Glossary

Optionetics Trading Education Center

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Safe Harbor
Refers to a form of shark repellent whereby a target company acquires a business so heavily regulated that it makes the target less attractive, giving the target in effect a safe harbor from the raider.

Safety
Refers to the concept of preservation and stability of original invested capital.

Sale (Securities)
A sale is executed in the securities field when a buyer and a seller agree on a price for the security.

Sales Charge
The fee charged by a mutual fund when purchasing shares, usually payable as a commission to a marketing agent, such as a financial advisor, who is thus compensated for his assistance to a purchaser. It represents the difference, if any, between the share purchase price and the share net asset value.

Salomon Brothers World Bond Index
Measures the performance of over 800 bonds representing 14 global bond markets. The bonds are weighted by market capitalization and include maturities of over 1 year.

Salvage Value
The residual value that can be realized from the disposition of an asset.

Saturday Night Special
A sudden attempt by one company to take over another company by making a public tender offer. This term was coined in the 1960s after a large number of such surprise maneuvers, which were often announced over the weekend.

Saucer Base
Similar to a cup and handle formation, but the saucer base is shallower and rounder in shape.

Savings and Loan Investment Contracts
A negotiated-term deposit issued by a savings and loan.

Scalp
To trade for small gains. In commodities, purchasing and selling in equal amounts so there is no net position at the end of the trading day; a speculative attempt to make a quick profit by buying at the initial offering price in the hope the issue will increase and can be sold. Scalping normally involves establishing and liquidating a position quickly, usually within the same day, hour or minutes.

Schwarz-a-tron
A dedicated computer system for options calculations and simulations.

Scorched-earth Policy
A form of shark repellent: a strategic move by a takeover target company to make its stock less attractive to a potential acquirer. One scorched-earth strategy is to institute a policy whereby there is agreement to sell off the most attractive parts of a business (the crown jewels) or to schedule all debt to become due immediately following a merger.

Scrip
A certificate exchangeable for cash before a specified date, after which it may have no value. Usually issued for fractions of shares in connection with a stock dividend or split or in a reorganization of a company. For example, a 1-for-3 stock dividend would result in many shareholders being entitled to a fraction of a share (1/3 or 2/3) for which scrip would be issued instead of an actual stock certificate.

Scripophily
Refers to the practice of collecting stock and bond certificates for their scarcity or historically significant value alone. Some certificates have risen in value since their issue because of the beauty of the illustrations on them, or the importance of the issuer in world finance and economic development (such as those issued by railroad companies in the 19th century) even though the issuer no longer exists.

Seasonal Autocorrelation
Autocorrelation that shows up at 12-, 24-, 36- and 48-month lag intervals or at four, eight, 12 and 16 quarterly lags.

Seasonal Trend
A consistent but short-lived rise or drop in market activity that occurs due to predictable changes in climate or calendar.

Seasonality
A consistent and predictable change in market activity that occurs from consistent and predictable events.

Seat
The traditional term for membership in a stock exchange.

Secondary Distribution
The redistribution of a block of stock after it has been initially sold by the issuing company. Usually a large block of shares is involved (e.g., from the settlement of an estate) and these are offered to the public at a fixed price, set in relationship to the stock's market price.

Secondary Market
Secondary markets are the stock exchanges and the over-the-counter market. Securities are first issued as a primary offering to the public. When the securities are traded from that first holder to another, the issues trade in these secondary markets. Most trading is done in the secondary market. The NYSE, as well as all other stock exchanges, the bond markets, etc., are secondary markets.

Secondary Offering
A sale of securities in which one or more major stockholders in a company sell all or a large portion of their holdings; the underwriting proceeds are paid to the stockholders rather than to the corporation. Typically such an offering occurs when the founder of a business (and perhaps some of the original financial backers) determine that there is more to be gained by going public than by staying private. The offering does not increase the number of shares of stock outstanding.

Sector Fund
A mutual fund whose investment objective is to capitalize on the return potential provided by investing primarily in a particular industry or sector of the economy. A mutual fund that concentrates on trading a range of securities within a broad industry group, such as technology, energy or financial services.

