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Futures Terms |
| Browse our glossary of terms by using the Alphabet below. You may also search the glossary by using the search box in the right column. | |
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| Term | Definition |
|---|---|
| Series of Options | Options of the same class having the same strike price and expiration date. |
| Settlement Day | This is the day that final cash settlement and physical delivery is to be made between buyer and seller. |
| Settlement Price | The price used for daily revaluation of open positions. |
| SFP - Security Futures Products | Securities futures traded electronically on NQLX including "single stock futures" as well as narrow based future indices. |
| Short | The seller of a futures contract is said to be "short" the contract. In such a case, the welfare of the position declines as its price rises and increases as its price falls. Note that the seller of a contract does not need to possess the contract's actual underlying asset; selling a futures contract is only an engagement to deliver the underlying commodity at a point in time in the future. |
| Short Sales | In stocks, the procedure of borrowing shares and then selling them with the obligation for subsequent repurchase. A short seller believes the price of a stock will go down over time.
Common wisdom says that to be successful on the stock markets, one has only to "buy low, and sell high." A short sale is essentially the mirror image: First sell high, THEN buy low. |
| Short-Term Capital Gains Rate | The tax rate applicable on trading profits on assets held for one year or less. |
| Special Dividend | An extraordinary payment to shareholders approved by the issuing company’s Board of Directors; generally held to be in excess of 10% of the share value. |
| Spread Tread | A trade whose profit profile is linked to the differential between two securities and not to the value of either security trade separately. |
| Stock | A unit of ownership in an issuing corporation; entitles the owner to participate in both the company’s growth and decline, to receive dividends as directed by the company’s Board of Directors, to elect these same directors, and to participate in corporate actions as dictated by the company’s by-laws and by securities law. |
| Stock Split | The division of shares into a larger number of smaller units, e.g., a 2-for-1 stock split would create twice the number of shares worth half the price. A reverse split creates a smaller number of larger units. |
| Strike Price | The price at which a person may purchase or sell the underlying futures contract or underlying physical commodity upon exercise of a commodity option. This term has the same meaning as the term “exercise price.” |
| Synthetic | An asset designed to duplicate the characteristics of a security created from the combination of other assets. For example, the simultaneous purchase of a call option and sale of a put option having the same expiration and strike price create a synthetic long stock position. A long position in a Single Stock Futures creates a synthetic long position in the underlying stock. |
| Tick Size Minimum Price Movement | The minimum price fluctuation possible for a futures contract. The tick size of Single Stock Futures is $0.01, with a value of $1.00 per contract ($0.01 X 100 shares) |
| Transaction Costs | The expenses involved in buying or selling a security. These include brokerage commissions, regulatory fees, taxes and spread between the bid and offer prices. |
| TRS - Trading Registration System | TRS allows clearing members to manage matched trades in real-time. After trades are matched using NQLX's trading host, TRS will allow members to edit account information or make trade allocations until the end of the trading day. |
| Types of options transactions | A) Opening purchase transaction — A transaction in which an individual purchases an option and thereby obtains a long option position. B) Opening sale transaction - A transaction in which an individual grants an option and thereby obtains a short option position. C) Closing purchase transaction—A transaction in which an individual with a short option position liquidates the position. This is accomplished by a closing purchase transaction for an option of the same series as the option previously granted. Such a transaction may be referred to as an offset transaction. D) Closing sale transaction—A transaction in which an individual with a long option position liquidates the position. This is accomplished by a closing sale transaction for an option of the same series as the option previously purchased. Such a transaction may be referred to as an offset transaction. |
| Underlying | The asset on which financial claims, represented by a security, option or futures contract, are made. |
| Underlying Futures Contract | The futures contract which may be purchased or sold upon the exercise of an option on a futures contract. |
| Unit of Trading | This represents the quantity of the underlying share each single futures position represents. Trades take place in multiples of the unit of trading. |
| Volatility | The variability of an asset’s price movements. The theoretical or historic volatility of an asset is a relative frequency measure of what has happened. Implied volatility is the market’s price of future uncertainty. |
| Voting Rights | Right attached to shares of common stock in a corporation. Holders of common stock can exercise their voting rights to elect Boards of Directors and decide on other matters as mandated by the corporation’s by-laws. Voting is done in proportion to the number of sharbes held. |