocks handed out. In illustration, if the stock of business ABC is selling for $10 USD and there are two million stock shares issued by ABC, the market cap for ABC is ten million USD.
Considering the stock price frequently differentiates on a daily bases, the market cap for a specific business also differentiates on a daily basis.
Market cap is just one of multiple forms or attitudes towards valuing a company. An additional basic procedure utilized to value a business is the book value. The book value is determined as the dissimilarity of the businesses assets and its liabilities. For example, if business ABC has fifty million USD worth of assets, such as inventory, buildings, and so forth, and twenty five million USD in liabilities, such as accounts payable, mortgages, accounts payable, and so forth, the book value of ABC is twenty five million USD.
The book value is additionally mentioned as the actual net worth of the business. The book value of the business and the market cap of the business are essentially, not under any condition, ever the equal value.
A strong expanded company tends to have a more escalated market cap than book value, while an established company with small expansion expectations typically has a market cap that is closer to the book value.
It is crucial to understand that both book value and market cap are merely assessments.
Market cap is the public opinion of what the market assumes the business is valued at. Book value is established on what accountants assume the liabilities and assets are worth.
There are multiple customs and principles accountants utilize to understand what these assessments are based on, yet, at certain checkpoints, a person will make a logical announcement pertaining to what a building is valued at, or what the total of the inventory is estimated at.
If a person assumes the market cap amount is extremely low, they will attempt to purchase stock within the business.
In conclusion, the market cap is utilized to analyze a business fundamentally according to its size.
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Booking The Basis
Booking the basis refers to the situation where the buyer and seller decide who will determine the forward sales agreement’s price. This is also called deferred pricing.
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Books On Day Trading
Reading books on day trading will only take you so far in your stock market education. Eventually you will need to apply the knowledge you gain from books in the actual market. However, you don’t want to jump right into the live day trading markets before you have the opportunity to practice. When you feel ready to move away from books on day trading, you should test your skills with paper trading.
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Books On Options Trading
Books on options trading provides an individual with the knowledge needed in order to perform options trading in the stock market. There are several books on options trading in which an investor has to choose from; finding the one most appropriate for the individual's needs is the tricky part.
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Boomerang
A boomerang is term used to describe an adult that moves back into their parents’ home after a period of living independently. Most often, the parents are of the baby boomer generation. Boomerangs move back in with their parents due to financial reasons and can result in the parent having to postpone their own retirement to help their children out.
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Boomernomics
Boomernomics is an investment strategy that involves the purchase of equities that are correlated with the studied spending behavior of members of the baby boomers generation that were born between 1946 and 1964. Investors that use this strategy typically invest in companies that offer products and services catered towards retiring and aging consumers, such as luxury cars, healthcare and dentures.
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Boon
A boon is a financial term that is used to describe an improvement or benefit a customer might receive from an investment. For example, an investor could experience increased dividends or stock buybacks. Basically, a boon is generally correlated with high returns.
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Booster Shot
A booster shot refers to an initial formal recommendation report for an IPO given by an underwriter. By strengthening its appeal, an underwriter uses a booster shot to reinforce the attractiveness of a new issue to the general public.
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Borrowed Stock
When executing a short sale, a trader borrows shares from a broker that they proceed to sell on the open market. The borrowed shares in a short sale are commonly referred to as borrowed stock. The short seller runs the risk that the borrowed stock will increase in value, meaning that they will have to repurchase the same stock at a higher price. If this happens, the short seller owes more than the original amount of the borrowed stock and ends up losing money on the trade when it is time to pay back their broker.
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Boston Snow Indicator
Boston snow indicator is a market theory that says the following year will result in rising stock prices if Boston experiences snow on Christmas. While there is no actual proof that solidifies the relation between a white Christmas in Boston and the markets, avid practitioners point out examples such as the Christmas of 1995, when Boston received snow and the following year, the S&P 500 grew 20%.
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Bottom Fisher
A bottom fisher is an investor that scavenges through stocks that have seen recent dramatic drops in search of bargains that have potential for making a comeback. These investors strongly believe that a price drop will not last forever and that it is generally the result of bad news and will inevitably make a return to prominence.
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Bottom Fishing
Bottom fishing happens when you try to determine the exact low of a stock. To overcome this mistake let the stock find the bottom on its own and then test the waters.
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Bottom Up Analysis
Bottom up Analysis is a leadership style where a company promotes employee participation of all power levels in decision making. This business plan can encourage flexibility and creativity while empowering employees.
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Bottom Up Investing
Investors utilizing the bottom up investment strategy do not pay attention to the market on a whole but focus on the behavior of a specific stock instead. By concentrating on a specific company and going against the trend, the investor assumes that a company can still perform well even if its industry is struggling on a whole.
In order to benefit from this approach, ample research must be conducted about the targeted company. Investors must possess in-depth knowledge of the company’s services, products, financial history, and general institutional history. By taking the time and effort to do this, investors can potentially hear about new product developments or other significant events that positively impact the performance of the stock.
Bottom up investing is most successful when applied in short-term trading since it is almost impossible to protect a stock from market volatility when trading long-term. Day traders and traders looking to get in and out of the market within a few weeks have the potential to do very well with a bottom up investment strategy, if they pick the right stock.
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Bottom Up Strategy
A bottom up strategy is an investment approach that doubts the significance of market cycles. Focus is shifted from the overall market to just the individual stock. Investors apply research to specific companies rather than the industry as a whole. If the industry is not performing well, an investor will not necessarily cast out a stock of that industry because of that overall industry performance.
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Bottom-Up Investing
Bottom-up investing is a trading strategy that looks at an individual company rather than an entire industry. This strategy emphasizes the idea that a company can perform well even during an economic downfall. This type of investor generally looks away from technical analysis and solely relies on research of the particular company in question.
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Bounce
The bounce is a temporary correction off of the level of known support. The bounce occurs as the price action rebounds from the lowest point to regain some level of temporary upward momentum. Buying a bounce occurs when the price of the security heads toward the support, and the profit opportunity emerges once this bounce back occurs.
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Box Spread
Box spreads combine positions to obtain particular payoffs that are known as delta neutral interest rate positions. The difference in exercise prices causes a continuous payoff through this discrepancy. Known as alligator spreads, the box spread commissions consume profits because of the quantity of trades occurring. This position is particularly complex because it involves 4 legs and visually forms a box.
This spread brings together two different options. The box represents the option prices, which create a rectangle in two quotation columns. This futures trading strategy can combine, for instance, a bull spread that is long a 20 call, short a 30 call, or a bear spread that is long a 30 put and short a 20 put. The bull and bear spreads have the same expiration date.
The dual option minimizes risk and takes advantage of the arbitrage position. By locking in a small return at the expiration date, the investor identifies and utilizes price differences. Since the commission absorbs any profit, the point of the Box Spread is to gain risk-free arbitrage. The box spread essentially encloses, or boxes in, profits that arise from the numeric differences. The Box Spread has to be employed rapidly because the discrepancies don’t really last, so this is a tricky strategy to utilize.
Box spreads are ideal when the Put Call Parity has been extensively violated. While it is not uncommon to violate the put call parity, the breach needs to be substantial enough to constitute action in the arbitrage realm.
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Box Spread Arbitrage Strategy
Box spreads combine positions to obtain particular payoffs that are known as delta neutral interest rate positions. The difference in exercise prices means a continuous payoff. Known as alligator spreads, the box spread commissions consume profits because of the quantity of trades occurring. This position is particularly complex because it involves 4 legs and visually forms a box.
This particular spread brings together two different options. The box literally represents the option prices which create a rectangle in two quotation columns. This futures trading strategy can combine, for instance, a bull spread that is long a 20 call, short a 30 call and a bear spread that is long a 30 put and short a 20 put. The bull and bear spreads have the same expiration date.
The dual option minimizes risk and takes advantage of the arbitrage position. By locking in a small return at the expiration date, the investor identifies and utilizes price differences. Since the commission absorbs any profit, the point of the Box Spread is to gain risk-free arbitrage. The box spread essentially encloses, or boxes in, profits that arise from the numeric differences. Box Spread has to employed rapidly because the discrepancies don’t really last, so this is a tricky strategy to utilize.
Box spreads are ideal when the Put Call Parity has been extensively violated. (See more Put Call Parity for more information). While it is not uncommon to violate the put call parity, the breach needs to be substantial enough to constitute action in the arbitrage realm.
The box spread is profitable when the expiration of the spread is valued higher than the debit and commissions paid. A Short Box Spread is implemented when the value of the box spread expiration is less than the debit and commissions paid. This expiration value is determined by comparing the strike prices in the position and the amount of purchased contracts.
The Box Spread brings together the Bull call spread and the Bear put spread at the same strike price. The box spread can also be viewed as a combination of the Synthetic long stock and the Synthetic short stock.
Computer softwares often have to locate the discrepancies because of how multi-faceted and complex these strike price relationships are. Often times, by the time this divergence in price is discovered, there is no time left to employ the arbitrage strategy. The option trade is possible because the technology is able to locate the grouping of strike prices where arbitrage exists. Profit results when the trader holds on until expiration and then closes profit that is fixed.
Regardless of how the underlying moves, the profit comes as the difference between the total debit or credit and the position’s expiration value. Risk-free profiting is possible, but the profits may be small or eaten up by commissions. It’s hard to spot the chance to do the box spread, but the right box spread can be a successful arbitrage spread option.
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Bracket Creep
A bracket creep is an economic situation that involves inflation pushing income into upper tax brackets. As income tax regulations generally take a long time to modify, people will see more taxation with smaller purchasing power.
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Brain Drain
A brain drain refers to the movement of educated or talented individuals from one country to another. This can result in a country losing expertise and revenue generated by the individual’s spending. Individuals often emigrate to obtain better living conditions, more opportunities or to avoid political turmoil.
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Brain Trust
A brain trust refers to a group of close advisors to an important decision maker. The term was first associated with former President Franklin Roosevelt’s group of advisors. In the market, the term can be used in reference to company’s top thinkers that influence a leader’s business decisions.
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Brazil Etf
Brazil ETF is an exchange-traded fund entirely devoted to Brazil and the Brazilian economy.
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Break
Break is the accelerated deterioration of a price in the futures’ market.
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Break Issue
A break issue refers to an initial public offering (IPO) that sells below the original offering price within the first months after trading begins. This problem can arise out of various factors, including poor market conditions or a lack of demand. When multiple companies suffer a break issue, it is generally taken as a sign that the timing is not ready for a company to go public.
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Breakaway Gap
The Breakaway Gap forms when there is a potential change in trend supported by an increase in volume. A breakaway gap forms at the start of a trend. There are two types of breakaway gaps - bullish and bearish. A bullish breakaway gap forms when a security gaps upwards. A bearish breakaway gap forms when a security gaps downwards. They may be partially filled, but typically, not entirely filled.
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Breakdown
The breakdown is the bearish version of a breakout, the bullish trading strategy. This occurs when the support line is breached and the stock price drops below the level established. As a result, traders will want to trade this stock more, and a successful breakdown will mean a new downtrend at high volume.
For the breakdown to be successful, the stock has to continue its momentum in the direction of the trend. In this case, profit will come when the stock price continues moving downward. The strategy entails short selling the underlying when the price declines past support. In this bearish strategy, the investor can assume that hefty pressure to sell is about to happen.
Technical analysis allows trading experts to predict the movement of a stock to strategize trades. Trendline historical data maps out the lines of support and resistance that box in a stock price until a new trend breaks down or out. The chart patterns can anticipate when the short position is necessary and can give investors the opportunity to get in and out of the trend immediately when it breaks. See breakout for the reverse scenario.
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Breaking The Buck
Breaking the buck is a phrase that is used to describe a money market funds' net asset value (NAV) that falls below $1. This generally occurs when the fund’s investment income cannot cover day-to-day operating expenses or investment losses. It can also happen when interest levels hit low levels and the fund uses leverage to generate capital risk in risk-free instruments.
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Breakout
Trendlines connect points that will predict the future direction and momentum of a stock price. These lines track support and resistance, which outline the trading range. The support is the lower boundary in this range, that is, the lowest possible price for the stock to drop.
The resistance is very important for the breakout system. This line shows the upper trading boundary in the given range or the highest possible stock price. When the price pushes past the resistance line, the stock is breaking out.
Breakout means that a price has broken past the resistance level, and the stock has major volume and amplified volatility. Once the stock breaks out, prices can soar almost straight up the chart. A new uptrend begins as the lines of resistance and support flip-flop. The value of the stock is rising at a rapid rate, and the trader must anticipate where to enter and how to execute an exit strategy. Breakout is the bullish strategy. See breakdown for the reverse bearish position.
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Breakout Gap
Breakout Gap is a term used in technical analysis. A breakout or breakaway gap will occur if the stock price surpasses a high of a price range during a specific period or falls below the low of a price range, simultaneously forming a gap. The breakout gap provides exceptional trading signals on when to enter into a new position, especially in the direction of the gap. When the breakout gap is charted with the price gapped upwards, it is a bullish movement. When the breakout gap is charted with a price gapped downward, it is a bearish movement.
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Breakout Trading System
The breakout is used by technical analysts as an indicator of when to buy or sell. Stock prices are constantly fluctuating, but normally, they move within a narrow range. Sometimes spikes and jumps will occur suddenly. A breakout will occur when there is a price increase in a security that surpasses the level of resistance; this is usually the previous high price. A breakout will also occur if the price level drops lower than the level of support; this is usually the prior lower price.
Traders will buy the underlying asset when the stock price exceeds the level of resistance and sell when the stock price decreases below the level of support. A breakout is used to indicate a continuous move in the same direction. A breakout will also indicate that the security is about to make a significant price movement in the direction of the breakout, especially in those with heavy volume.
Ex: If an upward breakout has just occurred, it is expected for there to be a major upward price movement. Typically, a breakout will be encouraged by a specific event - ex. if the company announces a beneficial financial development or a commercial success. A breakout is the bullish equivalency to a bearish breakdown.
Breakout Trading Systems:
•If today's closing price was above the highest high price that has occured over the past 20 days, you will buy at tomorrow's opening price.
•If today's closing price was below the lowest low price that has occured over the past 20 days, you will sell at tomorrow's opening price.
Calculating statistics - Things you must consider:
•Total gain or loss for the system
•Standard deviation
•Median gain (middle result)
•Average gain ( numerical average)
•Maximum loss of a single trade
•Maximum gain of a single trade
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Breakthroughs In Technical Analysis
As new generations of math whizzes enter the stock market, there are bound to be remarkable breakthroughs in technical analysis. These nerdy number crunchers on Wall Street are using cutting edge technical analysis methods and strategies to circumvent the competition and reach the profit summit first. If you don’t keep up with these breakthroughs in technical analysis, you will fall way behind the profit pack.
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Bric Etf
BRIC is an acronym that stands for Brazil, Russia, India and China. Exchange-traded funds that concentrate on these countries and their respective markets are known as BRIC ETFs.
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Broad-Based Weighted Average Ratchet
This is one type of anti-dilution protection that adjusts the price per share of the original investors’ stock if a company decides to issue new shares of stock. If the new shares are issued at a lower price than what the initial investors originally received, the original investor’s stock is modified to a weighted average of the old price and the new price.