Secular Trend
Pertaining to a long indefinite period of time.

Securities
Negotiable instruments such as stocks and bonds. Transferable certificates of ownership of investment products such as notes, bonds, stocks, futures contracts and options.

Securities Advisor
A person or firm registered with applicable securities commissions to generally advise the public on securities, often through publications.

Securities and Commodities Exchanges
Organized exchanges where securities, options and futures contracts are traded by members for the accounts of their customers, or for their own accounts.

Securities and Exchange Commission (SEC)
Commission created by Congress to regulate the securities markets and protect investors. It is composed of five commissioners appointed by the president of the United States and approved by the Senate. The SEC enforces, among other acts, the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940 and the Investment Advisers Act of 1940.

Securities Dealer
One who acts as the agent for another party to buy and sell securities and other investments; also an underwriter.

Securities Gap
A securities industry term used to describe the price movement of a stock or commodity when one day's trading range for that stock or commodity does not overlap the next day's, causing a range or gap in which no trading has occurred. This usually happens because of some extraordinarily positive or negative news about the company or commodity.

Securities Investor Protection Corporation (SIPC)
A non-profit membership corporation created by an act of Congress to protect clients of brokerage firms that are forced into bankruptcy. Membership is composed of all brokers and dealers registered under the Securities Exchange Act of 1934, all members of national securities exchanges and most NASD members. SIPC provides customers of these firms up to $500,000 coverage for cash and securities held by the firms.

Securitization
1. The development of markets for a variety of debt instruments that permit the ultimate borrower to bypass the banks and other deposit-taking institutions and to borrow directly from lenders.
2. In a narrow sense it also refers to the process of converting loans of various sorts into marketable securities by packaging the loans into pools and then selling shares of ownership in the pool itself.

Security
Another word for stocks, bonds, and short-term investments. Any piece of securitized paper that can be traded for value other than an insurance policy or a fixed annuity. Under the act of 1934, this includes any note, stock, bond, investment contract, debenture, certificate of interest in profit-sharing or partnership agreement, certificate of deposit, collateral trust certificate, pre-organization certificate, option on a security, or other instrument of investment commonly known as a security. Also categorized as securities are interests in oil and gas drilling programs, real estate condominiums and cooperatives, farmland or animals, commodity option contracts, whiskey warehouse receipts, multilevel distributorship arrangements, and merchandising marketing programs.

Security-market Line
The linear relationship between systematic risk and expected returns on securities, as postulated by the Capital Asset Pricing Model.

Seed
The first value used to start a calculation. For example, an exponentially smoothed moving average (EMA) uses the previous day's EMA for the calculation. On the first day's calculation of the EMA, you could use a simple moving average as the seed for the EMA.

Seed Stock
The shares or stock sold by the company to provide start-up capital.

Self Affine Transformation
A rescaling procedure used in fractal geometry and performed on a two-variable system. For example, in a system utilizing an x-axis and y-axis representing time and price, the x-axis could be rescaled by one ratio and/or procedure while the y-axis is rescaled by a different ratio and/or procedure.

Sell
To convey ownership of a security or other asset for money or value. This includes giving or delivering a security with or as a bonus for a purchase of securities, a gift of assessable stock, and selling or offering a warrant or right to purchase or subscribe to another security. Not included in the definition is a pledge or loan, or a stock dividend if nothing of value is given by the stockholders for the dividend.

Seller's Option
Refers to a securities transaction in which the seller is given the right to deliver the security to the purchaser on the date the seller's option expires or before provided written notice of the seller's intention to deliver is given to the buyer one full business day prior to delivery. Seller's option deliveries are usually not made before six business days following the transaction or after sixty days following the transaction.

Selling Group
Investment dealers who assist a banking group in marketing a new issue of securities in order to obtain wide distribution. These dealers do not assume financial responsibility for the underwriting of the issue as the banking group does.

