Employment

Proportion of a country’s population that is employed. Ages 15 and older are generally considered the working-age population.


Book-to-Price

A ratio compares the book value of the company's assets to its price. Defined as the company's ordinary equity capital (from the most recent fiscal year end) divided by the company's market capitalisation at the review date.


CAB (Current account balance)

Current account is all transactions other than those in financial and capital items. The major classifications are goods and services, income and current transfers. The focus of the BOP is on transactions (between an economy and the rest of the world) in goods, services, and income.


Counterparty

A trade can take place between two or more counterparties. Usually one party to a trade refers to its trading partners as counterparties.


Current ratio

Current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities.

If a company's current ratio is in this range, then it generally indicates good short-term financial strength. If current liabilities exceed current assets (the current ratio is below 1), then the company may have problems meeting its short-term obligations.


Daily Volume

Total Volume of a day.


Debt to Assets

This ratio calculates the proportion of a company's debt to its assets.


Debt To Capital

This ratio measure total debt of a company toward its total capital.


Debt-to-asset ratio

An indicator of financial leverage. It tells you the percentage of total assets that were financed by creditors, liabilities, debt.


Dividend Yield

Dividend yield is a term to measure how much cash flow you earn for each dollar (or other currency) invested in an equity position.


Enterprise value to its earnings before interest and taxes (EV/EBIT)

It is primary tool to evaluate its earnings power and to compare it to other companies.


Forward Contract

An agreement between two parties, a buyer and seller, to buy an asset or currency at a later date at a fix price.


Growth Company

These companies are expected to have high growth rates. Growth stocks are often characterized by favourable fundamental ratios such as steadily increasing revenue growth as well as steadily increasing earnings. Those investing in a growth company are investing on the basis of the anticipated growth of the company.


Interest-coverage-ratio

The formula for the interest coverage ratio is used to measure a company's earnings relative to the amount of interest that it pays. The interest coverage ratio is considered to be a financial leverage ratio in that it analyzes one aspect of a company's financial viability regarding its debt.


Net Asset Value

The Net Asset Value is simply the Book Value of the company's net assets divided by the number of shares issued. The resulting figure is the company's Net Asset Value (NAV) or book value per share - a base-line indicator of what a share would be worth if a company's assets were sold off i.e. in the event of a bankruptcy.


Price-to-earnings ratio (P/E)

The price to earnings ratio is used as a quick calculation for how a company's stock is perceived by the market to be worth relative to the company's earnings. A higher price to earnings ratio implies that the market values the stock as a better investment than if there was a lower price to earnings ratio, ceteris paribus. The increased perceived worth is due to news, speculation, or analysis from investors that the stock has a higher growth potential for the future.


Quick ratio

Quick ratio measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liabilities immediately. A company with a Quick Ratio of less than 1 cannot currently fully pay back its current liabilities. Note that Inventory is excluded from the sum of assets in the Quick Ratio, but included in the Current Ratio.


Tobins Q

The Tobin's Q ratio is a ratio devised by James Tobin of Yale University, Nobel laureate in economics, who hypothesized that the combined market value of all the companies on the stock market should be about equal to their replacement costs. The Q ratio is calculated as the market value of a company divided by the replacement value of the firm's assets.

 


Arbitrage

Attempting to profit by exploiting price references of identical or similar commodities or financial instruments on different markets or in different forms. Arbitrage opportunities (If they exist) provide riskless profit opportunities.


At the money

A situation where an option's strike price is identical to the price of the underlying security.


B or S

B = Buy, or S = Sell


Calendar spread

An option transaction consisting of the purchase of an option with a given expiration an the sale of an otherwise identical option with a different expiration.


Call

Call option or "Call" is the right to "call", or buy, the stock or index to someone else.


Call Option

A call option gives the buyer of the option the right but not the obligation to buy the underlying futures contract at a specified price.


Call or Put

Call Option or Put Option


Cash Settlement

Future contract that does not permit delivery, rather the contracts are settled at the cash price.


Cash-Backed Call

The investor buys a call option, and sets aside in a risk-free interest-bearing instrument enough cash to exercise it.