The broad-based weighted average ratchet considers all common stock, convertible securities, warrants and options when determining the new averaged price. This differs from narrow-based weighted average ratchet, which is an anti-dilution mechanism that only considers the outstanding preferred shares in the equation.
Because it takes more types of securities into account, the broad based weighted average actually results in a smaller adjustment of the preferred shareholder’s price. There is some debate as to whether or not the broad based or the narrow based average is the norm when adjusting the price of original shares, but it has been determined that the broad based average is the standard formula that should be used upon the issuance of new stock.
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Broadening Formations
A broadening formation is a trend where a stock will rise and fall several times within a very narrow margin.
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Broke The Buck
Broke the buck is a phrase that is used to refer to a money market fund’s net asset value (NAV) that has dropped below $1. It is an extremely rare event that can be derived from low interest levels and leverage used by funds to create capital risk. Many funds reached or came close to this occurrence in 2007 as a drop in mortgage-related assets spawned a credit crisis.
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Broker Association
A broker association is an allowed involvement between brokers who have an executed order in common. This mutual responsibility gives both exchange members access to the profits and losses accrued in these shares.
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Broker-Dealer
A broker-dealer fulfills roles as both the broker and dealer in a transaction where securities are purchased and sold.
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Brokerage Fee
The brokerage fee is charged by the middleman agent in the buying and selling of securities as a service charge for the service of enabling transactions.
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Brokerage House
A brokerage house is synonymous with the broker representative but extends to mean the broker’s entire practice. This is also known as a brokerage or brokerage firm.
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Brokers
A broker is a licensed individual or firm that charges a fee or commission to execute an investor’s order to trade in securities at their request. These fees or commissions will vary depending on the different services you require. There are different types of brokers available to you regardless if you choose to speak to a human or make trades electronically. The differences between brokers are based on prices, services and special capabilities.
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Browser-Based Trading Platform
For new and not so active traders, a browser-based trading platform may be the way to go. Any Internet-ready computer will do the trick. You will be relying on your Internet browser. Depending on how your broker implements their system, you might be manually updating information. This platform is relatively slow.
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Bse Stock Tips
Savvy international investors are recognizing the money-making opportunities that exist beyond their own borders. One exchange that is gaining popularity among investors is the Bombay Stock Exchange. The BSE is heating up and everyone is on the prowl for the BSE stock tips to amplify their portfolio’s profit potential. If you are considering trading on this exchange, you will most likely need to rely on BSE stock tips for awhile until you learn the market better.
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Bubble
The bubble constitutes a quick expansion and then a contraction in the economic cycle. The equity prices soar upward and then begin plummeting just as abruptly. This is because investors are heavy selling the stock. A bubble can also refer to the financial theory that the price of a security beyond the actual value. The security will move in this direction until the bubble ‘bursts’, so to speak.
When the participators conduct business differently, bubbles are created in markets, securities, and economies in general. This type of changes can be spurred by shifts in how banks are regulated or the result of a shift in the paradigm. The bubble has scant long-term profit because the resources are moving and the prices will inevitably deflate.
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Buck
On Wall Street, a buck is slang for a million dollars. In general conversation, a buck is usually conveyed as meaning one dollar.
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Buck The Trend
The phrase, buck the trend, is used to describe an occurrence where an asset’s market-driven price moves in the opposite direction of that of its competition and the rest of the market. The direction can go up or down but the term is generally associated with a positive movement. The notion that a company can succeed as others fail or slump gives backing to the idea that investors favor companies that are surrounded by negative activity.
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Bucket Shop
A bucket shop is a brokerage firm that employs telephone sales tactics to get rid of poor investments that the firm generally owns. In most cases, the investment is always a penny stock. The brokerage may promise a certain price to the client but will wait until a better price comes around that the firm will sell for in order to keep the difference as an extra profit. The U.S. has regulations that restrict the practices of bucket shop tactics that limits the firm’s ability to trade certain cheap securities.
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Bucketing
Bucketing is a tactic used by a broker to obtain a short-term profit by confirming a client’s order without even executing it. If the execution price is below the price that was available at the time that the client submitted the order, the client will have to pay the higher price while the firm keeps the difference.
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Bulge
Bulge is a financial slang term that is used to describe a quick advancement in prices in the commodities market. Similarly, equity exchanges can experience the same type of price increases in the form of a rally.
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Bulge Bracket
Bulge bracket is a term that refers to the top underwriting firms in the industry who typically issue the most securities on a new issue in an underwriting syndicate. These firms are very large and are financially equipped to handle very large transactions. Because they are backed by so much money and industry expertise, bulge bracket firms can afford to take more risks than smaller boutique firms.
Being considered a bulge bracket firm bolsters the reputation of an investment bank, and results in a lot of good publicity. One of the biggest benefits of a bulge bracket is a prominent listing on the tombstone of the security issue. The tombstone advertises the investment banks that comprise the underwriting syndicate. Since bulge bracket firms issue the most securities in a public offering, they are very prominently displayed at the top of the tombstone ad.
In addition to the free advertisement from the tombstone listing, bulge bracket firms use their underwriting success when talking about their credentials. Recognition as a bulge bracket firm garners instant attention and opens up more underwriting opportunities that might not have existed before.
Since bulge bracket firms operate globally in almost all business sectors for many clients, there is some possibility that a conflict of interest will arise. There are rules that are designed to prevent situations like this, but many question their effectiveness. For this reason, clients seeking underwriters may choose smaller investment banks or brokerages.
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Bull
A bull is an investor that is optimistic about the future of a security or an industry. These investors believe only good will prevail for a particular security and will attempt to profit from an upward movement. Bull’s are the exact opposite of their pessimistic counterparts, the bears, who believe a security will decline in price.
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Bull Call Spread
The Bull Call Spread strategy profits when the underlying stock price increases. This strategy has both limited profit potential and limited downside risk. To create this spread, an investor would buy a (long) call option with a lower strike price, while simultaneously selling a (short) call option with a higher strike price, with the same expiration date. To exit the trade, the investor needs to sell the lower strike call and buy the higher strike call or they can just let the options expire.
An investor receives a profit if the stock price rises above the higher strike price. The maximum profit of this spread is the difference between the strike option prices minus the net debit. If the stock price falls below than the lower strike price on the expiration date, then the investor has a loss. The maximum risk of this spread is equal to the net debit. A breakeven point would be the lower strike plus the net debit paid.
Maximum Profit = Difference Between Strike Prices – Net Debit
Maximum Loss = Net Debit
Break Even Point = Lower Strike Price + Net Debit
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Bull Flag Breakout
A bull flag breakout is typically very small and can last for either one day or several weeks. Using the appropriate moving averages will determine the accurate entry period. The closer the pattern is to the 15-or 20-day span, the faster the breakout will occur.
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Bull Market
A bull market is a prolonged period in the market in which stock prices are increasing faster than their past averages. It can last months or even years. This market tends to be associated with increasing investor confidence, encouraging investors to buy in hopes of additional capital gains. It is defined by a price increase of least 15% in a key stock market index. The bull market of the 1990s is perhaps one of the most famous and longest bull markets in history.
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Bull Market Stages
Primary Bull Market:
Stage 1- Accumulation: The “smart money” begins to collect stocks when the public is out of stocks and assessments are at historical lows. Those with patience begin to see the value behind owning a stock for the long heave. During the first stage stocks begin to find a bottom and quietly firm up. This rise signifies that the Bull market has begun. When the market begins to head back downward it is known that the bear market is not over. At this point is it confirmed whether the decline is a secondary movement or not. If it is a secondary movement a subsidized period will proceed as the market firms. Shortly after an advance will begin confirming it is now a primary bull market.
Stage 2- Big Move: The second stage is the longest but also sees the largest advances in prices. The importance of the second stage is to increase valuation in stocks and improve business conditions. Earnings will begin to start to rise again. Trend followers commonly contribute during this stage since it is the easiest to achieve profit.
Stage 3- Excess: The third stage experiences inflation pressures and exceptional conjecture. By this stage the public is fully involved in the market and valuations are excessive. The third stage is viewed as a repeat of the first stage of the bull market.
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Bull Put Spread
The Bull Put Spread strategy profits when the underlying stock price increases. This strategy has both limited profit potential and limited downside risk. To create this spread, an investor would buy a (long) put option with a lower strike price while simultaneously selling a (short) put option with a higher strike price, with the same expiration date. To exit the trade, an investor needs to sell the lower strike put and buy the higher strike put or they can just let the options expire.
An investor receives a profit if the stock price rises above the higher strike price. The maximum profit would be equal to the difference between the amount received from the short put option and the amount used to pay for the long put option. If the stock price falls below than the lower strike price on the expiration date, then the investor has a loss. The maximum risk of this spread is equal to the difference between the strike prices minus the credit the spread was sold for. A breakeven point would be the higher strike minus the net credit.
Maximum Profit = Net Credit
Maximum Loss = Difference Between Strike Prices – Net Credit
Break Even Point = Higher Strike Price - Net Credit
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Bulldog Market
Bulldog market is a slang term that is used to reference the United Kingdom’s stock market. The term is generally used by people outside of the United Kingdom. The name is derived from the British bulldog.
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Bullet
A bullet is a one-time lump-sum payment on an outstanding loan. This type of repayment is generally made shortly after the loan which can prevent or slow down amortization of the loan. People usually engage in bullet payments if they their financial situation significantly improves shortly after a loan is made.
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Bullish Engulfing Pattern
The bullish engulfing candlestick signifies a longer term down trending action. This decline in stock price means that a sharp sell off has taken place. Once the price begins dropping, interest is renewed and buying picks up again. Hence the name bullish, the buyers eagerly grab up the stocks and the market shifts back to the positive.
This particular candlestick encompasses the previous candle’s real body. It engulfs, or literally consumes, the prior candle. The longer candles are the best signal that the reversal will occur. When you see a bullish engulfing that absorbs many previous candles, it will tell you that the market is making a major shift.
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Bullpen
A bullpen is a term that is used to describe the seating arrangement of new and inexperienced brokers in a brokerage firm. In most cases, young brokers are assigned to desks that are located in the center of a room facing each other. The more experienced and successful brokers are usually given individual offices.
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Bump And Run
A bump and run refers to a chart pattern that depicts a reversal pattern. This often happens following a substantial uptrend. This pattern causes a big run up on the price and big investors eventually sell. This causes an investor panic where large sell-offs occur.
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Bunching
Bunching is a term that describes the combination of orders for the same security so that a broker can execute them at the same time. This can be to the investor’s advantage because it can save them from additional fees. However, brokers are required to obtain permission from the different investors before they can bunch orders together.
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Buoyant
Buoyant is a term used in commodities trading when the prices are steadily and strongly rising. Increased confidence among investors leads to higher volume and volatility in these situations.
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Burn Rate
Burn rate, or negative cash flow, describes the amount of time it takes a company to use its startup capital before it starts making profits. Analyzing the burn rate of a company can provide insight for investors into the financial stability and future of the company.
The burn rate is measured in cash and is usually reported on a monthly basis. When companies rely on venture capital for an extended period of time, it means that they are not making any real money. Burning through cash too quickly will put a company right out of business. On the other hand, spending cash too slowly may cause a company to fall behind its competition in terms of growth and market share.
Calculating burn rate is as simple as looking at the change in a company’s cash position over a determined period of time. Investors can easily see how much time a company has before it runs out of cash by comparing its cash reserves to the burn rate.
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Business Risk
Business risk is the risk of anything that can harm a company’s profitability, from poor management to outdated products.
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Bust
A bust refers to a time period that sees a rapid decrease in economic growth. Usually associated with bear markets, a bust may cause inflation to decrease and will occasionally create deflation. During a bust, unemployment will rise while income falls and demand rises. A bust will generally trail behind a boom in what financial forecasters call a “boom and bust” cycle.
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Busted Convertible Security
A busted convertible security refers to a convertible security that is selling below its conversion value. Since the security will unlikely reach its convertible price before maturing, it is valued as a regular debt. Busted convertibles frequently trade at prices that are close to other nonconvertible debt. However, if the stock miraculously makes a recovery, the bond could become very valuable.
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Butterfly
The Butterfly Spread is a neutral strategy that is a combination of the bull spread and the bear spread. An investor would use this strategy when they assume that an underlying stock will stay where it is but also wants to limit risk if it moves. This strategy has both limited profit potential and limited downside risk. In this strategy three strike prices are used. The lower strike price and the one in the middle are used in the bull spread, and the high strike price is used in the bear spread. This strategy can be created using all puts or all calls or a combination of both.
An investor receives a profit if the stock price remains or moves into a defined range. The closer the stock is to the middle strike price on expiration day, the larger your profit. The maximum profit of this spread is, when at expiration, the price of the underlying stock is equal to the middle strike price. If the stock price moves out of the desired range, then the investor has a loss. The maximum risk of this spread occurs if the underlying stock is above the higher strike price or below the lower strike price at expiration. There are 2 breakeven points for the butterfly spread. The net debit plus the lower strike price equals the lower breakeven point. The higher breakeven point is equal to the higher strike price minus the net debit.
Maximum Profit = Middle Strike – Lower Strike – Net Debit
Maximum Loss = Net Debit
Lower Breakeven Point = Net Debit + Lower Strike Price
Higher Breakeven Point = Higher Strike Price – Net Debit
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Buy And Hold
Buy and Hold is a long-term investment strategy where the investor buys shares of a stock in a company and holds onto the investment for a long period of time. The investor disregards fluctuating markets and holds onto the investment in hopes that over time the investment will develop a prolonged healthy price.
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Buy And Homework
Buy and homework is a phrase coined by Jim Cramer. Cramer argues that the concept of “buy and hold” is a losing strategy and that investors should spend one a week researching each stock in their portfolio. Cramer suggests that investors listen to conference calls, read news stories and financial reports as well as researching what analysts are looking for in order to have a greater knowledge of their portfolio.
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Buy Call Option
A buy call option is an option contract that gives the holder the right to buy, but not the obligation, a specified quantity of an underlying security from a writer of the option at a specified price that is to be paid on or before a predetermined date.
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Buy Limit Order
Buy Limit order is when the price of the stock you’re buying is at the limit price or lower.
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Buy Put Option
A buy put option is an options strategy used when an individual expects an underlying futures price to decrease. Buying a put option gives the investor the right to sell the underlying futures contract at the strike price before an expiration date.
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Buy Side
The buy side is the portion of Wall Street that is made up of investment institutions such as mutual funds, pension funds and insurance firms. These institutions usually buy large quantities of securities solely for money-management purposes. The buy side of the market differs from the sell side in that it is geared away from the general public.
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Buy The Dips
The phrase, buy the dips, refers to the act of purchasing stocks shortly after a decline in prices. This concept is based on the idea of market fluctuation that states that because of the market’s volatility, a decrease in prices will eventually see an increase. Essentially, by purchasing stocks after a price decline, an investor is practically purchasing an asset for a discount price.
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Buy To Close
Buy To Close is used to close or trade out of a short position on an options contract. The seller of an option (option writer) is short on an option. When using the “Buy To Close” order, whether for call or put options, it means buying back options that are currently short, to close the already open position. The “Buy To Close” order can be used to close open short positions anytime before the options contract expires.