Selling Short
If an investor thinks the price of a stock is going down, the investor could borrow the stock from a broker and sell it. Eventually, s/he must buy the stock back on the open market. For instance, you borrow 1,000 shares of XYZ on July 1 and sell it for $8 per share. Then, on Aug 1, you purchase 1,000 shares of XYZ at $7 per share. You've made $1,000 (less commissions and other fees) by selling short.

Selling Short Against the Box
Refers to selling short stock owned by the seller but held in safekeeping; also known as the box. The basic motive of this practice is to protect a Capital Gain in the shares that are owned while deferring a long-term gain into another tax year. This practice, which assumes that the securities needed to cover are borrowed as with any short sale, may be simple inaccessibility of the box or that the seller does not wish to disclose ownership of the securities.

Semilog Scaling Method
With semilog, the distance between each point of a chart is exponential. Semilog scaling is used to compare relative price changes rather than physical point changes.

Sensitivity
The rate of change of the moving average in response to the movement of the underlying data. The most sensitive period is that in which the rate of change of the moving average is fastest in response to changes in the sine wave.

Sensitivity Analysis
An analysis that specifies how changes in a particular variable, which may be subject to uncertainty, affect a decision that is dependent on the value of that variable.

Serial Bond
A bond or debenture issue in which a predetermined amount of the principal becomes due and payable each year.

Serial Correlation
The systematic relationship between successive observations of a time series.

Serially Independent
A number that is unrelated to the previous number in a given series in any way.

Series (Options)
All option contracts of the same class that also have the same unit of trade, expiration date, and exercise price.

Series (Stocks)
Shares with common characteristics, such as rights to ownership and voting, dividends, par value, etc. In many foreign shares, one series may be owned only by citizens of the country in which the stock is registered.

Series 7
The General Securities Registered Representative License entitles the holder to sell all types of securities products with the exception of commodities futures. The Series 7 is the most comprehensive of the NASD representative licenses, and serves as a prerequisite for most of the NASD principals' examinations.

Series EE Bond
A non-marketable, interest-bearing U.S. government savings bond issued at a discount from par. Interest on Series EE bonds is exempt from state and local taxes.

Series HH Bond
A non-marketable, interest-bearing U.S. government savings bond issued at par and purchased only by trading in Series EE bonds at maturity. Interest on Series HH bonds is exempt from state and local taxes.

Settlement
The price at which all outstanding positions in a stock or commodity are marked to market-typically, the closing price.

Settlement Change
Refers to the difference between the previous day's and current day's settlement price.

Settlement Date
The date on which payment is made to settle a trade. For stocks traded on U.S. exchanges, settlement is three days; settlement for options is one day. For mutual funds, settlement usually occurs in the U.S. the day following the trade. In some regional markets, foreign shares may require months to settle.

Settlement Price
A figure determined by the closing range that is used to calculate gains and losses in futures market accounts. Settlement prices are used to determine gains, losses, margin calls, and invoice prices for deliveries.

Shapiro-Wilkes Test
A statistical test indicating the likelihood that the sample of simulated net returns was drawn from a normal distribution. A small value of this statistic leads to nonacceptance of the null hypothesis that the sample is drawn from a normal distribution.

Shares
Certificates or book entries representing ownership in a corporation or similar entity

Share Price
For a mutual fund, the price of a share is called its net asset value (NAV). Multiplying the share price or NAV times the number of shares you have in the fund gives you the value of your investment.

Share Profit
Calculated by dividing the profit after dividend rights of preferred shares by the average number of common shares outstanding. This figure may be calculated either before or after taking extraordinary items into account. If the company had a loss, this calculation would result in a share loss figure, either before or after extraordinary items.

Share Repurchase
Program by which a corporation buys back its own shares in the open market. It is usually done when shares are undervalued. Since it reduces the number of shares outstanding and thus increases earnings per share, it tends to elevate the market value of the remaining shares held by stockholders.

Shareholder of Record
A shareholder whose name is registered in the records of a company whose shares he or she holds. Dividend payments and rights issues are announced as being payable to shareholders of record.

Shareholder or Stockholder
Someone who owns preferred or common shares of a company.

