Add training workflow, datasets, and runbook
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972 Glossary
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In-the-Money: a term describing any option that has intrinsic value. A call option is
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in-the-money if the underlying security is higher than the striking price of the call.
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A put option is in-the-money if the security is below the striking price. See also
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Intrinsic Value, Out-of-the-Money.
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Intramarket Spread: a futures spread in which futures contracts are spread against
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other futures contracts in the same market; example, buy May soybeans, sell
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March soybeans.
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Intrinsic Value: the value of an option if it were to expire immediately with the
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underlying stock at its current price; the amount by which an option is in-the
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money. For call options, this is the difference between the stock price and the
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striking price, if that difference is a positive number, or zero otherwise. For put
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options it is the difference between the striking price and the stock price, if that
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difference is positive, and zero otherwise. See also In-the-Money, Parity, Time
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Value Premium.
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Last Trading Day: the third Friday of the expiration month. Options cease trading
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at 3:00 P.M. Eastern Time on the last trading day.
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LEAPS: Long-term Equity Anticipation Securities. These are long-term listed
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options, currently having maturities as long as two and one-half years.
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Leg: a risk-oriented method of establishing a two-sided position. Rather than enter
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ing into a simultaneous transaction to establish the position (a spread, for exam
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ple), the trader first executes one side of the position, hoping to execute the other
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side at a later time and a better price. The risk materializes from the fact that a
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better price may never be available, and a worse price must eventually be accept
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ed.
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Letter of Guarantee: a letter from a bank to a brokerage firm stating that a cus
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tomer (who has written a call option) does indeed own the underlying stock and
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the bank will guarantee delivery if the call is assigned. Thus, the call can be con
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sidered covered. Not all brokerage firms accept letters of guarantee.
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Leverage: in investments, the attainment of greater percentage profit and risk
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potential. A call holder has leverage with respect to a stockholder-the former will
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have greater percentage profits and losses than the latter, for the same movement
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in the underlying stock.
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Limit: see Trading Limit.
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Limit Order: an order to buy or sell securities at a specified price (the limit). A limit
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order may also be placed "with discretion" -a fixed; usually small, amount such as
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1/s or ¼ of a point. In this case, the floor broker executing the order may use his
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