After selling a “Sell To Open” option, a “Buy To Close” option is needed in order to take a profit or prevent loss. With the “Buy To Close” call option, the order ends the obligation under the contract and the option will no longer benefit from further decreasing prices. With the “Buy To Close” put option, the order ends the obligation under the contract and the option will no longer benefit from further increasing prices.
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Buy To Open
Buy To Open is the most basic trading order and is used to establish a long position on an options contract. When using the Buy To Open order, whether for call or put options, it means opening a long position by buying an options contract.
•Buy To Open call options are used when speculating an upward movement in the underlying security. This is the order that is used when executing a long call options strategy. Buy To Open call options enables the buyer to own those call options and profit when the underlying security price increases and also allows the buyer to exercise the option to buy the underlying security at the strike price whenever they want to before the call options expire.
•Buy To Open put options are used when speculating a downward movement in the underlying security. This is the order that is used when executing a long put options strategy. Buy To Open put options enables the buyer to own those put options and profit when the underlying security price decreases and also allows the buyer to exercise the option to sell the underlying security at the strike price whenever they want to before the put options expire.
In order to take profit or stop loss on these positions, a Sell To Close order would be used. An option can expire worthless if the underlying security trades below or above strike price by expiration but the most a buyer can lose is the premium.
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Buydown
A buydown is a mortgage-financing technique where the seller of a property provides payments to the mortgage-lending establishment, lowering the buyer’s monthly interest rate. To make up for the lost capital, the seller increases the purchase price of the property. Having a lower monthly payment makes it easier for the buyer to qualify for a mortgage.
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Buyers Call
Buyers call is the arrangement between a buyer and a seller in which the purchase of a commodity is planned for a specific grade and quantity. This is also considered a call sale, where the buyer settles the price of sale by determining the specific details of the transaction.
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Buyers Market
A buyers market is the type of situation where a large quantity of goods is ready to be sold. This gives the futures buyer increased leniency because of the available selection.
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Buying And Selling Etf's
An ETF can be bought at any brokerage firm as you would any stock. When an investor sells an ETF they have two options. One option is to sell the EFT on the secondary market. The second option is submitting the shares to the ETF fund in exchange for the underlying shares.
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Buying Call Options - Going Long
Buying (holding) call options, also known as long call options, allows the buyer of the option to profit from an upwards movement in the underlying security price. The buyer of a call option is speculating rising prices in the underlying security. When buying a call option an investor has the right, but not the obligation, to buy a specified quantity of an underlying security at a specified price (strike price) within a specified time (expiration date).
Opening such a position involves a "buy to open" call option. The buyer then holds on to the call option and hopes that the underlying security will increase in price over time before the call options contract expires. At expiration a call option buyer can either sell the call options to another buyer at a higher price or exercise the option to buy the underlying security from the seller at the higher agreed price and sell the underlying security in the open market, at the current market price, receiving a profit. A call becomes more valuable as the price of the underlying security rises above the strike price.
A call option can expire worthless if the underlying security trades below strike price by expiration but the most a buyer can lose is the premium. The premium is the cost of buying a call option. That price acts as insurance to the buyer and a payment to the writer for taking the extra risk. The longer time until the expiration date, the higher this price will be due to the extra risk the writer is facing.
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Buying Put Options - Going Long
Buying (holding) put options, also known as long put options, allows the buyer of the option to profit from a downward movement in the underlying security price. The buyer of a put option is speculating declining prices in the underlying security. When buying a put option an investor has the right, but not the obligation, to sell a specified quantity of an underlying security at a specified price (strike price) within a specified time (expiration date). There is no ownership in the underlying shares, only the put options themselves.
Opening such a position involves a "buy to open" put option. The buyer then holds on to the put option and hopes that the underlying security will drop in price over time before the put options contract expires. At expiration a put option buyer can either sell the put options to another buyer at a higher price or buy the underlying security at the current market price and then exercise the option to sell the underlying security to the seller at the higher agreed price, receiving a profit. A put becomes more valuable as the price of the underlying security falls beyond the strike price.
A put option can expire worthless if the underlying security trades above strike price by expiration but the most a buyer can lose is the premium. The premium is the cost of buying a put option. That price acts as insurance to the buyer and a payment to the writer for taking the extra risk. The longer time until the expiration date, the higher this price will be due to the extra risk the writer is facing.
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Cage
A cage is a term used to refer to a department of a brokerage firm that is responsible for receiving and distributing physical securities. Commonly referenced in the industry by workers, the cage can be considered a room that holds certificates and bonds.
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Calendar Call
The Calendar Call is a bullish strategy that is used when the underlying stock price is anticipated to steadily increase. This strategy has unlimited profit potential and limited downside risk. To create this strategy, an investor would buy a long term call and sell a short-term call at the same strike price. The intention of this trade is to generate income by selling calls against your long term position and receiving the premium.
An investor would receive a profit when the short term option closes at or slightly above the strike price of the short call option, making it worthless. If time permits on long term option, an investor will repeat sale of another short-term option to attain additional time premium. An investor can hold the long option if the market looks ready to move in an upward direction. The maximum risks are limited to the net debit paid. A breakeven point would be the strike price plus the net debit paid after the short term call expiration.
Maximum Profit = Unlimited at the short-term call expiration
Maximum Loss = Net Debit Paid
Break Even Point = Strike Price + Net Debit paid after short-term Call Expiration
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Calendar Put
The Calendar Put is a bearish strategy that is used when the underlying stock price is anticipated to stay stagnant or decrease slightly. This strategy has both limited profit potential and limited downside risk. To create this strategy, an investor would buy a long term put and sell a short-term put with the same strike price but different expiration dates. The intention of this trade is to generate income by selling puts against your long term position and receive a premium.
An investor would receive a profit when the short put option expires worthless and the short premium can be retained. The maximum profit occurs when the underlying stock closes below the strike price of the short put option upon expiration of the long put option. The maximum risks are limited to the net debit paid. A breakeven point would be the when the long put value is equal to the net debit.
Maximum Profit = Long Put Value at expiration of short-term Put – Net Debit
Maximum Loss = Net Debit Paid
Break Even Point = Long Put Value is equal to Net Debit
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Calendar Spread
Calendar Spread- This is an option spread trade also called time or horizontal spreads because they involve options with different expiration months. The calendar spread gets its name because the month of expiration for the spread is different, while the strikes remain the same. A calendar spread consists of selling short-term option and buying a long-term option. Either calls or puts can be used, depending on which provides the best reward to risk ratio, but never with calls and puts used together in the same trade.
- Strategy: Buy a long-term call option and sell a shorter-term call option with the same strike price.
- Market Opportunity: Look for a market that is short-term range-bound (through expiration of the short option) with a moderately bullish bias in the long-term.
- Maximum Risk: The difference in premiums (net debit).
- Maximum Profit: Equal to the value of the long option at short term expiration minus the net debit.
- Breakeven: Point in which the value of the bought call will equal net debit.
Long Calendar
A long calendar spread involves buying an option with a longer expiration and selling an option with the same strike price and a shorter expiration. For example, imagine that XYZ is trading for $55 per share. To initiate a calendar spread, you might sell the XYZ June 55 calls and buy the July 55 calls.
For long calendar spreads to work, the underlying stock price must remain relatively stable. Any swings in either direction will negatively impact the time value of both options causing the spread to lose value.
Short Calendar
A short calendar spread involves selling an option with a longer expiration and buying an option with the same strike price and a shorter expiration. For example, imagine that XYZ was trading for $45 per share. To initiate a short calendar spread, you might buy the XYZ June 45 calls and sell the July 45 calls.
For short calendar spreads to work, the underlying stock price must make a significant move in either direction. Otherwise, lack of market movement will cause the spread to become unprofitable if the option with the earlier expiration loses time value at a faster rate than the other option.
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Call Around Market
The Call Around Market is most frequently associated with futures options traded on European exchanges. A call around market involves communication among brokers beyond the physical exchange facility to coordinate block trades, which are a larger number of securities.
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Call Backspread
The call backspread is the reverse call ratio spread, a bullish strategy that writes a quantity of call options and buys more at a higher strike price, same underlying stock and same expiration. The trader’s profit is unlimited and most useful when the trader predicts that the underlying stock price will spike at a later date.
A 3:1 call backspread means selling calls at a lower strike price, then buying three times as many calls at a higher strike price.
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Call Diagonal Ratio Spreads
Call diagonal ratio spreads can also make a profit in three directions like the call ratio spread. Also like the call ratio spread, the call diagonal will only lose money when the underlying rallies too much. This is considered a neutral options strategy but does not accrue loss when the underlying drops.
The call diagonal may actually be seen as an upgrade to the call ratio spread alone. The same long call can be employed for multiple months. As investors write short term options against the long term, no extra commission is needed to recreate this position on a monthly basis.
When the investor thinks that the stock will rise, the call diagonal spread is a strong option. Even if the stock stays in place or goes down, this strategy is optimal when the stock is predicted to go up to some price. The credit happens when the trader is shorting more from money call options than those bought.
The diagonal spread adds the dimension of time to this formula. With call ratio spread, the long and short options have the same expiration. The call options will have a long and short with different expiration dates. Typically, longer expiration dates are purchased while the shorter expiration are shorted. Bull Call Spread means high profits when underlying stock of the short options closes at strike price. Another big perk is that the call options can be written against the long call for many months instead of needing constant renewal. Disadvantages are the restriction on beginners, required margin, and an increased amount of margin. Extra margin gives more room for more shorting so that the net credit can have congruent strike prices.
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Call Option
The call option gives an investor the right to purchase an options contract without any obligation. Unlike the Put option, which gives the holder the contractual right to sell shares at a specific strike price and sell date, the call represents a bullish position. The investor expects the price of the financial instrument to rise, so buying the call option allows the shareholder to buy lower and sell higher. This is a core options investing concept, and the investor decides whether to exercise the contract or allow it to expire worthless.
The strike price on the call option is the agreed upon value for the option on a specific date in the future when the contract expires. At this time or at any time during this time frame, the investor has the right to purchase Calls and capture profits, assuming that the price action of the asset continues to move upward.
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Call Ratio Spreads
The call ratio spread has that unique ability to make a profit in all three directions. Simultaneous profit from up, down, and sideways is a highly advantageous perk to this trading strategy applicable in Call and Put Ratio Spreads.
Call Ratio Spreads only lose if the stock rallies too powerfully. Classified as a neutral strategy, the call ratio spread actually does not lose money even if the stock drops on the underlying. This spread is ideal if the investor thinks that the stock will rise in price because it wouldn’t matter if the stock stays as is or moves in the opposite direction.
The credit happens because the call options are shorted more than the money call options being purchased. With three directions to profit, the most profit will result when the stock closes on the short call option at strike price. The only downsides are required margin and restrictions for beginners.
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Call Rule
The call rule is an exchange rule that establishes the authorized bidding price of a cash commodity near the end of each daily trading session. This is the official price until the exchange opens again. By maintaining commodity prices close to the previous day’s closing bid, the volatility is reduced overnight.
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Callable Stock
The corporation that issues stocks maintains a particular condition for the callable stock normally absent in stock exchanges. With callable stock, the company maintains the right to repurchase the stock at a specific price on demand. Callable stock can be both common and preferred. An example of callable stock would be at the request of a parent company operating its subsidiaries. This particular right is oftentimes not exercised but simply put in place so the option is available should the issuer need this financial cushion.
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Camouflage Compensation
Camouflage compensation is a form of compensation that is hidden from analysts and shareholders. Companies can avoid disclosing employee compensation in mandatory company filings by making payments through stock options, SERPs, non-qualified deferred compensation plans and share grants. As this can be a way to hide outrageous compensations to executives, the SEC has proposed regulations to bring more disclosure of total compensations to the public light.
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Canadian Insider Trading
When you hear the phrase “Canadian insider trading,” you probably imagine a secret meeting at the border where investors are exchanging stock tips. It really isn’t like that. Insider trading simply means having access to a professional’s point of view. You don’t have to cross the border to get Canadian insider trading information. Gryphon Daily has the tips you need to succeed trading on Canadian exchanges.
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Canadian Online Trading
There are several sites out there that can help jump start your Canadian online trading. The appropriate websites can offer the investor valuable advice on the stock trading methods and how to correctly make maximum profits through Canadian online trading services. Whether, you have the capabilities to afford a high-quality service or an inexpensive service, the professionals gear you in the right direction for Canadian online trading.
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Canadian Stock Trading
Several other countries have stock exchanges just like the United States. Canadian stock trading is nothing more than Canadian companies whose shares trade on a Canadian stock exchange. Unlike the United States Stock Market, Canadian stock trading focuses on only two industries: commodities and financials. The majority of Canadian stock trading happens on the Toronto Stock Exchange, which is the largest stock exchange in Canada.
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Candlestick
Candlesticks, line, and bar graphs are the three ways to chart stock market price action. The candlestick is an important instrument for technical analysis, and the various candlestick formations and chart patterns give indicators for how the price will move in the future.
A candlestick chart consists of four major prices: high, low, open and close. The body of the candlestick bar is formed by the opening and closing prices. To indicate that the opening is higher than the closing, the body of the bar is left blank. If the instrument closes below its opening, the body is filled.
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Candlestick Charts
Candlestick charts show the high, low, open and close prices for a specific period of time. Candlestick charts consist of a wide vertical line (candle), and a narrow vertical line (wick). If a candle is green it means the stock closed higher than it opened. If a candle is red it means the stock closed lower than it opened. The black "wick" at the top and bottom show the high and low.
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Candlestick Technical Analysis
A lot of traders avoid candlestick technical analysis because it is extremely complicated. But the truth is that if you don’t put in the time and effort to learn to read candlesticks patterns, you will never realize your full potential as a trader. Candlestick technical analysis is primarily used by futures traders. If you don’t get candlestick savvy, you will alienate yourself from this entire market of potentially huge profits.
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Canslim
CANSLIM is a stock selection system created by William J. O’Neil, the founder of Investor’s Business Daily. CANSLIM is an acronym where each letter stands for a key factor that an investor should look for in a stock.
C – Current quarterly earnings per share increases sharply from the previous year’s same quarter.
A – Annual earnings have increased over the past five years.
N – New products, management, and other new events. The company strives to evolve.
S – Small supply with a large demand. High demand can increase stock prices.
L – Leader over similar stocks within the same industry.
I – Institutional sponsorship by institutions that have strong performance record.
M – Market direction that is heading up.
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Cap And Trade
Cap and trade is a system that is intended to decrease amounts of pollution and certain types of emissions by offering profit incentives to companies that reduce pollution levels faster than competitors. A cap-and-trade system allows companies to sell (trade) unused portions of their limits (cap) to other companies. The 1990 Clean Air Act, a cap-and-trade system, is viewed by many as a top factor that led to the reduction in sulfur-related acid rain.
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Cap Rates
Acknowledged as a capitalization rate, cap rate is the discount rating utilized for establishing the recent value of the acquired assets, which in turn shall furnish forthcoming income. Exercised in presenting revenues for a company over a set amount of time as well as investigating the scale of return on a particular mortgage, the cap rate commonly is determined income tax, extracted from net income. The cap rate is principally resolved by dividing the net operating income related with the business income affiliated with the company by the market value multiplied by one hundred.