Shareholders' Equity
Ownership interest of common and preferred stockholders in a company. It is also the difference between the assets and liabilities of a company, which is sometimes called net worth, or just "equity."

Shares or Stock
These two terms are used interchangeably. Certificates representing ownership in a corporation and the appropriate claim on the corporation's earnings and assets.

Shark Repellent
Refers to a measure undertaken by a company to discourage unwanted takeover attempts. Also called porcupine provision, fair price provision; golden parachute; defensive merger; staggered BODs; super-majority provision; poison pill and scorched-earth policy.

Shark Watcher
A company specializing in early detection of takeover activities. These firms monitor trading patterns in a client's stock and try to determine the identity of parties accumulating shares.

Sharpe Ratio Method
The Sharpe Ratio Method is the classic return/risk measure, given by: where: E = Expected return I = Risk-free interest rate, sd = Standard deviation of returns. Both the Sharpe and the Sterling ratio methods compare returns with variability of returns, as opposed to risk of loss of original investment.

Shaved Candlestick
In candlestick charting, when the shadows of a candle which mark the area between the real body and the extremes and give the appearance of being wicks are absent.

Shelf Offering
An SEC provision allowing an issuer to register a new issue security without selling the entire issue at once. The issuer can sell limited portions of the issuer over a 2-year period without re-registering the security.

Short
The term used to describe the selling of a security, contract or commodity not owned by the seller. For example, an investor who borrows shares of stock from a broker-dealer and sells them on the open market is said to have a short position in the stock.

Short Hedge
The sale of a futures contract in anticipation of a later cash market sale. A position resulting from the sale of a stock, option or contract. Note that a short put position is a long market position. Used to eliminate or lessen the possible decline in value of ownership of an approximately equal amount of the cash financial instrument or physical commodity.

Short Interest Ratio
A ratio that indicates the number of trading days required to repurchase all of the shares that have been sold short. A short interest ratio of 2.50 would tell us that based on the current volume of trading, it will take 2½ days' volume to cover all shorts.

Short Maturity
A short maturity, approximately 30 days, of a money fund indicates the fund managers are convinced that interest rates are going to rise.

Short Position (Commodities)
A contract in which a trader has agreed to sell a commodity for a specific price at a future date.

Short Position (Options)
A position wherein a person's interest in a particular series of options is as a net writer (i.e., the number of contracts sold exceeds the number of contracts bought).

Short Position (Stocks)
Occurs when a person sells stocks s/he does not yet own. Shares must be borrowed, before the sale, to make "good delivery" to the buyer. Eventually, the shares must be bought to close out the transaction. This method is used when a trader believes the stock price is going down.

Short Premium
Expectation that a move by the underlying in either direction will result in a theoretical decrease of the value of an option.

Short Sale
Selling a security that the seller does not own but is committed to repurchasing eventually. It is used to capitalize on an expected decline in the security's price.

Short Selling
The sale of shares or commodities that a seller does not currently own. The seller borrows the shares or commodities (usually from a broker) and sells them with the intent to replace what he has sold through later repurchase in the market at a lower price. Thus, short selling provides a vehicle for speculation in a market characterized by anticipated price declines.

Short-term Investment Horizon
An investment period of one year or less. An investor in this time frame should be most concerned about capital preservation as the moneys will be required shortly.

Short-term Bond
A bond or debenture maturing within 3 years.

Short-term Investments
In an investment portfolio, short-term investments are those whose prices are relatively stable compared to other types because they are easily converted into cash. They focus more on capital preservation as an investing goal than on growth. Short-term investments generally mature within one to three years.

Show Stopper
Refers to a legal barrier erected to prevent a takeover. For instance, some corporations make implement a scorched-earth policy or use other forms of shark repellent or they may appeal to government to pass a law preventing the takeover.

Side-By-Side Trading
Refers to the trading of a security and an option of that same security on the same exchange.

Signal
In the context of stock or commodity time series historical data, this is usually a daily or weekly price.

Signal Line
In artificial intelligence, a numeric variable that is pre-valued in the knowledge base. In moving average jargon, the first moving average is smoothed by a second moving average. The second moving average is the signal line.

