36 lines
2.4 KiB
Plaintext
36 lines
2.4 KiB
Plaintext
Glossary 965
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calls may be used. A calendar combination is a strategy that consists of a call cal
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endar spread and a put calendar spread at the same time. The striking prices of
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the calls would be higher than the striking prices of the puts. A calendar straddle
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consists of selling a near-term straddle and buying a longer-term straddle, both
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with the same striking price.
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Calendar Straddle or Combination: see Calendar spread.
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Call: an option that gives the holder the right to buy the underlying security at a
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specified price for a certain, fixed period of time. See also Put.
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Call Price: the price at which a bond or preferred stock may be called in by the issu
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ing corporation; see Redemption Price.
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Capitalization-Weighted Index: a stock index that is computed by adding the cap
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italizations (float times price) of each individual stock in the index, and then divid
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ing by the divisor. The stocks with the largest market values have the heaviest
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weighting in the index. See also Divisor, Float, Price-Weighted Index.
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Carrying Cost: the interest expense on a debit balance created by establishing a
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position.
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Cash- Based: Referring to an option or future that is settled in cash when exercised
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or assigned. No physical entity, either stock or commodity, is received or delivered.
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CBOE: the Chicago Board Options Exchange; the first national exchange to trade
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listed stock options.
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Circuit Breaker: a limit applied to the trading of index futures contracts designed
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to keep the stock market from crashing.
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Class: a term used to refer to all put and call contracts on the same underlying secu
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rity.
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Closing Transaction: a trade that reduces an investor's position. Closing buy trans
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actions reduce short positions and closing sell transactions reduce long positions.
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See also Opening Transaction.
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Collateral: the loan value of marginable securities; generally used to finance the
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writing of uncovered options.
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Combination: (1) any position involving both put and call options that is not a strad
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dle. See also Straddle. (2) the name given to the trade at expiration whereby an
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arbitrageur rolls his options from one month to the next. For example, if he sells
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his synthetic long stock position in June and reestablishes it by buying a synthetic
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long stock position in September, the entire four-sided trade is called a combina
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tion by floor traders. See also Straddle, Strangle. |