Glossary of Terms.

Major Trend
Underlying price trend prevailing in a market despite temporary declines or rallies.

Make a Market
To stand ready to buy or sell a particular security as a dealer for its own account. A market maker accepts the risk of holding the position in the security. (See also: Market Maker)

Managed Account
This is similar to a discretionary account where a client has given specific written authorization to a partner, director or qualified portfolio manager of an investment dealer to select securities and execute trades, but on a continuing basis and for a fee. Managed accounts can be solicited whereas discretionary accounts are opened as a matter of convenience to clients who are ill or out of the country.

Margin
A deposit made by a trader with a clearinghouse to ensure that he/she will fulfill any financial obligations resulting from his or her trades. Margin is the amount of money a company will lend you against the security of the investment you buy. The equity contributed by a customer as a percentage of the current market value of the securities held in a margin account is thus the margin amount. The same attributes apply to leverage. This amount will change as the price of the investment changes.

Margin Account
A customer account in which a brokerage firm lends the customer part of the purchase price of securities.

Margin Account (Stocks)
A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock and, if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among.

Margin Call
The Federal Reserve Board's demand that a customer deposit a specified amount of money or securities when a purchase is made in a margin account; the amount is expressed as a percentage of the market value of the securities at the time of purchase. The deposit must be made within one payment period.

Margin Requirements
When purchasing securities one may borrow (usually from a broker) to finance part of the purchase. The down payment required, or the proportion of funds the investor has to put up, is called the margin requirement. It is normally expressed as a percentage.

Margin Requirements (Options)
The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover his daily position valuation and reasonably foreseeable intra-day price changes.

Marked to Market
At the end of each business day the open positions carried in an account held at a brokerage firm are credited or debited funds based on the settlement price of the open positions that day.

Market Capitalization
The total dollar value of all outstanding shares. Computed as shares multiplied by the current market price. It is a measure of corporate size.

Market Maker
A dealer willing to accept the risk of holding a particular security in its own account to facilitate trading in that security. On the Over-The-Counter markets, there are individuals and companies that maintain bid and offerings for stocks. They must be prepared to buy or sell stocks from investors at any time.

Market on Close
An order specification that requires the broker to get the best price available on the close of trading, usually during the last five minutes of trading.

Market Order
Buying or selling securities at the price given at the time the order reached the market. This can be different than the price on the broker's screen depending on how fast the market is moving. A market order is to be executed immediately at the best available price, and is the only order that guarantees execution.

Market Price
The most recent price at which a security transaction took place.

Market Risk
The potential for an investor to experience losses owing to day-to-day fluctuations in the prices at which securities can be bought or sold.

Member
1. At the New York Stock Exchange: one of the 1,366 individuals owning a seat on the Exchange.
2. Of the National Association of Securities Dealers: any broker or dealer admitted to membership in the Association.

Member Firm
A broker-dealer or stock brokerage company in which at least one of the principal officers is a member of a recognized stock exchange, a recognized self-governing body (i.e., the IDA), or a clearing corporation.

Money Market
The securities market that deals in short-term debt. Money-market instruments are forms of debt that mature in less than one year and are very liquid. Treasury bills make up the bulk of the money-market instruments.

Money Market Fund
A mutual fund that invests only in short-term securities, such as bankers' acceptances, commercial paper, repurchase agreements and government bills. The net asset value per share is maintained at $1. Such funds are not federally insured, although the portfolio may consist of guaranteed securities and/or the fund may have private insurance protection. The fund's objective is to earn interest while maintaining a stable net asset value of $1 per share. Generally sold with no load, the fund may also offer draft-writing privileges and low opening investments.

Moving Average Chart
A tool used by technical analysts to track the price movements of a commodity. It plots average daily settlement prices over a defined period of time (for example, over three days for a three-day moving average).