Significance
The probability of rejection on the basis of a statistical test and a hypothesis that there is no validity to the specific claim that two variations of the same thing can be distinguished by a specific procedure.

Simple Moving Average (SMA)
The arithmetic mean or average of a series of prices over a period of time. The longer the period of time studied (that is, the larger the denominator of the average), the less impact an individual data point has on the average.

Simple Rates of Return
The percentage change in the net asset value of a fund over a certain period of time, usually in terms of one month to one-year periods.

Simple Regression
A mathematical way of stating the statistical linear relationship between one independent and one dependent variable.

Sine wave
A wave whose amplitude varies as the sine of a linear function of time.

Sinking Funds
A fund set up by a company to retire, over a period of time, the major part of a preferred share issue, or a debt issue prior to maturity. The fund helps to "pay off" the debt issue over the term of the issue and can be compared to principal payments made by a mortgage holder. Even though the issue is outstanding until maturity, the small incremental payments made under a sinking fund can make the maturity of the bond issue less onerous on the company. Instead of having to re-fund the entire issue, there may only be a small outstanding balance. A sinking fund security is attractive to investors as there is more assurance that the debt will be repaid on maturity.

Skew
A descriptive measure of lopsidedness in a distribution. Especially important when there is volatility skew and prices are greater or less than they should be.

Sleeper
Refers to a stock in where there is not much investor interest but which has potential to gain significantly in price once its attractions are recognized. Sleepers are easily recognized in retrospect, once stock prices have already started to rise.

Sleeping Beauty
Refers to a target company that has not yet been approached by a potential acquirer.

Slippage
The difference between estimated transaction costs and actual transaction costs. The difference is usually composed of revisions to price difference or spread and commission costs.

Smoothing
Simply, a mathematical technique that removes excess data variability while maintaining a correct appraisal of the underlying trend.

Society for Worldwide Interbank Financial Telecommunication (SWIFT)
A cooperative owned by the international banking community that operates a global data processing system for the transmission of financial messages.

Soft Dollars
A means of paying a brokerage firm for their services through commission revenue rather than through direct payment or hard-dollar fees.

Sole Proprietorship
A form of business organization in which the owner faces unlimited liability and where, effectively, his business and personal finances are not separated.

Solvency
The ability of a corporation both to meet its long-term fixed expenses and to have adequate money for long-term expansion and growth.

Specialist
A stock exchange member who stands ready to quote and trade certain securities either for his own account or for customer accounts. The specialist's role is to maintain a fair and orderly market in the stocks for which he is responsible. A trader on the market floor assigned to fill bids/orders in a specific stock out of his/her own account when the order has no competing bid/order to ensure a fair and orderly market.

Specialist Block Purchase & Sale
A transaction whereby a specialist on a stock exchanges buys a large block of securities either to sell for his or her own account or to try to place with another block buyer and seller, such as a floor trader. Exchange rules require these transactions be executed only when the securities cannot be absorbed in the regular market.

Specialist Unit
A group of stock exchange members whose job is to maintain a fair and orderly market in one or more securities. A specialist unit or specialist serves two main functions: executing limit orders on behalf of other exchange members for a portion of the floor broker's commission; and buying and selling for the specialist's own account to counteract temporary imbalances in supply and demand in order to prevent wide swings in stock prices.

Specialist's Book
A record maintained by a specialist. The book includes the specialist's own inventory of securities, market orders to sell short, limit orders and stop orders that other stock exchange members have placed with the specialist. Orders are listed in chronological sequence. The specialist is prohibited from buying the stock for his or her own account at a price for which he or she has previously agreed to execute a limit order.

Specify
To set the parameters and variables of a given model.
Spectrum
The frequency decomposition of time series data. This is used to detect periodic fluctuations or cycles in historical price data.

Speculator
A trader who hopes to profit from a directional move in the underlying instrument and attempts to anticipate price changes and, through buying and selling futures contracts, aims to make profits; does not use the futures market in connection with the production, processing, marketing or handling of a product. The speculator has no interest in making or taking delivery.

