Glossary of Terms.

Gamma
The degree by which the delta changes with respect to changes in the underlying instrument's price.

Generally Accepted Accounting Practices (GAAP)
The conventions, rules and procedures that define accepted accounting practice including broad guidelines as well as detailed procedures. The basic doctrine was set forth by the Accounting Principles Board of the American Institute of Certified Public Accountants, which was superseded in 1973 by the Financial Accounting Standards Board (FASB) an independent self-regulatory organization.

Go Long
To buy securities, options or futures with the intent to profit from a rise in the price of the asset.

Good Til' Canceled Order (GTC)
Sometimes simply called "GTC," it means an order to buy or sell stock that is good until you cancel it. Brokerages usually set a limit of 30-60 days, at which the GTC expires if not restated.

Goodwill
Goodwill is an intangible asset of a company. The buyer of a business is often willing to pay for the "good name" of the business in addition to the value of its assets. Goodwill appears on the balance sheet as the excess of the amount paid for the shares over net assets.

Growth Fund
A diversified common stock fund that has capital appreciation as its primary goal. It invests in companies that reinvest most of their earnings for expansion, research or development.

Growth Stock
Usually a non-dividend paying common stock of a company with expansion potential. The corporate funds that would normally be paid to shareholders as dividends are put back into the company to pay for expansion. Growth stocks have the potential for capital gains rather than income.

Hedge
To create a trade which lowers the risk of an outright directional move (i.e., to go long one security, short another security). An investment made in order to reduce the risk of adverse price movements in a security. The intention is to reduce the risk of a loss from a specified event; e.g., hedging a currency to protect against detrimental currency movements that would reduce the portfolio return. Thus, you can reduce the risk of loss by taking a position through options or futures opposite to the current position they hold in the market.

High (hi)
The highest price that was paid for a stock during a certain period. For example, the high for the day was $80, but the high for the year was $120.

High and Low
Refers to the high and low transactions prices that occur each trading day.

High Price
The highest (intraday) price of a stock over the past 52 weeks, adjusted for any stock splits.

Illiquid Market
A market that has no volume that subsequently creates a lot of slippage due to lack of trading volume.

Implied Volatility
The volatility computed using the actual market prices of an option contract and one of a number of pricing models. For example, if the market price of an option rises without a change in the price of the underlying stock or future, implied volatility will have risen.

Income Stock
A common stock that pays, or is expected to pay, an attractive dividend to shareholders. Usually stock from a more mature company that does not expect expansion or growth-therefore money is not required internally for equipment, etc.

Index Options
Call options and put options on indexes of stocks designed to reflect and fluctuate with market conditions. Broad-based indexes cover a wide range of industries and companies and narrow-based indexes cover stocks in one industry or economic sector. Index options allow investors to trade in a specific industry group or market without having to buy all the stocks individually.

Inflation
Increases in the general price level of goods and services; i.e., your dollar won't buy as much as it used to. Inflation is commonly reported using the Consumer Price Index (CPI) as a measure. Inflation is one of the major risks to investors over the long term as savings may actually buy less in the future if they are not invested with inflation as a consideration. Inflation rate refers to the rate of change in prices.

Institutional Investor
A person or organization that trades securities in large enough share quantities or dollar amounts that it qualifies for preferential treatment and lower commissions. An institutional order can be of any size. Institutional investors are covered by fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.

Intangible Asset
An asset that has no physical substance, such as goodwill, patents, trademarks and copyrights.

Interest Rate
The charge for the privilege of borrowing money, usually expressed as an annual percentage rate.

In-the-Money
If you were to exercise an option and it would general a profit at the time, it is known to be in the money. For example, when a commodity price is $500, a call option with a strike price of $400 is considered in-the-money.

In-the-Money Option
A call option is in-the-money if the strike price is less than the market price of the underlying security. A put option is in-the-money if the strike price is greater than the market price of the underlying security. For example, an XYZ call option with a 52-strike price is in-the-money when XYZ trades at 52 1/8 or higher. An XYZ put option with a 52-strike price is in-the-money when XYZ is trading at 51 7/8 or lower.

Intrinsic Value
The amount by which a market is in-the-money. Out-of-the-money options have no intrinsic value. Calls = underlying - strike price. Puts = strike price - underlying.

Iron Butterfly
The combination of a long (short) straddle and a short (long) strangle. All options must have the same underlying and have the same expiration.

Issuer
1. The entity, such as a corporation or municipality, that offers or proposes to offer its securities for sale.
2. The creator of an option: the issuer of an over-the-counter option is the option writer, and the issuer of a listed option is the Options Clearing Corporation.