Cap rate is understood by dividing the net operating income affiliated with the business by market value multiplied by one hundred.
Determining a current cap rate is a distinctive avenue of securing that a company or expense is furthering to receive a return.
In the most quality of affairs, one can pray that the cap rate shall determine a comparative return and chance with a premium over the course of time, comparatively risk free.
The cap rate could as well be utilized as a marker that expenditure has a particular amount of probable issues.
In turn, the cap rate does not determine a rate of return referred to as equitable. The stockholder may determine a rate of return considered to be equitable. The stockholder may also commit to not accept the investment, hence seeking another convenience or opportunity.
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Capital
Capital refers to cash and other financially valuable assets. This is a highly generic term that could refer to any and all monetary instruments, depending on the circumstances.
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Capital Appreciation
Capital appreciation is a general term referring to any increase in the market price of a stock. When the price per unit of a share of stock increases over a period of time, the amount of that increase is called capital appreciation. This increase in value only refers to the principal investment and not to any interest income that has accrued. Capital appreciation can also represent the anticipated growth of the initial investment over a period of time.
Investors looking to create a portfolio focused on long-term investments strongly consider the potential capital appreciation of a fund. By analyzing the historical and current performance of a stock in varying market conditions, investors gain insight and make educated projections about the stock’s potential to perform well in the future.
Focusing on capital appreciation as a source of return on investments does not have to be risky but can be in some cases. Stocks that show moderate but steady growth do have the potential for capital appreciation. However, there is a more aggressive approach that involves investing in capital appreciation funds. These funds target higher risk assets that have the possibility for quick and lucrative returns.
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Capital Asset
The term capital asset refers to any physical piece of equipment or property used regularly by a business to create profits. Depending on the industry, capital assets can comprise the majority of a company’s assets. Capital assets on a business’s balance sheet are included in the property, plant and equipment figure.
There are special tax stipulations applied to capital assets. Since capital assets are often pieces of equipment or machinery that lose value over time, taxes are assessed on both the gains and the losses associated with the asset. Business owners are eligible for tax credits on depreciated equipment and can eventually claim the asset as outdated and in need of replacement.
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Capital Gain
The worth of a capital asset can increase or decrease over time. A capital gain results when the value of an asset increases and is now worth more than the original purchase price. Capital gains can occur in capital assets, such as property or equipment, or in stocks and bonds.
There are two different types of capital gains: realized and unrealized. A realized capital gain means that the asset has increased in value and has been sold. An unrealized capital gain is when the asset has appreciated but has not yet been sold.
Any profit earned as a result of a realized capital gain is subject to taxation. The tax rate will vary depending on how long the asset has been held. If the capital gain is short term (less than one year), it is subject to the same rate of taxation as regular income earned. Long-term capital gains (longer than a year) are subject to a maximum tax rate of 15%.
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Capital Gains Distribution
Capital Gains Distribution come from a business investing portfolio’s capital gains to compensate share owners in mutual funds are known as capital gains distributions. This is typically toward the end of the year and subject to taxes.
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Capital Loss
A capital loss is a negative return on investment that occurs when an asset is sold for less than it was originally purchased. Capital losses will occur, but there is a silver lining associated with this negative situation.
Many investors use capital losses to offset the taxes applied to capital gains earned through other investments. Even in a year where there are no capital gains, up to $3,000 in capital losses can be deducted from ordinary income. Just like with capital gains, capital losses are not realized until the asset is sold.
Ups and downs are expected with any investment, and it is important to keep that in mind when dealing with a capital loss. While there are tax benefits, investors should not continue to hold on to an asset that is repeatedly losing you money.
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Capitalization Ratio
Capitalization Ratio measures the debt component of a company's capital. It reflects the extent of a company’s use of leverage.
Capitalization Ratio = Long-Term Debt ÷ Long-Term Debt + Shareholders’ Equity
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Capitulation
Capitulation originates from the military, indicating surrender. This term translates into stock language as giving up stock price gains. These investors surrender the profit and sell equities so as to abandon the position for safer investments. By reducing or preventing the risk, capitulation occurs at very high volume and abrupt downturns. This tends to be a period when panicked investors are selling stocks.
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Capitulation Bottom
Capitulation originates from the military, indicating surrender. This term translates into stock language as giving up stock price gains. These investors surrender the profit and sell equities so as to abandon the position for safer investments. By reducing or preventing the risk, capitulation occurs at very high volume and abrupt downturns. This tends to be a period when panicked investors are selling stocks.
Those investors who want to abruptly abandon certain positions opt for capitulation selling. This is a solid opportunity for other investors to grab the bargains. Because so many have sold to unload the stock, the price would typically reverse and head toward the lows.
Capitulation indicates that the direction of the price is trending toward a bottom. Forced selling as a result of margin calls may also signify the rapid selling associated with the capitulation bottom.
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Capping
This illegal practice violates NASD rules by manipulating the price of a stock. Capping puts selling pressure on a stock with the intention of either moving the price lower or keeping it low. Selling pressure happens when significant amounts of a security or commodity are sold leading up to the expiration date to further the call option writer’s profits.
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Captial Appreciation
Capital appreciation is a general term referring to any increase in the market price of a stock. When the price per unit of a share of stock increases over a period of time, the amount of that increase is called capital appreciation. This increase in value only refers to the principal investment and not to any interest income that has accrued. Capital appreciation can also represent the anticipated growth of the initial investment over a period of time.
Investors looking to create a portfolio focused on long-term investments strongly consider the potential capital appreciation of a fund. By analyzing the historical and current performance of a stock in varying market conditions, investors gain insight and make educated projections about the stock’s potential to perform well in the future.
Focusing on capital appreciation as a source of return on investments does not have to be risky but can be in some cases. Stocks that show moderate but steady growth do have the potential for capital appreciation. However, there is a more aggressive approach that involves investing in capital appreciation funds. These funds target higher risk assets that have the possibility for quick and lucrative returns.
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Carbon Trade
Carbon trade is an idea that was presented in response to the Kyoto Protocol. A carbon trade system allows countries to trade greenhouse gas emission rights. In other words, a country that is finding it difficult to hit its GHG reduction target could buy more emission rights from another nation that has a surplus.
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Cardboard Box Index
The cardboard box index is a financial gauge used by investors to measure the production of cardboard boxes in order to predict the purchase of non-durable consumer goods. In essence, the higher the amount of cardboard box production will correlate with the amount of capital being invested by companies to make products.
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Carry Trades
One of the most popular trading methods among Forex traders is the currency carry trade. This is when a trader will sell a currency with a low interest rate and buy a currency with a higher interest rate. When you apply this strategy you are essentially borrowing at a low rate and lending at a higher rate. With a carry trade, you will obtain the difference between the lower rate and the higher rate.
This strategy may not seem like a very profitable approach, but in reality, a small difference between the two interest rates can potentially result in a tremendous gain. This is especially true if the trade is highly leveraged. In addition to capitalizing on the rate difference in a carry trade, this strategy allows investors to bank on the increasing value of the higher currency.
Carry trades involving the Japanese yen became very popular when Japan reduced its interest rate to nearly zero in 1999. Smart investors took advantage of this incredible opportunity by borrowing large amounts of yen and converting them to US dollars to buy Treasury bonds which produced yields at around 4-5%. By converting yen to dollars, investors were capturing huge profits from these bonds since they paid next to nothing for the Japanese yen. By leveraging your trade, you can multiply your returns immensely.
Keep in mind that the carry trade strategy does not come without risks. Carry trades tend to be a longer term investment, which means that they can be exposed to a lot of changes over time.
It is possible for the lower currency to gain against the higher currency. If this happens, the profit earned from the difference in the interest rates could dwindle down to nothing. Investors might be deterred by the risk associated with the higher yielding currency. In turn, they will look to the lower yielding currency since it offers more security as an investment.
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Carrying Broker
The carrying broker, a member of the commodities exchange, has permission to clear trades for someone else. This representative, or futures commission merchant, offers services by acting as the liaison between a small party and the commodities market.
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Carrying Charge
Carrying charges is a fee that is accrued based on the length of time a financial instrument is held or the physical commodity is stored. The futures contract or commodity price will reflect these additional costs.
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Carryover Basis
The carryover basis is the means to figure out an asset’s tax basis after one individual receives another person's assets. This transference typically involves property.
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Cash Commodity
A cash commodity is the actual commodity product being traded in the futures contract, which derives value based on the worth of this underlying good.
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Cash Cow
In financial terms, a cash cow is a company that produces a consistent cash flow over its lifespan. Cash cows require little investment capital and the generated revenue can be used to buy back shares on the market, pay dividends to shareholders or it may even be used to strengthen other divisions within a corporation.
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Cash Dividend
Cash dividends are the most common type, checks subject to taxation and deemed an investment earning.
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Cash Equivalents
Cash and Cash equivalents contains mainly the liquid assets – currency, deposit accounts, and the negotiable instruments such as money orders, bank drafts, and checks.
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Cash Flow Coverage Ratio
Cash Flow Coverage Ratio measures the ability of the company's operating cash flow to make interest and principal payments as they become due. A ratio of less than (1) indicates bankruptcy for the company.
Cash Flow Coverage Ratio = Net Income + Depreciation and Amortization ÷ Total Debt Payments
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Cash Flow Debt Ratio
Cash Flow to Debt Ratio measures a company's ability to cover total debt with its yearly cash flow from operations. The higher the percentage ratio indicates the better the company's ability to bear its total debt.
Cash Flow to Debt Ratio = Operating Cash Flow ÷ Total Debt
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Cash Flow Indicator Ratios
Cash Flow Indicator Ratios focus on cash being generated and the protection that it provides to the company. These ratios give another look at the financial health and productivity. Companies might not be as profitable as they appear if they are generating little cash from these profits.
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Cash Flow To Debt Ratio
Cash Flow to Debt Ratio measures a company's ability to cover total debt with its yearly cash flow from operations. The higher the percentage ratio indicates the better the company's ability to bear its total debt.
Cash Flow to Debt Ratio = Operating Cash Flow ÷ Total Debt
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Cash For Refrigerators
Cash for refrigerators is a federal energy efficiency program that was introduced in 2009 on the heels of the controversial cash for clunkers program which generated over 690,000 new vehicle sales during its time. The cash for refrigerators program offered customers a rebate of up to $200 when they bought a newer more energy efficient home appliance. Congress backed the program up with $300 million.
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Cash Forward Sale
In this regular cash transaction, the commercial buyer and seller settle on the details of the exchange. This agreement encompasses every aspect of the delivery: the exact quantity, the expected quality, and the future date. The price can be decided up front, or both parties can agree to settle the price upon delivery. This is a private negotiation that can vary instead of more standardized procedures.
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Cash Market
The cash market refers to the financial market where actual cash commodities are bought and sold as opposed to futures contracts or options. In the securities market, the term cash market describes the scenario where the delivery occurs almost instantaneously following a sale.
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Cash Price
Cash price is the cash commodities’ purchase and delivery price. The costs from the initial transaction to the transportation are included in the cash price.
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Cash Ratio
Cash Ratio is an indicator of a company's liquidity that further refines both the current ratio and the quick ratio by measuring the current assets to cover current liabilities. The higher the cash ratio means the more liquid the company’s current position is.
Cash Ratio = Cash + Short-Term Investments ÷ Current Liabilities
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Cash Settlement
The cash settlement is an agreement in a futures or options contract where the seller transfers cash instead of delivering the financial instrument. This works for those who do not want the actual commodity but instead the exchange of funds.
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Cash Surrender Value
Cash surrender value, or cash value, is the sum of money which can be realized in the event that an insurance policy is retired. This tends to involve a complete life policy that doesn’t attain full growth. The cash value that is integrated in the coverage at the period of cancellation of the insurance policy, will show in a cash deposit to the insured party.
One benefit many types of insurance policies have is the capability to make cash value over a period of time. In most cases, the cash value will continue to increase the longer the policy is in effect. While the value of the policy increases, it’s likely to earn against the cash value or possibly use the policy as collateral to sure a loan.
When using the entire life policy as an asset to secure a loan, a lender typically makes note of the ongoing cash surrender value of the policy. The lender will utilize this amount as a redeemable worth of asset. By engaging the cash surrender value as the collateral for the loan, the lender is certain of recovering the value of the loan even if the debtor defaults. The debtor is not required to bind other assets, providing that the financial need is satisfied. A cash surrender value should never be confused with the face value of other insurance coverage's.
The policies face value is involved with the amount that is paid out to the beneficiaries, providing the terms of the policy are satisfied. Cash surrender value is to be paid to the insured at the time the decision to stop the insurance policy coverage is made. The cash surrender value will be substantially less than the face value.
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Casino Finance
Casino finance is an extremely risky for of investment strategy. For instance, a trader could invest into a security with a hefty amount of borrowed money. The added leverage has the ability to amplify the gains or losses that come with the investment.
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Catalyst
A catalyst is something that causes or triggers an important event to occur. More frequently used in chemistry for a reactive substance in a formula, investors will often say that a stock needs some good news (catalyst) to happen in order to reinvigorate interest in the asset again.
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Category Killer
A category killer is a large company that puts smaller merchants out of business. These types of businesses gain this status through being cheaper, bigger and more popular than the competition. Retailers such as Wal-Mart have been called category killers because they have forced many smaller businesses to close their doors.
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Cats And Dogs
The phrase, cats and dogs, in the financial sense of things, refers to speculative stocks that contain a suspicious history of questionable sales, dividends, earnings, etc. During a bull market, analysts will occasionally mention that everything is moving up, including the cats and dogs. During this time, investors should be careful because even the most questionable investment could yield good returns to begin with but in the long-term they could tank.
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Caveat Emptor
Caveat emptor is a Latin phrase that translates to “let the buyer beware.” Basically, this saying means that a buyer should perform research before purchasing an item. Knowing your rights and being vigilant and up-to-date on prevalent scams is an easy way to ensure that a transaction is secure.
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Cayman Island Offshore Banking
Think about all of the things to do while visiting a tropical locale like the Cayman Islands. Offshore banking wasn’t your first thought, I bet. Forget fun in the sun, the Cayman Islands is one of the hottest destinations for savvy investors looking to hang on to their hard earned cash.
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Cayman Offshore Bank
On your list of 10 places to visit in your lifetime, is a Cayman offshore bank listed? It should be, but not for pleasure. If you value your wealth, you should be doing everything in your power to protect it. A Cayman offshore bank account can legally help you maximize the worth of your assets. The smart money system is setting sail to the Cayman Islands…are you on board?
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Center Point
Center Point represents the current stock price that is placed in the center of the diagram on the X-Axis which is part of the risk graph.
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Certificated Stock
Certificated stocks are given a basis grade that is determined through careful inspection by a qualified exchange official. This stock or commodity, also known as “certified stock”, has already been evaluated for exchange on a futures contract. Once this inspection is completed, the certified stock can be delivered during the exchange of a futures contract. The suitable exchange representative makes this assessment to ensure that the financial goods are acceptable quality for delivery.
