Add training workflow, datasets, and runbook
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Glossary 973
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discretion to buy or sell at 1/s or ¼ of a point beyond the limit if he feels it is nec
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essary to fill the order.
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Listed Option: a put or call option that is traded on a national option exchange.
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Listed options have fixed striking prices and expiration dates. See also Over-the
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Counter Option.
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Local: a trader on a futures exchange who buys and sells for his own account and
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may fill public orders.
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Lognormal Distribution: a statistical distribution that is often applied to the move
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ment of the stock prices. It is a convenient and logical distribution because it
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implies that stock prices can theoretically rise forever but cannot fall below zero-
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a fact which is, of course, true.
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Margin: to buy a security by borrowing funds from a brokerage house. The margin
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requirement-the maximum percentage of the investment that can be loaned by
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the broker firm-is set by the Federal Reserve Board.
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Market Basket: a portfolio of common stocks whose performance is intended to
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simulate the performance of a specific index. See Index.
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Market-Maker: an exchange member whose function is to aid in the making of a
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market, by making bids and offers for his account in the absence of public buy or
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sell orders. Several market-makers are normally assigned to a particular security.
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The market-maker system encompasses the market-makers and the board bro
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kers. See also Board Broker, Specialist.
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Market Not Held Order: also a market order, but the investor is allowing the floor
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broker who is executing the order to use his own discretion as to the exact timing
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of the execution. If the floor broker expects a decline in price and he is holding a
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"market not held" buy order, he may wait to buy, figuring that a better price will
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soon be available. There is no guarantee that a "market not held" order will be
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filled.
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Market Order: an order to buy or sell securities at the current market. The order
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will be filled as long as there is a market for the security.
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Married Put and Stock: a put and stock are considered to be married if they are
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bought on the same day, and the position is designated at that time as a hedge.
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Model: a mathematical formula designed to price an option as a function of certain
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variables-generally stock price, striking price, volatility, time to expiration, divi
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dends to be paid, and the current risk-free interest rate. The Black
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Scholes model is one of the more widely used models.
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