The call guarantees a maximum purchase price during the life of the option, while leaving the investor free to take advantage of any downturn that might occur in the stock price.


Clearing House

The clearinghouse financially guarantees all contracts on the exchange and manages the financial settlement of futures and options contract.


Contract Month / Delivery Month

Indicates the month during which the futures contract expires.


Contract Specification

A derivative exchange designs its own products and publishes a contract specification setting out the details of the derivative contract. This will include the size or unit of trading and the underlying, maturity months, quotation and minimum price movement and value together with trading times, methods and delivery condition.


Contract Specification

A derivative exchange designs its own products and publishes a contract specification setting out the details of the derivative contract. This will include the size or unit of trading and the underlying, maturity months, quotation and minimum price movement and value together with trading times, methods and delivery condition.


Delivery Month

Indicates the month during which the futures contract expires.


Expiry

Expiry or Expiry Date is last day that an options or futures contract is valid.


Futures

In finance, a futures contract (more colloquially, futures) is a standardized contract between two parties to buy or sell a specified asset of standardized quantity and quality for a price agreed upon today (the futures price) with delivery and payment occurring at a specified future date, the delivery date, making it a type of derivative instrument.


Futures Contract

An agreement between two parties, a buyer and a seller, to purchase an asset or currency at a later date at a fix price and that trades on a futures exchange and is subject to a daily settlement procedure to guarantee to each party that claims against the other parties will be paid.


Futures products

A futures contract ( or Futures as in English) is a firm delivery standard, whose characteristics are known in advance, covering:

- A specific amount of an underlying asset precisely defined,

- To date, called maturity

- A given place, and traded on an organized futures exchange.


Highest Price

Highest Price


Implied Volatility

In financial mathematics, the implied volatility of an option contract is that value of the volatility of the underlying instrument which, when input in an option pricing model will return a theoretical value equal to the current market price of the option.


In the money

For a call option, when the option's strike price is below the market price of the underlying asset. For a put option, when the strike price is above the market price of the underlying asset.


Index

An index is a statistical measure of the changes in a portfolio of stocks representing a portion of the overall market.


Initial Margin

The minimum amount of money that must be in and investment account on the day of a transaction. On futures accounts, the initial margin must be met on any day in which the opening balance starts off below the maintenance margin requirement.


Last

Last is last traded price


Leverage

The magnification of gains and losses by paying only for part of the underlying value of the instrument or asset; the smaller the amount of funds invested, the greater the leverage. It is also known as gearing.


Limit orders

Limit orders include a specified price limit, and may not be executed at a price worse than that limit. They are divided into restricted limit orders and unrestricted limit orders.

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Limit orders - Daily

Daily is also known as Good-for-day (GFD). All orders are assumed to be Daily unless otherwise specified. The validity of a Daily order ends at the close of that day's Trading Period. Daily orders entered during the post-trading period of a given trading day will be valid for the following trading day.


Limit orders - Good till cancelled

Good till cancelled (GTC) is also known as an open order in some markets. This order remains valid until it is executed, it is cancelled, or the contract expires. All orders are automatically cancelled one year after entry.

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Limit orders - Good to date

Good to date (GTD) is also known as an open order in some markets. This order remains valid until it is executed, it is cancelled, the contract expires or until the specified date up to one year from entry on which the order is automatically cancelled.

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Limit orders - Good to expiry

Good to expiry is also known as an open order in some markets. This order remains valid until the expiry,it is executed, it is cancelled, or the contract expires.

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Lowest Price

Lowest Price


Margin Call

Where the brokerage calls the account holder in order for them to pay more funds into their account to maintain the trade.


Market Maker

A trader or trading firm that buys and sells securities in a market in order to facilitate trading. Market makers make a two side market.


Market orders

Market orders are not visible in the order book for any market participant and have no specific price limit, but are matched to the best available contra-side bid or offer. For example, a market that is twelve bid and fourteen offered will fill market orders to sell at twelve and market orders to buy at fourteen. Market orders are possible for both futures and options, but are not supported for strategies and futures calendar spreads.


Open Interest

The number of futures or options contracts that have been established and not yet been offset or exercised.