Moving Average Convergence/Divergence (MACD)
The MACD is used to determine overbought or oversold conditions in the market. The crossing of two exponentially smoothed moving averages that are plotted above and below a zero line. The crossover, movement through the zero line, and divergences generate buy and sell signals. Written for stocks and stock indices, MACD can be used for commodities as well. The MACD line is the difference between the long and short exponential moving averages of the chosen item. The signal line is an exponential moving average of the MACD line. Signals are generated by the relationship of the two lines.

Naked Option
An option written (sold) without an underlying hedge position.

Naked Put
The writer of a put option contract who is not short the underlying security.

Naked Writer
A seller or writer who has sold stock or a stock option contract for stock that he or she does not own. Also referred to as a naked writer.

NAV Per Share
The value of a mutual fund share, calculated by dividing the total net asset value of the fund by the number of shares outstanding.

Near-Month Contract/Far-Month Contract
Contract whose expiration is near/far.

Near-the-Money
An option with a strike price close to the current price of the underlying tradable.

Net Asset Value (NAV)
The value of a fund's investments. For a mutual fund, the net asset value per share usually represents the fund's market price, subject to a possible sales or redemption charge. For a closed end fund, the market price may vary significantly from the net asset value.

Net Change
The daily change from time frame to time frame. An example would be the change from the close of yesterday to the close of today. The difference between the closing price of a security on the trading day reported and the previous day's closing price. In over-the-counter transactions, the term refers to the difference between the closing bids.

Net Earnings
That part of a company's profits remaining after all expenses and taxes have been paid and out of which dividends may be paid.

Net Income
The company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses.

Obligation
A legal responsibility for a debt.

Obligator
Refers to a person who has a legal obligation to pay a debt, such as a borrower of money, a credit customer of a business supplier or retailer, or an issuer of bonds. Also referred to as a debtor or obligor.

Offer
The lowest price at which a person is willing to sell.

Off-floor Trader
Refers to a trader who does not trade on the actual floor of an organized stock exchange.

On-the-Money
An option term, meaning not in-the-money, not out-of-the-money, but right smack in the middle. For options it means that the option in question is trading at its exercise price.

Open Interest
The current number of contracts that are available in a specific option series. For example, the open interest in the Jan $25 Calls for Happy Trust is 122 contracts. At present there are 122 contracts that been initiated. The number of outstanding option contracts in the exchange market or in a particular series.

Open Order
An order to buy or sell a security at a specified price, valid until executed or canceled.

Open Outcry
Verbal bids and offers made on the trading floors of stock exchanges. This method is disappearing as exchanges become automated.

Open Trades
Current trades that are still held active in the customer's account.

Opening
The period at the beginning of the trading session during which all transactions are considered made or first transactions were completed.

Opening Call
A period at the opening of a futures market in which the price for each contract is established by outcry.

Opening Price
The range of prices at which the first bids and offers were made or first transactions were completed.

Opening Purchase
A transaction in which the purchaser's intention is to create or increase a long position in a given series of options.

Opening Range
The range of prices that occur during the first 30 seconds to five minutes of trading, depending on the preference of the individual analyst.

Opening Sale
A transaction in which the seller's intention is to create or increase a short position in a given series of options.

Option
A security that represents the right, but not the obligation, to buy or sell a specified amount of an underlying security (stock, bond, futures contract, etc.) at a specified price within a specified time. The purchaser acquires a right to exercise the specifics of the contract, and the seller assumes a legal obligation to fulfill the contract if the purchaser chooses to exercise his/her right. Interesting to note that options are a zero sum game, meaning that if someone makes $10,000 on an option, the other person has lost out on that same amount.

Option Eligible Securities
Securities that meet the eligibility criteria as underlying securities for put and call options on a stock exchange.

Option Holder
The buyer of either a call or put option.

Option Premium
This is the price of an option. It is the amount of money that the option holder pays for the rights and the option writer receives for the obligations granted by the option.

Option Writer
The seller of either a call or put option. The option writer receives payment, called a premium, and is obligated to buy or sell the underlying security at a specified price, within a certain period of time, if called upon to do so.

Order
1. A ticket or voucher to buy or sell securities.
2. The number of days of past price history used to predict the following day's price.