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Certificated Stocks
Before fulfillment of a futures contract, exchange professionals inspect financial goods, which then pass as certificated stock. Unlike the dirty stock, the certificated stocks meet the criteria for good delivery and gain a basis grade.
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Cftc
CFTC is the abbreviation for the Commodity Futures Trading Commission. Established in 1974, this federal regulatory agency is responsible for administering the Commodity Exchange Act and monitoring the futures and options on futures markets within the U.S.
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Chameleon Option
A chameleon option is a security that features the ability to transform its structure if predetermined terms or obligations of a contract are satisfied. For example, a chameleon option could be a put option that becomes a call option after the value of an underlying option exceeds a predetermined price.
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Champagne Stock
A champagne stock is a stock that's value appreciates considerably, making a large profit for its shareholders. Typically, a champagne stock will double or triple in value over a short period of time. The term derives from an old tradition where individuals would order an expensive bottle of champagne to celebrate a successful stock.
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Changer
This individual serves as a clearing member who takes on a futures contract’s opposite position. The changer assumes this role within a bigger alternative exchange. By absorbing the larger position, more liquidity is created. Entering this position has its risks, so the changer requires a service fee.
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Channel Stuffing
Channel stuffing is an illegal business practice where a company intentionally sends retailers more products than they can possibly sell to the public. By doing this, the company can temporarily report increased sales. However, as the retailers are unable to sell the excess products, they will inevitably return them to the supplier who will then have to adjust its accounts receivable. Channel stuffing is seen as a fraudulent practice used to increase a stock’s value.
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Channels Ascending And Descending
An ascending channel is the price activity between mounting trendlines. A descending channel is the price activity between cascading trendlines.
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Chart Patterns
A chart pattern is a pattern formed within a chart when the prices of stock are graphed. Patterns can be seen on a chart with the variations of the movement of the stock price. While no two patterns are the same, they are similar in form and can be used to try and predict future trends. A pattern can develop over several days, months, or years.
When a breakout of a chart pattern occurs, it sets off the buying or selling pressure that has developed during the formation of the pattern. The breakout's first reaction may be to return back into the pattern, but any setback in continuing the breakout's trending will probably be short-lived. Volume should increase sharply as the breakout happens.
The research and development of Chart patterns began in the 1930’s. The technical analyst uses charts and other tools to identify patterns that can predict future trends. Identifying chart patterns may seem uncomplicated, but they can be problematic because they are open to interpretation, making them more of an art than a science. Careful and constant study is necessary for successful chart analysis.
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Chartist
Technical analysts, also known as Chartists, examine the bars, lines, and candlestick patterns that represent the daily high, low, and close. A chartist interprets these activity trends in order to make predictions for future momentum. Chartists assume that trends will repeat into future activity, thus creating an accurate projection through careful charting, research, and analysis of visual data.
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Chartists
Technical analysts, also known as chartists, examine the bars that represent the daily high, low, and close.
A chartist interprets these activity trends in order to make predictions for future momentum. Chartists assume that trends will repeat into future activity, thus creating an accurate projection through careful charting.
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Chasing Nickels Around Dollar Bills
The phrase, chasing nickels around dollar bills, refers to the practice of cutting smaller trivial costs instead of larger costs. For example, an employer could start cutting out morning coffee for employees as a solution to a big problem that would be easier alleviated by letting someone go. More times than not, this practice wastes valuable time that could have been used to take care of a problem.
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Chasing The Market
Chasing the market refers to an investment strategy where the investor enters or exits a trend significantly later than the beginning of the trend. While investors may not realize it at the time, entering or exiting late in a trend will inevitably cost profits since they sell at lower prices or buy at higher prices than everyone else did.
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Chastity Bond
A chastity bond is a form of investment that is created with the intention of preventing undesired company takeovers. The bond has a stipulation that states that the maturity will be activated once a takeover is complete. By doing this, a company can thwart off potential buyers by forcing them to pay bondholders once the takeover is completed.
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Cheap Online Trading
Something traders don’t consider when choosing a broker online is just how much money they will be spending on commissions and fees alone. There is such a thing as a cheap online trading broker, but these are usually discount brokers whose only job is to execute your trade. This works if you are an experienced trader, but if you are an amateur, a cheap online trading broker might not be the best choice. Instead of immediately choosing a cheap online trading broker to save money, try a full service broker until you get the hang of things.
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Cheap Stock Picks
Even though cheap stock picks are readily available on the Internet, you can’t always trust everything that you read. If you are looking for cheap stock picks on the Web, make sure you do plenty of research on your source to ensure that it is a credible name in the industry.
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Cheap Stock Tips
It’s human nature to seek out bargains, but when it comes to stock picks, you should never cut corners. Cheap stock tips are pretty easy to find, but remember that accessibility does not necessarily equate to reliability. Don’t be tempted by the lofty promises offered by cheap stock tips. Stick to trustworthy sources, even if it costs a bit more. You won’t be sorry.
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Cheap Stock Trading
Your stock market trading account is not the where you should decide to be cheap. Stock trading is a serious matter, and if you try to cut costs in the wrong places, you will get burned. Cheap stock trading sites are out there, but your best bet is to settle on a trading site that offers quality over quantity.
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Cheapest Online Stock Trading
Everything comes at a cost but normally people are searching for the cheapest online stock trading system. Lets face it, just indulging into the world of the stock market can be costly, so you want to find the cheapest online stock trading methods available. Rummaging through guides and comparisons can assist with the search.
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Cheapest-To-Deliver
Cheapest-to-Deliver is the most inexpensive underlying instrument that meets the derivative contract’s qualifications for delivery upon expiration.
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Cheif Financial Officer
The Chief Financial Officer, or CFO, is like the treasurer of a business. This upper manager supervises the whole company’s financial actions. The CFO is responsible for managing cash flow, planning financial decisions, and signing checks.
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Cheif Operating Officer
The Chief Operating Officer, or COO, is the senior manager of a company that manages the daily operations and reports them to the Chief Financial Officer.
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Cherry Picking
Cherry picking is a method of choosing investments that have a good performance record within another portfolio. The hope behind cherry picking is that the good trends will continue. The benefit of cherry picking is that investors do not necessarily have to perform all the research that goes into picking an initial investment because the work has already been done for them.
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Chicago Board Of Trade
The Chicago Board of Trade, or CBOT, is best known for trading grains. Some active markets that are traded are corn, soybeans, soybean oil, soybean meal wheat, oats, ethanol, rough rice, treasury bonds, treasury notes and Dow Jones futures.
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Chicago Mercantile Exchange
The Chicago Mercantile Exchange, or CME, is best known for the S&P 500 and the agriculture markets. Some active markets that are traded are live cattle, feeder cattle, lean hogs, pork bellies, lumber, S&P 500, Russell 2000, Nasdaq 100, several foreign currencies, Eurodollars.
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Chief Executive Officer
The Chief Executive Officer, or CEO, is the highest ranking corporate officer. The CEO is responsible for high-level strategies, making major corporate decisions, managing the overall operations and resources of a company, and reports to the Board of Directors.
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Chief Investment Officer (cio)
A chief investment officer (CIO) is an executive position that is in charge of a company’s investment portfolios. CIOs are responsible for developing short-term and long-term investment goals and strategies as well as being responsible for managing a team of professionals that maintain and monitor investment activity. The CIO also works with external analysts and helps maintain an overall good relationship with a company’s shareholders.
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Child Investment Income
Do you know how to handle your child’s investment income when tax season rolls around? In case you aren’t aware, a child’s investment income is subject to the kiddie tax. This measure was put in place by the IRS to prevent parents from hiding money in their child’s name. Make sure you do your homework to see how your child’s investment income may impact your return.
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Chill
A chill is a special restriction that the Depository Trust Company (DTC) can place on a security. Chill restrictions limit the potential for issues within a marketplace and can be issued for various reasons. A chill will restrict a brokerage’s ability to trade shares of a security until the DTC has cleared up the matter.
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China Etf
China ETF is an exchange-trade fund whose main interests lie overseas in China and the Chinese economy.
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China Insider Trading
How could you possibly use China insider trading tips to your advantage? If you are wondering this exact same thing, then you might want to consider broadening your investing horizons a bit. In case you didn’t know, the markets are heating up in China. Insider trading knowledge can help you capitalize on the hottest money-making plays in China.
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Chinese Wall
A Chinese wall is an ethical divider in place between divisions of a financial institution to prevent conflicts of interest. For example, a large financial institution might have a Chinese wall between its corporate-advisory division and its brokering department. Having this barrier will help prevent investment clients from taking advantage of private corporate information that is handled by the corporate-advisory division. Many companies set up Chinese walls to prevent employees from abusing company information and taking advantage of insider information.
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Chooser Option
The chooser option is a type of exotic option that is path-independent. This option allows the investor to pay an up-front premium and have the ‘choose’ whether their option is a Call or Put but only when a predetermined strike or expiration date has been reached.
The chooser option is somewhat equivalent to a straddle but obtained as an inexpensive alternative. The longer the choice period the greater the value of the option. Since there is an increase in flexibility of choice, normally the chooser option is found to be more expensive than a standardized option.
A benefit that is found with the chooser option is it allows for hedging against both a price incline and decline without purchasing both a call and a put. There are two types of chooser options: the complex chooser option and the simple chooser option.
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Christmas Tree
A Christmas tree is an options trading strategy where an investor buys one call option and sells two other call options at different strike prices. When drawn out, the long option’s strike price is located below the two higher written calls and somewhat resembles a Christmas tree. Investors use this strategy when they believe a stock is going to move higher. A significant upward move in a stock price can result in a large loss due to the extra short call. The staggered strike prices for the written calls, however, will reduce the amount of loss when the share price rises more than anticipated.
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Circuit Breaker
Following the stock market crash of 1987 when the Dow Jones Industrial Average (DJIA) fell 508 points to 1,738 and the Standard & Poor’s 500 futures dropped 80.75 points to 201.50 in one day, stock and commodities exchanges established a system of trigger-point rules known as circuit breakers, to prevent the market from fluctuating excessively.
Circuit breakers refer to any of the measures used by the stock exchanges during large sell-offs to restrict panic selling that will cause the Dow from dropping even further. After an index has fallen a certain percentage, the Securities and Exchange Commission (SEC) and National Association of Securities Dealers will announce trading halts or restricted trading in stocks, stock options, and stock index futures.
There are actually different circuit breakers depending on whether the DJIA has fallen 10%, 20% or 30%.
Since the value of the DJIA changes over time, the actual number of points the DJIA would need to drop to hit the trigger is set four times a year, at the end of each quarter, and is based on the average value of the DJIA in the previous month.
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Circular Trading
Circular trading is a fraudulent trading scheme where buy numbers are entered by a broker who is aware of the corresponding sell numbers or the other way around. This practice allows a broker to artificially increase trade volumes of prices of a particular security.
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Classified Stock
Classified stock refers to the classification of a company’s stock into different classes, such as Class A stock or Class B stock. Classified stock can also be referred to as complex capital structure or multiple capital structure. The purpose of splitting up stock into different classes is to raise the majority of capital in one class while keeping the voting rights in the other class, which is typically reserved for management. There are actually very few publicly traded companies that use this complicated stock structure.
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Clean Dark Spread
Quite literally, the clean dark spread works just like the clean spark spread with the substitution of coal as the electricity source. Also known as the dark green spread, this particular spread is highly relevant to locations that make use of coal powered electricity. The clean dark spread makes special allocations for the number of carbon credits used when determining the overall revenue of the coal operation.
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Clean Energy Investing
You really can’t go wrong with clean energy investing. You are adding profitable investments to your portfolio while maintaining an environmentally conscious outlook. Granted, an interest in supporting clean energy technologies probably isn’t going to be your number one reason for getting involved with clean energy investing, but it’s a nice thought. Truthfully, clean energy investing looks like it is going to be the next big trend on Wall Street.
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Clean Energy Investment
A lot of traders have been shuffling their portfolios around to make room for the ‘clean energy investment’ category. This relatively new form of investing is becoming increasingly popular among savvy investors who know how to spot the next money-making trends.
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Clean Energy Investment Fund
A clean energy investment fund is a type of mutual fund or exchange traded fund that invests in companies who dedicate most or all of their operations to alternative energy initiatives. The clean energy investment fund market is fairly young still, but it is quickly becoming the latest profit destination for smart investors.
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Clean Sheeting
Clean sheeting is a fraudulent act, where an individual purchases a life insurance policy without informing the company about a pre-existing disease or terminal illness. Most of the time, the policy is sold shortly after it is purchased through a viatical settlement, but the money is substantially less than what a legitimate settlement would generate. Often, this scheme is engaged with the knowledge of both the purchaser and agent that sells the policy.
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Clean Spark Spread
The Clean Spark Spread takes into consideration the expenditure of carbon dioxide emission allowances. Under a cap and trade regime, this cost must be considered by countries affected by the European Union Emissions Trading Scheme.
A gas emission intensity factor is calculated into this spread. Clean Spark spread = Spark Spread – (Price of Carbon *intensity factor). This factor is 0.411 tCO2/MWh. This spread may also be known as a spark green spread.
The clean spark spread, then, displays the net earnings that the plant makes to sell power. Keeping all costs in consideration, this figure also represents the allotted number of carbon allowances needed.
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Clean Your Skirts
Cleaning your skirts is a phrase that is used in the equity market to describe a trader’s duty to check for possible prior obligations related to a security transaction. Obligations pertaining to a security could include confirming limit prices or conditional events. Most large transactions require traders to check prior obligations before an order is executed.
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Clearing
When an organization serves as intermediary and takes on the buyer and seller role to settle transactions between transacting parties. This results in the organized and even correspondence of buys and sells and increases the efficiency of the markets. The clearing corporation will be responsible for the transfers in lieu of the other transaction party.
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Clearing House
A Clearing House is a futures exchange corporation or agency that handles trading accounts with responsibilities related to clearing, reporting data, and regulating trading delivery. The clearing house is a third party business responsible for the options and futures contracts and stands in for either the buyer or seller to facilitate the transaction process. A clearing house is established by all the futures exchanges, so that at the end of every trading session, every exchange member has the ability to clear trades and settle balances.
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Clearing Margin
Clearing margins are financial safeguards, or funds, to guarantee that clearing members carry out their customers' open contracts. These funds are deposited by clearing members and are used as collateral to ensure their financial commitments to customers.
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Click And Mortar
Also known as clicks and bricks, the phrase “click and mortar” is an expression that describes a business model that includes both an online and offline operation. This is typically made up of a website and a physical store. This business model can offer customers the ability to make quick transactions online or give them the option to come into the store to view a product up close and personal before making a purchase.
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Clientele Effect
Clientele effect is a financial theory that states that a company’s stock price will change in correlation to the demands and goals of its shareholders in reaction to factors such as tax increases, and dividend and policy changes that affect the company. For example, shareholders might negatively react to a company that decides to decrease its dividend and will sell their stock. As a result, the price of the company’s stock will decrease.
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Climate
Like weather conditions, the climate of the financial markets describes the overall conditions impacting the economy. When the climate is encouraging, the investing sentiment is positive, businesses strive to enhance efficiency, and business productivity rises to create more revenue and capital streams for investing. A favorable market climate increases the overall sense of confidence among investors.