Out of the money

A call option with a strike price that is higher than the market price of the underlying asset, or a put option with a strike price that is lower than the market price of the underlying asset.


Position Limit

The maximum number of options or futures contracts that any one investor can hold.


Put

Put option or "Put" is the right to "put", or sell, the stock or index to someone else.


Quantity of Ask

Quantity of Ask


Quantity of Bid

Quantity of Bid


Settlement price

The official price established by the clearinghouse at the end of each day for use in the daily settlement.


Short Position

A term used to refer to holding a short position or to the party holding the short position.


Spread

A derivatives transaction consisting of a long position in one contract and a short position in another, similar contract.


Strike price

The strike price is the price at which a specific derivative contract can be exercised, and are fixed in the contract. For call options, the strike price is where the security can be bought (up to the expiration date), while for put options the strike price is the price at which shares can be sold.


Theoretical price

The price which is evaluate by pricing model and parameters.


Tick Size

The minimum permissible price fluctuation.


Time

Time of the last update


Underlying Asset

The asset or instrument on which a derivative's price is based.


Variation

Variation is the difference between the "last" and the settlement price of last trading day


Volatility surface

Volatility is a measure of the uncertainty regarding the magnitude of change in the future value of a financial instrument. It is a key parameter in the pricing of options. All other things being equal, high volatility implies a higher option price and low volatility a lower price. Basic option pricing models often assume that volatility is constant and independent of both an option.


Volume

The quantity trading of right


Base date

The base date is the reference date for an index. It is the date from which the base value is chosen. The base date could be different to the first date.


Base value

For an index, the base value is often arbitrary figure used as the initial value. Generally, it is 100 or 1,000.


Benchmark

Reference Index (or Benchmark) is an index representing a market, a country, a region, ...

It is characterized by a high number of values, variables and generally high level of representation in terms of capitalization and trading volume.


Blue Chip

Blue Chip index is a composite of a small number, usually fixed to a core value, of stocks​​. It is characterized by a level of high representation in terms of market capitalization and trading volume.


Capping

The weight value ​​in an index could be capped to reduce their impact on the overall index performance and meet the requirements of European Directives (UCITS IV), for example.


Composition review

The composition of the indices is reviewed regularly at the intervals specified in the rules. The intervals could be monthly, quarterly and semi-annually.


Corporate actions

Securities transactions (or DTS), or Corporate Actions in English, describe the events involved in the life of a securities

- Dividend payment

- Capital increase

- OPA...

We can distinguish operations that affect the course or the number of titles that require an adjustment in the indices.


Leverage Indice

The leverage index is used to amplify the rise or fall of the market, in the same or opposite direction with the market.

There are two main types of leverage indices:

- The "Leverage" Indices or Bull

- The "Short" Indices or Bear


Sector index

A sector index is an index combining all the values ​​of the same industry, which compares the evolution of a company to that of its comparable.There are two main sector classifications in the world:

- Global Industry Classification Standard (GICS)

- Industrial Classification Benchmark (ICB)


Volatility index

A volatility index is an index calculated from the price of options contracts based on the same underlying index. There are several methods of calculation: the currency (at the money) or weighted by the deviation from parity.

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Weighting

Several types of weightings:

- Equi-weighting (EW): all values ​​are equally important components at the revision date.

- Weighting by market capitalization (CW): the weighting value ​​is proportional to market capitalization.

- Weighted by float-adjusted capitalization (FCW).

- Weighting by fundamental factors (FW).


Alpha

Alpha is a coefficient that measures the performance, positive or negative, produced by an index relative to what could justify risk. A positive alpha indicates the profitability of the fund or portfolio or index is higher than its market and vice versa.

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Ask price

The ask price or offer price is the price a seller is willing to accept for a security.


Beta

The beta of a stock or an index measures the risk against a benchmark market that can be represented by a benchmark index. An index with a low risk will have low beta and vice versa. The beta is estimated by the CAPM model using ordinary least squares (OLS).


Bid Ask Spread

The Bid Ask Spread is the difference in price between the highest price that a buyer is willing to pay (Best Ask) for an asset and the lowest price for which a seller is willing to sell it (Best Bid).