Spike
A sharp rise in price in a single day or two; may be as great as 15-30%, indicating the time for an immediate sale.

Spline
The linear interpolation between two adjacent points on a curve.

Split
The division of the outstanding shares of a corporation into larger number of shares. A "3 for 1 split" by a company with one million shares outstanding results in three million shares outstanding. Each holder of 100 shares before the split would hold 300 shares after the split, although the proportionate equity in the company would remain the same.

Spot Month
In trading, the current contract month. Also known as the front month.

Spot Prices
Same as cash price, the price at which a commodity is selling at a particular time and place.

Spread
1. In a quotation, the difference between the bid and the ask prices of a security.
2. An options position established by purchasing one option and selling another option of the same class but of a different series. A trade in which two related contracts/stocks/bonds/options are traded to exploit the relative differences in price change between the two.

Spread Rolls
A spread order used to bridge the closing of one position and the establishment of a new one.

Spring
A two-day pattern in which on the first day, the market declines below a support point, while the next day sees the market move strongly back up into the congestion area. Another term for up thrust; occurs when price moves above a pivot top and a widespread reversal ensues as follows:
1. Two previous closes are reversed
2. Close is below pivot top
3. Close is below opening and mid-range
4. Daily price range is greater than the previous day's range.

Stag
A speculator who buys and sells securities for quick profit rather than holding onto them as an investment.

Stair-stepping
In which market activity is characterized by a trend, then sideways movements, followed by another trend and further sideways movement.

Standard & Poor's Corporation (S&P)
A company that rates stocks and corporate and municipal bonds according to risk profiles and that produces and tracks the S&P indexes. The company also publishes a variety of financial and investment reports, for example, Standard & Poor's Composite Index of 500 Stocks (S&P 500), a benchmark of U.S. common stock performance, which includes 500 of the largest stocks (by market value) listed in the U.S.

Standard Deviation
A measure of the fluctuation in a stock's monthly return over the preceding year.

Standard Industrial Classification (SIC)
Specific 4-digit codes assigned to represent unique business activities.

Standardized Unanticipated Earnings
A company's average earnings surprise is compared with analyst earnings estimates dispersion, which can be used to estimate the likelihood of earnings surprises.

Stationarity
A distribution of a quantity that does not change over time.

Stationary Time Series
Implies that no trend is observed in the time series. Identified when the time series has a constant mean and variance.

Statistics
The probability distribution used to test the hypothesis that a random sample of an observations comes from a normal population with a given mean.

Step Function
A function defined on an interval so that the interval can be partitioned into a finite number of subintervals each of which the function is a constant. Also known as a simple function.

Sterling Ratio Method
A measure of risk/return given by: where: T = Three-year average annual return AM = Three-year average maximum annual drawdown. Both Sharpe and Sterling ratio methods compare returns with variability of returns, as opposed to risk of loss of original investment.

Stochastic
Literally means random.

Stochastic Indicator
The Stochastic Indicator is based on the observation that as prices increase, closing prices tend to accumulate ever closer to the highs for the period. Conversely, as prices decrease, closing prices tend to accumulate ever closer to the lows for the period. Trading decisions are made with respect to divergence between % of "D" (one of the two lines generated by the study) and the item's price. For example, when a commodity or stock makes a high, reacts, and subsequently moves to a higher high while corresponding peaks on the % of "D" line make a high and then a lower high, a bearish divergence is indicated. When a commodity or stock has established a new low, reacts, and moves to a lower low while the corresponding low points on the % of "D" line make a low and then a higher low, a bullish divergence is indicated. Traders act upon this divergence when the other line generated by the study (K) crosses on the right-hand side of the peak of the % of "D" line in the case of a top, or on the right-hand side of the low point of the % of "D" line in the case of a bottom. Two variations of the Stochastic Indicator are in use: Regular and Slow. When the Regular plot of the Stochastic too choppy, the "Slow" version can often clarify the Stochastics.

Stock
When you own a company's stock, you own part of the company. How much you own depends on how many shares of stock you have. Holders of common stock are the last to be paid any profits from the company but are likely to profit most from any growth it has. Owners of preferred stock are paid a fixed dividend before owners of common stock, but the amount of the dividend doesn't usually grow if the company grows.