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Climate Spread
The climate spread corresponds to the discrepancy between the dark green spread and the spark green spread (Clean dark – Clean spark).
If carbon prices rise, the climate spread may actually compute as a negative figure. If this is the case, the obvious response would be to choose natural gas instead of coal-fired electricity. For clean dark spreads, calculations show power costs while considering the coal and carbon expenses.
A positive spread reveals that this generation of electricity is effectively profitable. Bearing in mind that operational costs are not taken into account, a decision could be made about the efficiency of the method. The climate spread likewise quantifies revenue so that the power plant may determine whether the method is generating the most positive returns.
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Clinton Bond
A Clinton bond is a type of bond that is believed to contain no principal, no interest and no maturity. This bond is named after former President Bill Clinton for his well-documented “extravagances.”
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Close
When the trading session finishes, that end is referred to as the close. Newspapers and media sources quote the closing price for the security on that given day.
A close is also the term that describes a finalized home sale where all documents are completed, and the transference of property has officially occurred.
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Closed And Open Economies
In today’s business world, a closed economy is a strategy that concentrates on all economic agreements internally rather than externally. The belief behind the closed economy is to match all customer needs with the buying and selling of products and services that are created internally. This method also avoids the chances of exporting products and services. With that in mind, the economy is believed to be self-sufficient.
When the idea of a closed economy is applied to a geographic area such as a country, the method is typically known as an autarky. An autarky does what it can to avoiding any trade with other parts of the world.
With the special skills of people and the usage of natural resources, the country will try to satisfy every want and need of the country with the advancement and practice of all the material goods within the geographical borders of a society.
Closed economies are the opposite of open economies. In an open economy, many of the products and services created in the country are traded to buyers around the world.
The open economy regularly supports and products or services that are unable to be made domestically at bargain costs.
The open economy motivates the intercommunications in a global society. The closed economy is made from the practice of isolation from other countries.
The closed economy has become less practical in this day and age. Almost every nation in the world operates with the aid of imported products of some kind.
Many countries continue to look to create products and services that can be made at low costs, and sold in other parts of the world at considerable earnings.
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Closed Economy
A closed economy is an economy that does not interact with any other country’s economy. Closed economies do not allow imports or exports and denies foreign investors and countries from participating in their stock market.
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Closed Fund
A closed fund and a closed-ended fund are NOT the same thing. Basically a closed fund is just a mutual fund that has been closed; temporarily or permanently to new investors. The investment counselor will close the fund if the fund’s asset base has grown too large to successfully implement its investing style. Closed Fund is a structured fund that has a fixed number of shares usually invested in specialized sectors listed as a stock. The current shareholders in the closed fund are permitted to continue investing although sometimes they are prohibited from making additional investments.
When the mutual fund is declared as closed, the status does not impact the outstanding shares that are currently in circulation. Managers normally close the mutual fund when the investment strategy is experiencing a negative impact. The fund will become unmanageable with higher growth.
Fund managers can declare a closed fund be reinstated if they determine the reasons for suspension is no longer valid. Existing shareholders are permissible to acquire further investment within the fund and new investors are now eligible to participate in the fund.
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Closed-End Bond Funds
Closed-end bond funds is a fund that is made up of bonds which offers a limited number of shares on its initial public offering (IPO) and then trades on the stock market. A fund manager has complete authorization to take care of all sales and purchases within an investment portfolio. He can sell securities to create goods that are used to buy other securities, figure out the duration of time to hold onto any given investment, and how to expand the options. Most closed-end funds are versatile since they trade in bonds and stocks.
In just about any type of investment strategy, closed-end bond funds function with the idea that there is a level of risk involved. During any given time, shifts in the market may cause investors to go with other investment options and away from closed-end bonds. Since closed-end stocks are taken care of by the same fund, the chance for market volatility to push the value of the fund up or down increases which is based on the holdings discovered within the portfolio.
Closed-end bond funds do not have to show concern with stockholders requesting money.
A portion of taxable closed-end bond funds are in existence. One instance is the government bonds issued by the United States. Proceeds accumulated from the sale of the bonds permits the fund manager to invest in different securities and bonds to pay the bondholder the value of the bond with interest at maturity.
Investment-grade business bonds are used with closed-end bond funds. They concentrate on investing in the debt securities of businesses that show significant potential to respect the debt within terms.
Loan participation bonds, convertible bonds, and mortgage backed bonds can also be counted in. Municipal closed-end bond funds provide an alternative option. National bonds give a high rate of return after taxes. State municipal bonds tend to be a great option when the bond fund concentrates on bonds issued in a given state. The goal is to provide the biggest level of income.
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Closed-End Fund
Closed-End Fund is a type of mutual fund that issues a fixed number of shares. The shares are usually not redeemable.
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Closed-End Investments
Closed-end investment businesses manage investments that have sale and distribution shares with restricted issue. This type of company usually handles senior securities in addition to the limited issue investments. A company of closed-end investments typically will not redeem shares outstanding.
Instead of handling the primary market, the closed-end investment will be purchased and sold with the limited share numbers in a secondary market. The shares’ sale price will be based on the market’s supply and demand in most cases instead of a net asset value.
Investors will choose this closed-end option to scout out a great bargain opportunity. The sale price could be listed as above or below the shares’ current book value. Because of these pricing discrepancies, profit potential emerges. When the investor thinks that the share prices will maintain value or increase, a substantial return on investment could be realized. This is a key advantage for choosing a closed-end investment.
The risk of the closed-end investment derives from the possibility that the share will be overvalued over the current book price. If the share is then selling for an amount too high, the usual practice of buying lower to sell higher is violated. This results in losses accrued by the investor. Investors select the closed-end investment to seek out the most competitive share prices in the market.
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Closed-End Mortgage
Closed-end mortgages are mortgage agreements where the total repayment of a loan cannot be made before the maturity time of the mortgages. Unlike open-ended mortgages, there isn’t any savings when paying off the closed–end mortgage. The homeowner must get authorization from the mortgage holder prior to getting the ability to use the collateral assets to secure a second mortgage.
A closed-end mortgage is sometimes referred to as a closed mortgage. This mortgage is ready for use in fixed and variable interest rate models. A closed-end mortgage may not appear to look like a good path for someone buying a new home. There are mortgage holders that can provide this type of financing with competitive rates.
There are some benefits connected with a closed-end mortgage for a mortgage holder. For one, if an interest rate of a mortgage is fixed, it’s possible to show the total return that will be made from the transaction. Since the homeowner pays a similar amount of interest, whether the loan is paid off ahead of time or not, the lender understands how much will be earned and collected over the duration of the loan. This makes the record keeping for the lender very simple. It is not needed to redo the math on the amount of interest due if the home owner chooses to finish payments on the mortgage early.
A closed-end mortgage sometimes discourages homeowners from trying to commit the collateral assets to other transactions. If default happens to occur on the mortgage, the lender has fewer problems to fix prior to gaining control of the collateral and settling the outstanding debt. Since there is less stress on the mortgage holder, the closed-end mortgage is simple to take care of.
Lenders may find it to be beneficial to provide this type of mortgage at attractive rates.
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Closing An Option Position -Buy To Close
Buy To Close is used to close or trade out of a short position on an options contract. The seller of an option (option writer) is short on an option. When using the Buy To Close order, whether for call or put options, it means buying back options that are currently short, to close the already open position. The Buy To Close order can be used to close open short positions anytime before the options contract expires.
After selling a Sell To Open option, a Buy To Close option is needed in order to take a profit or prevent loss. With the Buy To Close call option, the order ends the obligation under the contract and the option will no longer benefit from further decreasing prices. With the Buy To Close put option, the order ends the obligation under the contract and the option will no longer benefit from further increasing prices.
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Closing An Option Position-Sell To Close
Sell To Close is used to close or trade out of a long position on an options contract. The buyer of an option (option holder) is long on an option. When using the Sell To Close order, whether for call or put options, it means selling options that are currently long, to close the already open position. The Sell To Close order can be used to close open long positions anytime before the options contract expires.
After buying a Buy To Open option, a Sell To Close option is needed in order to take a profit or prevent loss. With the Sell To Close call option, the order ends the rights under the contract and the option will no longer benefit from further increasing prices nor will the option be able to be exercised anymore. With the Sell To Close put option, the order ends the rights under the contract and the option will no longer benefit from further decreasing prices nor will the option be able to be exercised anymore.
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Closing Price
At the end of every trading day, the session concludes with the closing price. This amount represents the last price for the security on that day. The closing price serves as the latest security value before the next day’s trading session alters the price. When analyzing the movement of price over time, investors usually look at the closing price of the security.
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Club Deal
A club deal is a private equity buyout or controlling interest of a company that is the result of multiple firms pooling their assets together to make a collective acquisition of the company. A group investment allows firms to reduce their individual risk by taking a smaller position than they would alone. However, many firms do not engage in club deals because of concerns that the deal will result in less profit for shareholders.
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Cnn Effect
The CNN effect is a notion that suggests that consumer spending will be temporarily shifted due to coverage of large news events. Studies have shown that consumer spending slows down during events that captivate the public’s attention such as the Persian Gulf War and 9/11. Nonetheless, it is also shown that necessary goods such as food and fuel suffer less because people depend on them to survive.
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Coattail Investing
Coattail investing is an investment plan where investors follow the same trades of established and successful investors. Many investors find this strategy to be fruitful because they are making the same decisions that the experts make. However, this method works best with a buy-and-hold mentality as most noted firms and brokers will not release information to the public that could hinder short-term trades.
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Cockroach Theory
The cockroach theory is an investment idea that follows the belief that the sighting of one cockroach inevitably points to signs that there are more cockroaches in hiding. In financial terms, you could imagine that one company in an industry suddenly becomes jolted by liquidity concerns due to defaulting borrowers. This event could signify that other similar companies may face the same arising problem in the near future if they are not already suffering.
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Coiled Market
A coiled market is a financial belief that a market has the potential to make a substantial move in one direction after traveling in the opposing direction. Essentially, if a market is decreasing in value, it should eventually make a strong upswing. Often, this effect will cause a larger movement than what would have happened if the market had traveled in the expected tradition. This usually arises when traders artificially hold down a market.
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Cold Calling
Cold calling is a sales technique employed by numerous brokers and firms in order to obtain new business. This method involves a representative of a company engaging in unsolicited calls to potential clients. Strong opinions on this subject are felt on both sides of the spectrum and many nations have put forth laws that restrict the practice.
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Collapsible Swap
Collapsible Swap is also known as Callable Swap, Puttable Swap, Cancelable Swap, Break Forward Swap and Retractable Swap. The swap provides the fixed-rate payer the option to terminate the agreement if the rate falls one or more times prior to the scheduled maturity date. The fixed rate obtained during the swap counterbalances the fixed rate paid under the original swap, effectively terminating the swap. The strategy of the swap is to protect the investor from any adverse effects that occur with the change of the fixed rates. The cash flow from the swap will be reduced when the receiver, if protected, from a large increase in rates.
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Collapsible Swap Advantages
The strategy of the collapsible swap is to protect the investor from any adverse effects that occur with the change of the fixed rates.
Collapsible Swap Advantages
•It limits downside - the investor has the right to cancel the swap
•There is no upfront premium
•The swap is written as one agreement
•Customized flexibility
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Collapsible Swap Disadvantages
The strategy of the collapsible swap is to protect the investor from any adverse effects that occur with the change of the fixed rates.
Collapsible Swap Disadvantages
•There is a lower swap rate than traditional swaps
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Collar
The Collar strategy is a combination of the covered call option strategy and the protective put option strategy. This strategy has both limited profit potential and limited downside risk. With the collar strategy an investor who already owns or buys the underlying stock will sell a call option at one strike price and using the proceeds to purchase a protective put at a lower strike price to limit risk. Generally, the put and the call are both out-of-the-money when this combination is established, and have the same expiration month. The investor will then know the exact highest and lowest dollar amounts they could potentially receive when they sell their underlying stock.
When the underlying stock has increased in price above the strike price of the short call options upon expiration, the stocks will be exercised and the investor will profit from the price of the call options and the price of the underlying stock up till the strike price of the short call options. The maximum profit occurs when the stock closes exactly at the strike price of the short call options at expiration of the short call options. If the stock price decreases, the loss is limited by the put option. The maximum risk would be equal to the stock purchase price minus the put strike price minus the premium for the call option plus the premium for the put option. The breakeven point is equal to the stock purchase price minus the premium for call option plus the premium for the put option.
Maximum Profit = Call Strike Price – Stock Purchase Price + Call Premium – Put Premium
Maximum Loss = Stock Purchase Price – Put Strike Price – Call Premium + Put Premium
Breakeven Point = Stock Purchase Price – Call Premium + Put Premium
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Com-Dev Company
A Com-Dev company is short for “commercial development company.” A commercial development company specializes in developing business software or applications for large-scale commercial use. These companies are also often referred to as business-to-business companies.
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Combination
A combination in financial terms is a mixture of puts and calls that are held long or short and have different strike prices and expirations. Examples of combinations include straddles and strangles.
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Command Economy
A command economy is an economy where the supply and price is regulated by the government. Government entities determine which goods or services are produced as well as how their distribution will be set up. The Soviet Union was an example of a command economy.
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Commercial
Commercial refers to an entity that is involved in the production, processing, and/or merchandising of a commodity.
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Commercial Grain Stocks
Commercial grain stocks refer to the domestic grain that is held in public and private elevators at significant markets as well as the grain that is in vessels or barges in ports.
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Commercial Paper
A commercial paper is a short-term promissory note that is issued by large corporations. These notes have maturities that range from 5 to 270 days. Commercial paper markets are usually dominated by substantially sized corporations that have spotless credit ratings.
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Commission
A commission is the fee that a broker or firm charges a client for carrying out a transaction.
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Commitments
Commitments refer to the amount of futures or options contracts of a particular commodity that have not been offset by an opposite futures or option transaction or has not been fulfilled by the delivery of the particular commodity or option exercise.
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Commitments Of Traders Report
The Commitments of Traders Report is a weekly publication from the Commodity Futures Trading Commission (CFTC). The report provides a rundown of each Tuesday’s open interest for markets where 20 or more traders hold positions that are equal to or above the reporting levels that are required by the CFTC.
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Commodities
A commodity is anything there is demand for and supplied without qualitative differentiation across a market. The quality of a given commodity may slightly differ but it is basically standard across producers.
Commodities are usually goods that originate from agricultural products or found in nature. These products not only come from nature but because of our use of the products, it can be invested in and traded in commodities markets.
The different types of commodities include agricultural products, metals, petroleum, foreign currencies and financial instruments and indexes. The different types fall into one of two categories - hard commodity or soft commodity. Soft commodities generally refers to goods that are grown, rather than mined such as coffee, cocoa, sugar, corn, wheat, soybean, fruit and others. Hard commodities refer to goods that are typically mined rather than grown such as copper, tin aluminum and other solid raw materials. Recently, commodities have expanded to include financial products such as foreign currencies and indexes. In addition, technological advances have led to new types of commodities such as cell phone minutes, RAM and bandwidth.