Bid price

The bid price is the price a buyer is willing to pay for a security.


Currency

Indexes are sometimes calculated in currencies other than the local currency to measure the effective performance of a foreign investor buying or selling shares from another currency.

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ISIN

An International Securities Identification Number (ISIN) uniquely identifies a security. Its structure is defined in ISO 6166


Bear Call Spread

A bear call spread contains two calls with the same expiration but different strikes.

The strike price of the short call is below the strike of the long call, which means this strategy will always generate a net cash inflow (net credit) at the outset.


Bear Put Spread

A bear put spread contains two puts with the same expiration but different strikes.

The strike price of the short put is below the strike of the long put. Because of the way the strike prices are selected, this strategy requires a net cash outlay (net debit) at the outset.


Bear Spread Spread

This strategy is the combination of a bear call spread and a bear put spread.

This strategy consists of being short one call and long another call with a higher strike; also long one put and short another put with a lower strike


Bull Call Spread

A bull call spread contains two calls with the same expiration but different strikes.

The strike price of the short call is higher than the strike of the long call, which means this strategy will always require an initial outlay (debit). The short call's main purpose is to help pay for the long call's upfront cost.


Bull Put Spread

A bull put spread involves being short a put option and long another put option with the same expiration but with a lower strike.

The strike price of the short put is higher than the strike of the long put. Because of the relationship between the two strike prices, the investor will always receive a premium (credit) when initiating this position.


Bull Spread Spread

This strategy consists of being long one call and short another call with a higher strike, and short one put with a long put on a lower strike.

Typically, the call strikes are above and the put strikes below the current level of underlying stock, and the distance between the call strikes equals the distance between the put strikes. All options must have the same expiration date.


Cash-Secured Put

The cash-secured put involves writing an at-the-money or out-of-the-money put option and simultaneously setting aside enough cash to buy the stock.

The goal is to be assigned and acquire the stock below today's market price. Whether or not the put is assigned, all outcomes are presumably acceptable. The premium income will help the net results in any event.


Collar

An investor writes a call option and buys a put option with the same expiration as a means to hedge a long position in the underlying stock.

The investor will select a call strike above and a long put strike below the starting stock price.There is latitude, but the strike choices will affect the cost of the hedge as well as the protection it provides. These strikes are referred to as the 'floor' and the 'ceiling' of the position, and the stock is 'collared' between the two strikes.


Covered Call

An investor who buys or owns stock and writes call options in the equivalent amount can earn premium income without taking on additional risk.

The premium received adds to the investor's bottom line regardless of outcome. It offers a small downside 'cushion' in the event the stock slides downward and can boost returns on the upside.


Covered Put

The idea is to sell the stock short and sell a deep-in-the-money put that is trading for close to its intrinsic value. 

The profit would then be the interest earned on what is essentially a zero outlay. The danger is that the stock rallies above the strike price of the put, in which case the risk is open-ended.

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Covered Ratio Spread

This strategy consists of being long stock, short two calls at one strike and long a call at a higher strike. All the options must have the same expiration date.

This strategy profits if the underlying stock moves up to, but not above, the strike price of the short calls. Beyond that, the profit erodes and then hits a plateau.

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Covered Strangle

This strategy consists of two parts: (1) short a call and long the underlying stock, and (2) short a put with sufficient cash to purchase the stock if assigned.

If the stock rises above the call strike at expiration, the investor is most likely assigned on the call, which means selling their stock at the call strike. If the stock falls below the put strike at expiration, the investor is more than likely assigned on the put and obligated to buy more stock at the put strike.

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Long call

This strategy consists of buying a call option. Buying a call is for investors who want a chance to participate in the underlying stock's expected appreciation during the term of the option.

The investor buys calls as a way to profit from growth in the underlying stock's price, without the risk and up-front capital outlay of outright stock ownership. The smaller initial outlay also gives the buyer a chance to achieve greater percentage gains (i.e., greater leverage).


Long Call Butterfly

Combining two short calls at a middle strike, one long call each at a lower and upper strike creates a long call butterfly.