Stock Broker
One who acts as an agent in the buying and selling of securities and charges a commission for his services.

Stock Consolidation
The opposite of a stock split. A number of existing shares are combined into a smaller number of shares, i.e., turning every three shares into one.

Stock Dividend
Payment of a corporate dividend in the form of stock rather than cash. The stock dividend may be additional shares in the company, or it may be shares in a subsidiary being spun off to shareholders. Stock dividends are often used to conserve cash needed to operate the business. Unlike a cash dividend, stock dividends are not taxed until sold.

Stock Exchange or Stock Market
An organized marketplace where buyers and sellers are brought together to buy and sell stocks and must follow certain rules, regulations and guidelines.

Stock Index
An indicator used to measure and report value changes in a specific group of stocks.

Stock Index Futures
A futures contract traded that uses a market index as the underlying instrument. Typically, the value of the contract is $500 times the underlying index. The delivery mechanism is usually cash settlement.

Stock Quote
A list of representative prices bid and asked for a stock during a particular trading day. Stocks are quoted in points, where one point equals $1, and 1/8ths of a point, where 1/8th equals 12.5 cents. Stock quotes are listed in the financial press and most daily newspapers.

Stock Split
An increase in the number of a corporation's outstanding shares that decreases the par value of its stock. The market value of the total number of shares remains the same. The proportional reductions in orders held on the books for a split stock are calculated by dividing the market price of the stock by the fraction that represents the split.

Stock Symbol
An unique three or four letter symbol assigned to a security trading on a stock exchange.

Stockholder or Shareholder
Someone who owns preferred or common shares of a company.

Stocks or Shares
These two terms are used interchangeably. Certificates representing ownership in a corporation and the appropriate claim on the corporation's earnings and assets.

Stops
Buy stops are orders that are placed at a predetermined price over the current price of the market. The order becomes a "buy at the market" order if the market is at or above to the price of the stop order. Sell stops are orders that are placed with a predetermined price below the current price. Sell-stop orders become "Sell at the market" orders if the market trades at or below the price of the stop.

Stop Loss and Stop Buy Orders
Orders for certain securities when the price of a stock rises or falls to a specified price. A stop loss order is an order to sell when the price of the stock declines to, or below, a stated price. The purpose of this is to reduce the amount of loss that might occur. A stop buy order is an order to buy a stock when the price rises to a certain level. This is given by a person who has sold a security short in an attempt to reduce loss or protect a profit should the price rise unexpectedly.

Stop and Reverse (SAR)
A stop that, when hit, is a signal to reverse the current trading position, i.e., from long to short. Also known as reversal stop.

Stop Order
An order to buy or sell at the market when and if a specified price is reached.

Stop Price
The specific price at which a stop order, limit order, or stop-limit order to a securities broker is to be executed.

Stop-limit Order
An order to a securities broker to buy or sell at a specified price or better but only after a given stop price has been reached or passed. A stop-limit order is a combination stop order and limit order. A stop-limit order avoids the risk of a stop order, which becomes a market order when the price is reached. But as with all limit orders, a stop-limit order may miss the market entirely if the specified limit price never occurs.

Stop-out Price
The lowest dollar price at which Treasury bills are sold at a particular auction. The stop-out price and the beginning auction price are averaged to establish the price at which smaller purchasers may purchase bills under the noncompetitive bid system.

Straddle
A position consisting of a long (short) call and a long (short) put, where both options have the same strike price and expiration date.

Strange Attractor
A balance point between a set of conflicting forces.

Strangle
A position that consists of a long OTM (short) call and a long OTM (short) put where both options have the same underlying, the same expiration date, but different strike prices.

Strategic Buyout
An acquisition based on analysis of the operational benefits of consolidation, rather on the paper value of assets. A strategic buyout focuses on how the companies fit together and anticipates enhanced long-term earning power, rather than liquidation of the target company's assets.