When traded on an exchange, commodities must meet specified minimum standards known as basis grade to maintain consistency for the investor.
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Commodities Investment
How much of your portfolio is allocated in commodities? Investment professionals will tell you that commodities are an important part of any balanced portfolio. This is because commodities have a negative correlation to other types of securities. So when your stocks are performing poorly, chances are your commodities investments will be doing just fine. This is exactly how you maintain a profitable and balanced portfolio.
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Commodities Investments
Commodities investments are typically considered pretty risky, but when incorporated into a larger investment plan, commodities investments can prove to be quite valuable. You should always make sure that you have a good mix of asset classes so that your portfolio is protected regardless of whether or not the markets are up or down.
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Commodities Market Trading
How much do you know about the commodities market? Trading commodities opens you up to a whole world of profitable opportunities. By buying futures contracts and betting on price movements, you can capitalize on even the smallest fluctuation in a commodity’s price.
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Commodities Options Trading
Commodities options trading is basically the trading of commodity options. Commodities options trading is simply performed in a market where an individual will purchase an opportunity to sell or buy a commodity at a specified price. Commodities options trading is performed in designated markets.
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Commodities Technical Analysis
Many traders think that you have to be a math wizard to successfully trade commodities. Technical analysis skills are definitely required to trade commodities, but with the right amount of effort and practice, anyone can master commodities technical analysis methods. Reading stock charts is a valuable trading tool that every trader must master in order to reach their full profit potential.
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Commodities Trading
Want to learn how you can convert pork bellies and soybeans into your first million dollars? Read on to discover how commodities trading has landed among the wealthiest wins in the market. Figure out the price direction in commodities trading of crude oil, natural gas, and agricultural markets. I assure you that when you take a closer look at the goods and products exchanged through commodities trading, all you will be seeing is dollar signs.
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Commoditize
The term, commoditize, refers to the process of making a product or service easily obtainable by making it plentiful, uniform and affordable. A product will become commoditized when other products of the same use are essentially indistinguishable from one another. In recent times, products such as computer chips and personal computers have become commoditized.
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Commodity Day Trading
Commodity day trading is the process of a day trader indulging in the commodity world. Commodity day trading is in reference to exercise of purchasing and selling stocks throughout a 24-hour span. For every commodity day trading that is purchased at an equal amount, the share is sold.
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Commodity Etf
Commodity ETF is an exchange-traded fund that limits its investment interests to the commodities market.
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Commodity Exchange Act
The Commodity Exchange Act establishes federal regulation of commodity futures and options trading.
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Commodity Exchange Authority
The Commodity Exchange Authority is a U.S. Department of Agriculture regulatory agency that was established to carry out the Commodity Exchange Act before 1975. This agency was the predecessor to the Commodity Futures Trading Commission.
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Commodity Exchange Commission
The Commodity Exchange Commission is responsible for carrying out the Commodity Exchange Act prior to 1975. The commission consists of the Secretary of Commerce, Secretary of Agriculture and the Attorney General.
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Commodity Funds
Commodity funds are made up of investments in commodities and commodity options and futures. These funds are particularly volatile and are considered speculative investments. Commodity funds have direct holdings in the commodities themselves.
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Commodity Futures Modernization Act
The Commodity Futures Modernization Act reauthorized the Commodity Futures Trading Commission for five years. It was responsible for the overhauling of the Commodity Exchange Act that was carried out in order to establish a flexible structure for regulation of futures and options trading.
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Commodity Futures Trading Commission
The Commodity Futures Trading Commission was established in 1974 to administer the Commodity Exchange Act. The CFTC is responsible for monitoring the futures and options on futures markets within the United States.
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Commodity Index Investing
Commodity index investing is a popular way to expose your portfolio to commodities while reducing the overall risk that is associated with the commodities market. When you participate in commodity index investing, you are able to invest in a basket of different types of commodities traded on one particular index.
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Commodity Index Investment
Commodity index investment funds are very popular investment tools for people who want a safer way to trade in the volatile commodities market. Trading individual commodities is definitely not for the faint of heart, but when you take advantage of a commodity index investment fund, you can experience the best of all worlds.
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Commodity Invest
If you are particularly attracted to the probability of high returns, pick a commodity, invest, and start earning profits today. The commodities market is complex, but once you have learned your way, it can be highly lucrative.
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Commodity Investing
Commodity investing is the strategy of choice for investors that have a firm grasp on supply and demand concepts. For instance, if the demand for products made from steel increases, the price of iron ore increases as a result.
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Commodity Investment
Investing in commodities is a way to expand your portfolio because raw goods are the foundation of our economy. A commodity investment is a wise choice because commodities are used to make products that we use every day.
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Commodity Investment Funds
The investment funds that focus their attention on the commodities market are known as commodity investment funds. Commodities all share the same set of standards and include anything from natural gas to cell phone minutes.
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Commodity Investment World
Raw materials are the axis around which the commodity investment world rotates. Although there are risks involved due to the impact that factors such as the weather can have on them, commodities can greatly increase your profits.
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Commodity Investments
Commodity investments are a long-term method of increasing your profit margin. Commodity investments are not limited to the physical commodities themselves. They also include investments in commodity-related companies like solar technology or an oil company.
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Commodity Market Trading
When you trade in commodities, you are usually doing so in the futures market. Commodity market trading can cripple your portfolio if you are not well adept at navigating futures contracts as well as the options market.
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Commodity Option Trading
Commodity option trading, if done correctly, is guaranteed to always pay out. In it, someone pays you a premium for the chance to buy your commodity at a set price on a future date, but if the commodity does not reach your desired price, you don’t have to sell.
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Commodity Options Trading
Commodity options trading allows you to unload a commodity at today’s price, tomorrow. In commodity options trading, you are basically trading volatility: Historical and implied.
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Commodity Pool
Commodity pool is modeled after a mutual fund and devoted entirely to commodity futures and future options.
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Commodity Pool Operator - Cpo
Commodity pool operator, or CPO, is the governing body of a commodity pool's accounts in options positions and commodity-futures.
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Commodity Price Index
A Commodity Price Index is an average of select commodity prices that can be weighted and serves as a general gauge of markets or a particular subset of commodities such as metals or corn.
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Commodity Product Spread
The Commodity Product Spread is a trading strategy that involves the relationship between a raw commodity and its product derivations as purchased and sold. The investor buys the commodity and sells the specific products that come from this commodity. These dealings can even happen simultaneously, but the spread results when a slight delay separates the transactions.
The spread is capable of happening the other way around. In such a case, the investor purchases the refined product and sells the commodity. Only a month long window exists for such a contract. Commodity Product Spreads can be highly specific, see crack spread and crush spread.
So, why do traders strategize these commodity product spreads? When the market experiences an upswing, the investor can profit in the commodity market. The buyer can get a reasonable price for the purchase and cover these costs during the sale of the byproduct. In fact, high returns are quite possible when the market is favorable and this trade has moderately low risk.
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Commodity Swap
A commodity swap relies on the price of the underlying commodity in the cash flow exchange. A commodity swaps' purpose is to hedge against the value of the commodity. The user of a commodity swap agrees to pay a financial establishment at a fixed price and the user will secure a maximum price. The user will then receive payments based on the market price for the commodity involved.
Commodity Swaps Type:
Fixed- floating swaps: An agreement between two parties. One side will pay the floating rate while the other pay the fixed rate. In the case of the commodity swap both indices are commodity based.
Commodity-for-interest swaps: The total return on the commodity is exchanged for a money market rate.
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Commodity Technical Analysis
Commodity technical analysis is used to predict the movement of the particular stock. It is illustrated through charts, patterns, facts, and statistics. A common commodity technical analysis tool used is candlesticks; they help to forecast the commodity futures.
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Commodity Trading
Volatile, sophisticated, and risky are three words that the naysayers may call commodity trading. Gryphon defines commodity trading as - opportunistic, savvy, and powerful – as well as a means to multiply the return on your investment effortlessly. If you want to energize your portfolio and go for the substantial wins, learn more about the power of commodity trading to go with the goods! With unsurpassed profit potential, commodity trading opens new doors toward your financial future.
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Commodity Trading Advice
With the right commodity trading advice, you will be set to soar in the markets. Commodities are highly volatile and subject to risk, so the right advice will put you on the right side of the trade in this highly lucrative sector. Diversify your portfolio now by striking the goldmine with today’s hottest commodities.
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Commodity Trading Advisor
A Commodity Trading Advisor (CTA) gives advice or suggestions to individuals or groups in relation to the value of commodity futures. CTAs may advise a client to purchase or sell futures and commodity options, release reports focused on commodity futures or options. In many cases, CTAs are required to register with the Commodity Futures Trading Commission.
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Common Gap
The common gap forms by normal market influences and is usually uneventful. The common gap occurs often in the price movements of a security. There is a rise or decline from one point on the chart to another point. These gaps are filled relatively quick compared to the other types of gaps.
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Common Stock
A Common Stock is a guarantee that represents ownership in a corporation. This type of stock allows the holder the right to vote at shareholders’ meetings and receive common dividend payments. This stock is also known as equity shares. When having common stock you have one vote for each of the shares you own. If a corporation offers new stock to the public, shareholders have the first right to buy new shares, to keep their percentage. This is called Preemptive Rights. As a shareholder you have the right to inspect the books and records of the company. An upside is they usually outperform preferred shares in the long run but a downside to having common stock is that you are last in line to receive any assets should the company go out of business and they have to liquidate their assets to pay its creditors.
Common shares may come in two classes with different levels of voting and dividend rights.
- Class A: more voting rights than Class B.
- Class B: less voting rights than Class A.
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Company Insider Trading
When someone that owns a considerable amount of a company’s stock, typically ten percent or more, sells off those shares after the public has been duly informed of any significant developments about that company. This form of company insider trading is a completely lawful practice and one that you, as a day trader, can use to your advantage.
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Compare Online Stock Trading
There are several different online brokerage firms to choose from that offer a wide range of services. When you compare online stock trading sites, you ideally find the one that best suits your needs and experience as an online trader.
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Compare Online Trading
In order to find the most fitting system it is best to compare online trading systems. The investor should compare online trading systems for numerous reasons, such as for cost efficiency, most informative research, competitive stock rating, and technical analysis.
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Comparison Of Online Trading
Online brokerage firms appeal to different traders in different ways. A thorough comparison of online trading sites is the optimal way to ensure that your online day trading experience is a positive and profitable one.
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Complete Guide To Day Trading
When you buy and sell stocks with machine-gun efficiency, you are engaged in the practice of day trading. A complete guide to day trading will help you to develop strategies, avoid loss, and clear up any misgivings you might have about the stock market.
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Compound Option
A compound option is an exotic option also known as the ‘split free option’. The option is utilized for currency or fixed-income markets (uncertainty of risk protection). The payoff is basically one option upon another option.
The Compound Option has two specified expiration dates and two strike prices; one for each option. The compound option has two possible option premiums. One premium is paid up front while the other is paid in the event that the compound option is exercised.
The combined premiums can exceed the cost of the underlying option at the start if the compound option is exercised. It is more difficult for a business to hedge due to the values sensitivity to the volatility of volatility.
Advantages of Compound Options:
- Allow large leverage
- Cheaper than straight options.
Four ways to construct a Compound Option:
- Call on Call
- Call on Put
- Put on Put
- Put on Call
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Compounding Profits
Normally people are skeptical about the possibility of making a quick million dollars. While there is not one specific way for everyone to successfully invest, there is a sound investing principle that anyone can use. Compounding the profits is an essential technique.
It is best to make sure that the investments are those with a fast turnaround. Usually, as soon as the return becomes visible most people will pocket it instead of reinvesting into a new venture. They are missing out on a more profitable approach. Not only will your profits grow, but the investing potential will grow as well. Compounding profits is giving an asset the capability to generate earnings. These assets are then reinvested to produce their own earnings. The fundamental of compounding profits refers to the generating of earnings from prior earnings.
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Comps
A comp is a term that is used to reference comparable same-store sales. Comps are used to compare the growth or decline of a store’s revenue in comparison to a previous period of time. Generally, a company may issue a monthly or periodical report that shows the comps of a particular store in relation to the store’s prior sales records or in comparison to other stores locations. Typically, an investor would prefer to know that a company’s comps are increasing as it is seen as a sign of growth.
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Computer For Day Trading
ECNs, or electronic communications networks, have revolutionized who can enter into the world of day trading, as well as where and when it can be done. If you aren’t using a computer for day trading, you are living in the Jurassic period.
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Computers For Day Trading
An overwhelming number of people have switched to computers for day trading because of all the added benefits that they can put to work for them. Thanks to computers, money is changing hands and being accumulated at lightning-quick speeds.
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Concentration Risk
Concentration risk is the risk of losing your whole investment by concentrating all your money on one investment.
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Condor
The Condor Spread is a neutral strategy that is a combination of the bull spread and the bear spread. An investor would use this strategy when they assume that an underlying stock will stay where it is but also wants to limit risk if it moves. This strategy has both limited profit potential and limited downside risk. In this strategy four strike prices are used. To create the strategy an investor would buy to open (1) In The Money (ITM) option, sell to open (1) At The Money (ATM) option, sell to open (1) Out of The Money (OTM) option and buy to open (1) further Out of The Money (OTM) option. This strategy is created by using all put options or all call options. Either way will yield the same results as long as the underlying security remains within a profitable range.
The maximum profit of this spread is when at expiration, the price of the underlying stock is within the two middle strike prices at expiration. The maximum risk of this spread is limited to the net debit paid and is reached if the underlying stock is above the higher strike price or below the lower strike price at expiration. There are 2 breakeven points for the condor spread. The net debit plus the lower strike price equals the lower breakeven point. The higher breakeven point is equal to the higher strike price minus the net debit.
Maximum Profit = Lower Short Option Strike Price – Lower Long Option Strike Price – Net Debit
Maximum Loss = Net Debit Paid
Lower Breakeven Point = Net Debit + Lower Strike Price
Higher Breakeven Point = Higher Strike Price – Net Debit
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Confirmation Statement
A confirmation statement is the written documentation sent to a customer by a futures commission merchant when a futures or options position has been initiated. This documentation will state the price and quantity of contracts that are purchased or sold.
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Congestion
Congestion refers to a market situation identified by shorts that attempt to cover their positions but cannot obtain an adequate supply of contracts provided by longs that are prepared to liquidate or new sellers that are poised to enter the market. Through the concept of technical analysis, congestion is defined as a period of time marked with repetitive and limited price fluctuations.
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Consensus Rating
A research analyst assigns recommendations to shares of a business, and the average of these ratings is known as the consensus rating.
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Consignment
A consignment refers to a shipment delivered by an entity to an agent with the agreement and understanding that the commodities will be sold at the highest possible price. Ownership of the consignment merchandise belongs to the shipper until the products are sold or disposed of in accordance to the agreement.
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Constant Ratio System
The constant ratio system is a liquidity ratio that is used to identify a company’s capability of paying off short-term obligations. The ratio is generally used to determine if a company can pay back debts and payables with short-term assets such as cash, receivables and inventory. The formula states that the current ratio is equal to the current assets divided by current liabilities.
