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