Street Certificate (Street Name)
Most people who own securities today do not physically have possession of the stock or bond certificates. Their securities are kept on their behalf by their investment dealer, which is called keeping securities in "street name." All interest payments and dividends are passed onto the client by crediting their account with the dealer.

Strike Price (Exercise Price)
A price at which the stock or commodity underlying a call or put option can be purchased (call) or sold (put) over the specified period. For instance, a call contract may allow the buyer to purchase 1,000 shares of ABC at any time in the next three months at an exercise of $75.00.

Strips
An option strategy in which an investor buys one call and two puts on the same underlying security with the same exercise price and expiration date.

Stripped Debentures
Debentures that have been separated from other securities, such as warrants, which were originally issued together as a unit.

Struck
The price at which an exercised option delivers the underlying securities.

Subject Bid/Subject Offer
A bid or offer made for a security that indicates the buyer's interest, in the case of a bid, or the seller's interest, in the case of an offer, but does not commit the buyer or seller to the purchase or sale of the security at that price or time.

Suicide Pill
A form of shark repellent: a strategic move by a takeover target company to make its stock less attractive to a potential acquirer. The suicide pill has potentially catastrophic implications for the target company and if implemented could put the company in danger of bankruptcy. The suicide strategy might consist of an exchange of stock for debt in the event of a hostile takeover that would discourage an acquirer by making the takeover prohibitively expensive.

Sum of Squared Residuals (SSR)
Measure related to the R-squared value and the smaller the number, the higher will be the R-squared, and the better the regression.

Super-majority Provision
A form of shark repellent: a strategic move by a takeover target company to make its stock less attractive to a potential acquirer. A super-majority provision strategy would be to increase the majority of shareholders required to ratify a takeover by an outsider from a simple majority to a two-thirds or 3/4 majority.

Supply
The total amount of a good or service available for purchase by consumers. (See also: Demand)

Supply-side Theory
An economic theory holding that bolstering an economy's ability to supply more goods is the most effective way to stimulate economic growth. Supply-side theorists advocate income tax reduction insofar as this increases private investment in corporations, facilities and equipment.

Support
A historical price level at which falling prices have stopped falling and either moved sideways or reversed direction; usually seen as a price chart pattern.

Swap
An agreement between two businesses to exchange commodities, payments or other financial products to reduce the risk of volatile market conditions or to obtain a better price or rate. For example, interest rate swaps, where floating rate interest is exchanged for fixed rate interest, protects a corporation against rises in rates or allows it to take advantage of a better rate. A cross-currency swap enables two parties to enter into an agreement in which one exchanges its currency for the other's to meet their separate requirements.

Sweetener
A feature included in the terms of a new issue of debt or preferred shares to make the issue more attractive to initial investors. Examples of sweeteners include warrants, or convertible, extendible or retractable features.

Swing Chart
A chart that has a straight line drawn from each price extreme to the next price extreme based on a set criteria such as percentages or number of days. For example, percentage price changes of less than 5% will not be measured in the swing chart.

Swings
The measurement of movement of the price of a tradable between extreme highs and lows.

Switching
Selling one security and buying another.

Synergy
Economics realized in the merger of two companies ('the whole is greater than the sum of the parts')

Synergistic Market Analysis
An analytical method that merges technical and fundamental analysis with an emphasis on intermarket analysis. Also known as synergistic analysis.

Synthetic Long Call
A long put and a long stock or future.

Synthetic Long Put
A long call and a short stock or future.

Synthetic Long Stock
A short put and a long call.

Synthetic Securities
Security created by buying and writing a combination of options that imitate the risk and profit profile of a security.

Synthetic Short Call
A short put and a short stock or future.

Synthetic Short Put
A short call and a long stock or future.

Synthetic Short Stock
A short call and a long put.

Synthetic Straddle
Futures and options combined to create a delta neutral trade.

Synthetic Underlying
A long (short) call together with a short (long) put. Both options have the same underlying, the same strike price and the same expiration date.

Systematic Risk
Market-related risk that cannot be eliminated by forming diversified investment portfolios. Typically measured by a security's beta coefficient.

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