Put – Call Ratio
The Put-Call Ratio is the number of put options traded divided by the number of call options traded in a given period. While typically the trading volume is used to compute the Put-Call Ratio, it […]
O
Objective (mutual funds) The fund’s investment strategy category as stated in the prospectus. There are more than 20 standardized categories. Odd lot A trading order for less than 100 shares of stock. Odd lot dealer […]
Options contract
A contract that, in exchange for the option price, gives the option buyer the right, but not the obligation, to buy (or sell) a financial asset at the exercise price from (or to) the option […]
N
Naive diversification A strategy whereby an investor simply invests in a number of different assets and hopes that the variance of the expected return on the portfolio is lowered. Related: Markowitz diversification. Naked The opposite […]
M
Macaulay Duration 1. A measure of the sensitivity of a financial instrument’s value to a change in its yield. Macaulay Duration is an overestimate, and Modified Duration (q.v.) is a more precise measure. 2. The […]
L
Ladder Option An option somewhere between a Lookback (q.v.) and a European Option. A Ladder Call Option has one or more “Rungs” (price levels) above the initial spot level. The Call’s payoff equals the greater […]
K
Kappa The ratio of the dollar price change in the price of an option to a 1% change in the expected price volatility. Knockin Option An option that “comes to life” when a trigger event […]
J
January Effect A recurring trend in the stock market during the month of January (mostly the first half of the month) wherein stock prices tend to go up. Jamming Executing a large sell (buy) order […]
I
Idiosyncratic Risk Unsystematic risk or risk that is uncorrelated to the overall market risk. In other words, the risk that is firm specific and can be diversified through holding a portfolio of stocks. Immediate settlement […]
H
Haircut The margin or difference between the actual market value of a security and the value assessed by the lending side of a transaction (ie. a repo). Hamster Option A form of Range Option that […]
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