The upper and lower strikes (wings) must both be equidistant from the middle strike (body), and all the options must have the same expiration date.This strategy generally profits if the underlying stock is at the body of the butterfly at expiration.


Long Call Calendar Spread

Short one call option and long a second call option with a more distant expiration is an example of a long call calendar spread.

The strategy most commonly involves calls with the same strike (horizontal spread), but can also be done with different strikes (diagonal spread).If the underlying stock remains steady or declines during the life of the near-term option, that option will expire worthless and leave the investor owning the longer-term option free and clear. If both options have the same strike price, the strategy will always require paying a premium to initiate the position.

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Long Call Condor

A long call condor consists of four different call options of the same expiration. The strategy is constructed of 1 long in-the-money call, 1 short higher middle strike in-the-money call, 1 short middle out-of-money call, 1 long highest strike out-of-money call. 

This strategy profits if the underlying security is between the two short call strikes at expiration.

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Long Condor

A long condor consists of being long one call and short another call with a higher strike, and long one put and short another put with a lower strike.

Typically, the call strikes are above and the put strikes below the current level of underlying stock, and the distance between the call strikes equals the distance between the put strikes. All the options must be of the same expiration.

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Long Iron Butterfly

This strategy combines a short call at an upper strike, a long call and long put at a middle strike, and short a put at lower strike.

The upper and lower strikes (wings) must both be equidistant from the middle strike (body), and all the options must be the same expiration. This strategy profits if the underlying stock is outside the wings of the iron butterfly at expiration.

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Long Put

The investor buys a put contract that is compatible with the expected timing and size of a downturn.

Although a put usually doesn’t appreciate $1 for every $1 that the stock declines, the percentage gains can be significant.

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Long Put Butterfly

A long put butterfly is composed of two short puts at a middle strike, and long one put each at a lower and a higher strike.

The upper and lower strikes (wings) must both be equidistant from the middle strike (body), and all the options must be the same expiration.

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Long Put Calendar Spread (Put Horizontal)

To enter into a long put calendar spread, an investor sells one near-term put option and buys a second put option with a more distant expiration.

The strategy most commonly involves puts with the same strike (horizontal spread), but can also be done with different strikes (diagonal spread).

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Long Put Condor

A long put condor consists of four different put options of the same expiration.

The strategy is constructed of 1 long out-of-money put at the lowest strike, 1 short out-of-money put at the middle strike, 1 short put at a higher in-the-money strike and 1 long deeper in-the-money put at the highest strike.

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Long Ratio Call Spread

A long ratio call spread combines one short call and long two calls of the same expiration but with a higher strike.

This strategy is essentially a bear call spread and a long call, where the strike of the long call is equal to the upper strike of the bear call spread.a

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Long Ratio Put Spread

The long ratio put spread is a 1x2 spread combining one short put and two long puts with a lower strike.

All options have the same expiration date. This strategy is the combination of a bull put spread and a long put, where the strike of the long put is equal to the lower strike of the bull put spread

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Long Stock

This strategy simply consists of buying shares of the underlying stock. The purchase price sets the cost basis, and the exit price establishes whether there is a net profit or loss on the asset. No gain or loss is final until the stock is actually sold. (However, once received, dividend income of course belongs to the stockowner.)

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Long straddle

A **long straddle** is a combination of buying a call and buying a put, both with the same strike price and expiration. Together, they produce a position that should profit if the stock makes a big move either up or down. Typically, investors buy the straddle because they predict a big price move and/or a great deal of volatility in the near future.


Long Strangle (Long Combination)

This strategy typically involves buying an out-of-the money call option and an out-of-the-money put option with the same expiration date.

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Naked Call

An investor who writes a call option without owning the underlying stock is banking on a flat to bearish short-term forecast for the stock.

The strategy consists of writing the call in hopes that it will lose value through time decay and eventually expire out-of-the-money. If the term ends without the option being assigned, the writer keeps the entire premium initially received, and all obligations under the short call position terminate.

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Protective Put (Married Put)

A long put option added to long stockinsures the stock's value. The choice of strike prices determines where the downside protection 'kicks in’.