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Consumable Commodities
A consumable commodity is a product or good which is physically capable of consumption. This commodity is a physically tangible item capable of depletion, destruction, and so forth. These items have a supply, and this supply can physically dwindle.
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Consumer Stock
Consumer stock refers to company stock in the industry of products geared toward consumption, mainly food, beverage, and pharmaceutical products. Consumer stock would involve any company that created packaged food and drink, tobacco, and even candy. This is simply a classification category for stock.
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Contagion
A contagion is the probability that economic changes in one country will spread to other countries. This is usually seen through either economic booms or crises. The most recent American recession was seen as a contagion because it spread to foreign markets like a bad cold.
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Contango
Contango occurs when the future price rises above the predicted future spot price. The price will eventually decline to the spot price prior to the delivery date.
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Continuation Pattern
Continuation pattern is the theory that a market tendency will sustain itself despite short-term setbacks.
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Contract
A contract is a unit of trading used in the commodity future and option arena. It is also an agreement to buy or sell a specified amount and grade of a particular commodity. This agreement also states the date that the contract reaches maturity and becomes deliverable.
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Contract Grades
Contract grades are standards involved with different types of investment commodity scenarios. The contract grade helps to establish the status of a futures contract based on a commodity as being transferable in the terms covered in the contract. Contract grades ensure that investors bargaining in commodities will get their moneys worth.
Contract grades or standards are made on two fronts. The jurisdiction or government where the commodities exchange is found will give specific rules and regulations which apply to all commodities traded in the market.
The exchange or actual market will have knowledge in whether or not any commodity contribution satisfies the guidelines for trading made by the exchange. The goal of the rules and laws is to create contract grades that are fair, show the underlying value of the commodity to promising investors, and make certain that any transactions are carried out with complete integrity.
In very few markets, contract grades are referred to as deliverable grades. This direction shows that standards set for the commodities must be of a quality that will assure the investor gets a finished product that is as good as specified in the original futures contract. If the delivery grade does not satisfy the rules of the contract, there are some methods that can be applied to reverse the transaction.
Contract grades can sometimes be continual but are also prone to change every so often. Key aspects, such as change in the accessibility of the commodity, can impact contract grades. Also, political and environmental factors may restrict the making of the commodities. Government rules of the commodity exchange can improve conduct grades in a way that maintains the investor’s awareness of the recent condition of any commodity. Contract grades make it easier to understand if investing in the commodity is reasonable or not.
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Contract Market
A contract market, commonly called an exchange, refers to a designated board of trade that can legally trade futures or options contracts of a particular commodity. The Commodity Futures Trading Commission is responsible for determining if a contract market can be established.
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Contract Markets
Exchanges that are enabled under laws and regulations of an authority to partake in trading of futures and future options are known as contract markets. At times this is known as a SRO or self regulatory organization. The contract market operates by distributing commodities and securities involving futures trading. They are traded in agreement with compliance standards dealing with the exchange and the extensive laws and regulations of the dominant nation where the exchange is taking place.
Contract markets are also known as designated exchanges. A contract market concentrates on a specific form of trading commodity or activity. The Chicago Mercantile Exchange is one instance of a designated exchange.
“Contract market” does not always refer to a trading exchange. It might instead refer to an actual commodity that is traded on an exchange. Utilizing the contract market this way is common when looking at commodities such as pork bellies, soybeans, or corn. Soybeans would be considered as a contract market, especially when futures trading with soybeans are more common.
With any case of securities trading, a contract market is prone to recent financial laws and routines established by the jurisdiction of residence. With such laws, the contract market has more regulations that are outlined to assist with compliance in local laws, protecting all people that participate in the trading of futures on the market platform. These protections give balance to the market, as well as safety to investors from investment deals that can have a risk not seen as reasonable by the local laws.
Investors that want to trade futures on a contract market must devote the necessary time to understand as much about the market and commodities traded as possible. This has to do with understanding federal laws that apply, and the regulations for partnership set by a certain contract market. With this, the investor shall be in a healthier standing to make updated decisions with future trading in the surroundings of the contract market.
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Contract Month
A contract month refers to the month that a delivery is required to be executed as determined by the terms of the futures contract. This is also commonly referred to as the delivery month.
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Contract Size Or Contract Unit
Contract size or contract unit refers to the actual quantity of a commodity that is represented by a contract.
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Contrarians Investing
Contrarians investing is an investment strategy where the investor goes against the trend of other investors. These investors typically disregard information and advice that most traders would acknowledge as reliable and pertinent.
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Control Stock
A control stock refers to the large proportions of equity owned by shareholders that can be wielded as power within the particular company. For example, if an investor owned 51% of the shares of a company, they would own a majority and could inevitably use that power to influence decisions within the company.
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Controlled Account
In a controlled account, trading is managed by an individual or entity rather than the actual owner. A controlled account is also referred to as a managed account or discretionary account.
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Convergence
Convergence refers to the probability for prices of physical commodities and futures to come close to one another. This usually occurs during the delivery month and is also known as “narrowing of the basis.”
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Conversion
A conversion refers to a position that is created through the sale of a call option and the purchase of a put option as well as the purchase of the underlying instrument. In this position, the options have identical strike prices and expirations.
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Conversion Factor
The conversion factor is the exchange of a convertible type of asset into a different type of asset. This usually occurs at a predetermined price on or before a specified date. For example, a convertible bond allows the holder to exchange the bond for a predetermined amount of the issuer’s equity.
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Conversion Price
The conversion price is a predetermined price at which a convertible security can be exchanged for shares of company stock. The conversion price is decided when the security is issued and it is usually set much higher than the current price of the stock.
The conversion price is necessary to determine the number of shares the investor will receive once the convertible security is exchanged for common stock in the company. To arrive at the number of shares you divide the principal value of the convertible security by the conversion price.
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Convertible Arbitrage
An investor can return a convertible bond to the issuing company for a preset amount of shares in the company. Convertible arbitrage entails going long on the convertible security and short on the converting common stock. The profits are results of mispricing the conversion factor of the convertible security.
The convertible bond price is contingent on the movement of interest rate and stock price as well as how worthy the issuer’s credit is. The convertible bond is affected when the interest rate and the stock prices rise. The former hurts the bond and the latter improves it. As for the credit spread, if the issuer’s worthiness declines, then the spread widens and the bond moves lower.
The convertible arbitrage utilizes sophisticated calculations to set these three factors against one another. The arbitrageur will buy the bond and then hedge two of the three elements to render one of the factors as profitable. For example, the arbitrageur purchases the convertible bond, sells fixed income securities or interest rate futures, and buys credit protection. These transactions hedge the interest rate factor and the credit spread. The net yield of the transaction would basically be a call option on the underlying stock.
Another hedge fund strategy, the investor will buy convertible securities and short sell the same issuer’s common stock at the same time. Because the convertible is priced inadequately to the underlying stock, this strategy exploits this price difference. The long position in the convertible bond together with the short position in the underlying stock will generate profits with the assumption that the market will establish a more effective value.
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Convertible Bonds - Cb's
Sometimes referred to as CBs, holders of a convertible bond have the right to convert the bond to a pre-established amount of a company’s equity. A company typically issues convertible bonds to offset any negative opinions formed by investors based on the actions of the corporation.
If a company that is already publicly traded releases shares of stock, investors automatically assume that the share price of the company is valued too high. To combat this negative impression, a company will issue convertible bonds that investors will eventually trade in for shares of stock in the company.
While the advantages generally favor the issuer, convertible bonds are very attractive to investors who view them as bonds with the added bonus of a stock option. Acquiring convertible bonds is essentially a win-win situation for an investor. Convertible bonds are less volatile and realize a higher yield upon issuance than common stock. Moreover, once converted into stock, investors can potentially bank on large returns.
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Convertible Preferred Stock
Convertibile preferred stock gives shareholders the option to change preferred shares into a fixed number of shares of common stock.
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Cook The Books
The phrase, cook the books, is used to describe fraudulent activities performed by a corporation or individual in order to augment financial data. Generally, an individual will change financial data to claim more revenue than was actually generated. Doing this allows a company to artificially boost the strength of its value. However, these practices are illegal and there are many laws and regulations in place to prevent and punish those involved.
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Cookie Jar Accounting
Cookie jar accounting is a practice where a company uses revenue reserves from a good year to cover up losses incurred in less profitable times. Considered to be a misleading accounting practice, cookie jar accounting basically overstates revenue in bad years.
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Cooler
A cooler refers to an individual or firm that is considered to have bad luck at picking winning stocks. Superstitious traders usually blame a stock’s negative performance on the fact that a supposed cooler has bought shares of the particular stock.
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Coppock Curve
A Coppock Curve is a long-term momentum indicator that analysts use mainly to identify major bottoms in the stock market. The Coppock Curve is determined as a 10-month weighted moving average of the addition of the 11-month rate of change and the 14-month rate of change for the index. When there is an upturn in the Coppock Curve after an extreme low in the curve, a buy signal is created. A sell signal is formed when there is a high peak in stock prices along with a low peak in the Coppock Curve.
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Core Competencies
Core competencies are the main strengths and advantages a business has in comparison to its competitors. These strengths are generally used as building blocks for the business to capitalize on. For example, a restaurant is well known in its community for having an amazing chili cheese burger, they would market their amazing chili burger as the best in the area to entice new customers that love a great chili cheese burger.
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Core Holding
A core holding refers to an investment that an individual intends on retaining for a long period of time. For example, an investor could purchase shares in Wal-Mart with the intention of holding onto them for decades before considering selling them.
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Corner
To corner is the act of gaining enough controlling interest within a security that an individual or group can manipulate the quantity and price of the particular security. Cornering can also affect future contracts through freak accidents such as a tornado that wipes out a large portion of a crop. The inability to make good on the futures contracts due to the reduction of supply would be considered a cornered market.
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Corner A Market
When an individual or group of investors corner a market they are acquiring enough shares of a particular security so that they have enough control to manipulate its quantity and price. The Securities and Exchange Commission keeps close supervision on shareholders that have a significant interest in a security in order to prevent fixed prices. Cornering the market can also come about from natural events such as hurricanes that wipe out a significant enough portion of a crop that companies cannot make good on futures contracts.
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Corporate Bond Investing
Purchasing corporate bonds is the act of loaning money to a corporation as a way for them to generate capital with the expectation that it will be repaid with interest at a predetermined date. Corporate bond investing is a low risk undertaking and a great foundation for your portfolio.
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Corporate Bonds
Corporate bonds are a debt security issued by a company through public securities markets to raise capital. The company acknowledges the stated sum that’s owed and will be repaid at a certain date. This type of bond usually pays a predetermined amount of interest throughout its life to the holder.
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Corporate Cannibalism
Corporate cannibalism is the process where a company introduces a new product into a market where it already has a similar product that is well-established. The intention is to obtain a greater control of the market. For example, a company that is number one at producing gas running vehicles could introduce a new electric vehicle that will give them a larger control of the auto industry.
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Corporate Kleptocracy
Corporate kleptocracy is when corporate executives use shady tactics to exploit wealth at the expense of the company’s shareholders. For example, an executive may embezzle millions of dollars over a period of time and use that money for personal exploits such as scuba diving or illicit drug use.
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Corporate Social Responsibility
Corporate social responsibility refers to a company’s initiative to take responsibility for its impact on the environment and society in general. Many companies go beyond government regulation to limit their impact on the environment by incorporating their own limits on pollution and energy waste. Some companies might even contribute funds to local schools or community projects to improve the general welfare of a region.
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Corporate Stock
Corporate stock is used to indicate a position of ownership or equity in a company. It also is an instrument used to correspond to a claim on the equal share of a company’s assets and earnings. The claim that common shareholders have on a company’s assets and profits is second to the claim that the company’s debtors have. This means that if the company declares bankruptcy, debtors will be paid out before common shareholders are paid out.
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Correction
During a correction, a market or security temporarily reverses in direction from the prevailing trend. The correction typically happens as a short-term downtrend in the middle of an uptrend.
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Corrective Wave
Part of the Elliott Wave Theory - A price movement in direction must be followed by a contrary movement. While trends show main direction, a sideways movement will go against the main trend composed of three waves creating a 5-3 ratio. The waves have distinctive price movements.
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Corridor Option
The Corridor Option was developed mainly for trading. The Corridor Option will profit if the spot stays within a specific currency range that the investor establishes. Normally, this option is associated with a deposit for yield- enhancement purpose.
The investor will pay a premium upfront when he establishes the range. On a daily basis, a portion of the pay-out will be locked-in during set periods that the spot fixes within the specific currency range. The maximum pay-out will be achieved if the spot fixes within the day. If not, one day is fixed within the currency range and the pay-out is zero.
The pay-out is determined by a pro-rata basis. The corridor option exists for the whole duration until the maturity date. If the spot trade is outside the currency range, only the pay for that day will be forfeited. The maximum pay-out is on the smaller size since there is less aggressive risk with the corridor option.
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Counter Currency
Also known as the quote currency, the counter currency is the currency listed to the right of the slash in a currency pair. In order for an investor to trade currencies in the forex market, they must understand how to read and interpret a currency quote. If you look at a currency quote that is EUR/USD, the US dollar is the quote currency. This means that an investor is looking at how many US dollars it takes to purchase one euro.
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Counter Party
A counter party is in reference to the other participant that is contributing to the financial transaction. In order for the transaction to be established, the contract must possess a counter party. For example, an investor who plans to sell a stock must be matched up with someone willing to purchase the stock in order for the transaction to commence. The individual purchasing the stock is the counter party to the seller.
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Counter Value
A counter value refers to the U.S. currency value of a transaction when an individual investor purchases a currency against the dollar.
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Counter-Cyclical Stock
A counter-cyclical stock goes against the performance of the broad economy, which is known statistically as a negative correlation. This company is affiliated with an industry that is performing better or worse than the general economic state. This type of scenario means that a countertrend is in place, as the stock price is moving in the opposite direction of the overall trend. A counter-cyclical stock will exceed the broad market during a recession and lose value when the economy is thriving. Purchasing this type of stock can add benefit to a trading system that utilizes hedging strategies.
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Counter-Trend Trading
Counter-trend trading is a technical analysis trading style that is identified by taking a position that contrasts current market direction with expectations of a change in that direction.
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Counterparty Risk
Counterparty risk is when the other person involved in the transaction cannot meet their obligation.
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Country Basket
Country basket is an ETF comprised of multiple stocks from other countries.
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Coupon
A coupon is the interest rate that is stated on a bond when it is issued. The coupon is generally paid off twice a year. A coupon is also known as the “coupon rate” or “coupon percent rate.”
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Coupon Rate
The coupon rate is the amount of interest you will receive from a bond, expressed as a percentage of principal value.
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Cover
Cover is the act of finishing a transaction to allow any restrictions to be removed. A cover is also known as the quantity higher than unity on a debt service ratio.
Cover Example:
• If an investor has recently bought a security, they must cover the security. The cover is conducted by depositing appropriate funds.
• A portfolio manager or investor may be inclined to cover their risk exposure or short position. For a short position, they would conduct this by buying the stock, while with risk exposure they would be purchasing a counterbalancing position.
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Coverage Initiated
Coverage initiated refers to th