If the stock stays strong, the investor still gets the benefit of upside gains. (In fact, if the short-term forecast brightens before the put expires, it could be sold back to recoup some of its cost.) However, if the stock falls below the strike, as originally feared, the investor has the benefit of several choices.


Short call

This strategy consists of writing an uncovered call option. It profits if the stock price holds steady or declines, and does best if the option expires worthless.

The only motive for writing an uncovered call option is to earn income from selling premium.

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Short Call Butterfly

A short call butterfly consists of two long calls at a middle strike and short one call each at a lower and upper strike.

The upper and lower strikes (wings) must both be equidistant from the middle strike (body), and all the options must have the same expiration date.

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Short Call Calendar Spread (Short Call Time Spread)

Selling a call calendar spread consists of buying one call option and selling a second call option with a more distant expiration.

The strategy most commonly involves calls with the same strike (horizontal spread), but can also be done with different strikes (diagonal spread).


Short Condor (Iron Condor)

To construct a short condor, the investor sells one call while buying another call with a higher strike and sells one put while buying another put with a lower strike.

Typically, the call strikes are above and the put strikes below the current level of underlying stock, and the distance between the call strikes equals the distance between the put strikes. All the options must be of the same expiration.


Short Iron Butterfly

A short iron butterfly consists of being long a call at an upper strike, short a call and short a put at a middle strike and long a put at a lower strike.

The upper and lower strikes (wings) must both be equidistant from the middle strike (body), and all the options must be the same expiration. An alternative way to think about this strategy is a short straddle surrounded by a long strangle.  It could also be considered as a bear call spread and a bull put spread.


Short Put

A short put involves writing a put option without the reserved cash on hand to purchase the underlying stock.

The only motive for writing an uncovered put is to earn premium income.

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Short Put Butterfly

Buying two puts at a middle strike, and selling one put each at a lower and upper strike results in a short put butterfly.

The upper and lower strikes (wings) must both be equidistant from the middle strike (body), and all the options must be the same expiration


Short Put Calendar Spread (Short Put Time Spread)

Buying one put option and selling a second put option with a more distant expiration is an example of a short put calendar spread.

The strategy most commonly involves puts with the same strike (horizontal spread) but can also be done with different strikes (diagonal spread)

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Short Ratio Call Spread

A short call ratio spread means buying one call (generally an at-the-money call) and selling two calls at the same expiration but with a higher strike.

This strategy is the combination of a bull call spread and a naked call, where the strike of the naked call is equal to the upper strike of the bull call spread.


Short Ratio Put Spread

The short ratio put spread involves buying one put (generally at-the-money) and selling two puts of the same expiration but with a lower strike.

This strategy is the combination of a bear put spread and a naked put, where the strike of the naked put is equal to the lower strike of the bear put spread.


Short Stock

Selling stock short means borrowing stock through the brokerage firm and selling it at the current market price, which the short seller believes is due for a downturn.

The plan is to buy the borrowed stock back later for less, allowing the investor to keep the difference between the two prices.

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Short Straddle

A short straddle is a combination of writing uncovered calls (bearish) and writing uncovered puts (bullish), both with the same strike price and expiration.

Together, they produce a position that predicts a narrow trading range for the underlying stock.


Short Strangle

Selling a call and selling a put with the same expiration, but where the call strike price is above the put strike price is known as the short strangle strategy.

Typically both options are out-of-the-money when the strategy is initiated.


Synthetic Long Put

By combining a long call option and a short stock position, the investor simulates a long put position.

The object is to see the combined position gain value as the result of a predicted decline in the underlying stock's price.


Synthetic Long Stock

The strategy combines two option positions: long a call option and short a put option with the same strike and expiration.

The net result simulates a comparable long stock position's risk and reward. The principal differences are the smaller capital outlay, the time limitation imposed by the term of the options, and the absence of a stock owner's rights: voting and dividends.


Synthetic Short Stock

The strategy combines two option positions: short a call option and long a put option with the same strike and expiration.

The net result simulates a comparable short stock position's risk and reward. The principal differences are the time limitation imposed by the term of the options, the absence of the large initial cash inflow that a short sale would produce, but also the absence of the practical difficulties and obligations associated with short sales.