Glossary

Optionetics Trading Education Center

A -> C D -> H I -> N O -> R [ S T U V W X Y Z ]

10-K
Annual report required by the SEC each year. Provides a comprehensive overview of a company's state of business. Must be filed within 90 days after fiscal year end. A 10-Q report is filed quarterly.

T-Bill
Common term for a government Treasury Bill, which is a short-term government debt issue.

Taft-Hartley Act
Refers to a U.S. Law (the Labor Management Relations Act). This law was enacted in 1947 to restore to management in unionized industries some of the bargaining powers they had lost in pro-union legislation enacted prior to World War II.

Tail (U.S. Treasury Auctions)
Refers to the spread in price between the lowest competitive bid accepted by the U.S. Treasury for bonds, bills and notes and the average bid by all those offering to buy such Treasury securities.

Tailgating
Refers to the unethical practice of a broker who places an order for his or her own account after a client has placed an order to buy or sell a certain security. The broker hopes to profit because their client's sale or purchase is of sufficient size to put pressure on the security price, or because of information the broker assumes the client has about the security.

Takeover
A term describing a change in the controlling interests of a company. A takeover may be a friendly acquisition or an unfriendly bid that the target company may try to fight with shark repellent strategies. A hostile takeover, whose goal is to replace existing management, is usually attempted through a public tender offer. Other hostile takeover strategies may be to: accumulate shares of the target company on the open market; make unsolicited merger proposals to target company directors; or seek to install new target company directors through a proxy fight.

Takeover Arbitrage
Refers to the practice of attempting to profit from buying the stock of announced or potential takeover targets while simultaneously purchasing stock in the potential acquirer. This attempt to take advantage of the expected price rise of the target company's shares and expected drop in the price of the acquirer's shares is also known as risk arbitrage. The risk is that the takeover may fail, leaving the arbitrageur with large losses.

Takeover Bid
An offer made to security holders of a company to purchase their voting securities which, together with the offering individual's already owned securities, will total over 20 % of the outstanding voting securities of the company. For federally incorporated companies, the equivalent requirement is more than 10 % of the outstanding voting shares of the target company.

Tangibles
Cash equivalents of the futures contracts.

Target Company
A company that has been selected as being attractive for takeover by a potential acquirer. The acquirer may buy up to 5% of the target's stock without public disclosure but must report all transactions and supply other information to the Securities and Exchange Commission, the exchange the company is listed on and the target company itself once 5% or more of the stock is acquired.

Tax Shelter
This is an investment that offers tax savings in some form, such as immediate deductions, credits or income deferral.

Tax-loss Carry-forward
Any losses incurred on a security transaction may be carried forward indefinitely and be used to offset any future capital gains.

Taxable Gain
The portion of a sale or distribution of mutual fund shares that is subject to taxation.

Technical Analysis
A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value.

Technical Indicator
A bullish or bearish numerical indicator used to help predict future price movement.

Telegrapher's Equation
A variation of the diffusion equation that describes minor differences in the drunkard's walk, in which the random decision controls the change in direction rather than the direction itself.

Tender Offer
A general offer to all shareholders of a corporation to purchase some or all outstanding shares at a stated price.

Term Structure
The slope of the term structure is the yield on long-term government bonds minus the yield on short-term instruments

Time Limit Order
A client order that specifies the time during which it can be executed.

Time Premium
Another name for extrinsic value. The additional value of an option due to the volatility of the market and the time remaining until expiration. Premium minus intrinsic value.

Time Price Opportunity (TPO)
A price that occurs during designated half-hour periods of trading; a price-time relationship developed for the CBOT's Market Profile and Liquidity Data Bank reports.

Time Series
A collection of observations made sequentially in time and indexed by time.

Time Spread
A spread consisting of one long and one short option of the same type with the same exercise price but which expire in different months (i.e., sell the nearby month, buy the far away month). Margin may be required.

Time Value (Extrinsic Value)
The amount that the current market price of a right, warrant or option exceeds its intrinsic value. Intrinsic value is the amount by which the market price of a security exceeds the price at which the warrant, right or option may be exercised. The intrinsic value of a put is calculated as the amount by which the market price of the underlying security (premium) is below the exercise price.

Time Value of Money
The rate at which the value of money is traded off as a function of time. Because money can be invested to earn a return, economic values of the same dollar amount received at different times are not equivalent.

Timely Disclosure
The obligation for companies to promptly release to the news media any favorable or unfavorable corporate information which is of a material nature. This obligation is imposed by the securities administrators on companies. Broad dissemination of this news allows all investors to trade the company's securities with the same knowledge about the company as insiders.

Toronto 100 Index (TSE 100)
An index of the top 100 companies in the Toronto 300 Index, ranked by quoted market value

Toronto 300 Index (TSE 300)
An index of 300 Canadian stocks, in fourteen subgroups, designed to represent the Canadian equity market.

Total Return
The annual return on an investment including appreciation and dividends or interest. Total return for stocks is calculated by projecting the current price/earnings ratio. Total return in options trading is calculated by adding dividends plus capital gains plus premium income. Total return is yield to maturity for bonds held to maturity.

Total Return Expressed in a Percentage
This figure tells you how much you have made or lost on an investment over time. It assumes that all dividends and capital gains are reinvested.

Total Return Index
Measures the performance of a stated index assuming reinvestment of all dividends and distributions over a period of time.

Total Revenue
Total sales and other revenue for the period shown. Known as "turnover" in the UK.

Trade
A verbal (or electronic) transaction involving one party buying a security from another party. Once a trade is consummated, it is considered "done" or final. Settlement occurs 1-5 business days later. Optionetics instructors use the word "trade" to mean the purchase or sale of a single stock and one or more derivatives at the same time, as part of a single strategy, and entered on the same day. A completed trade includes both an entry and an exit.

Trade Credit
An open account arrangements between suppliers of goods and services and company's requiring those goods and services. Dun & Bradstreet rate commercial firms and supply published reports. They are the largest compiler of trade credit information. Trade credit data is also processed by mercantile agencies specializing in different industries.

Trade Date
The date on which a trade occurs. Trades generally settle (are paid for) 1-5 business days after a trade date. With stocks, settlement is generally 5 business days after the trade.

Trader
1. Employee of an investment dealer who executes buy and sell orders for the dealer and its clients either on a stock exchange or the over-the-counter market.
2. The term is also used to describe a client who buys and sells frequently with the objective of short-term profit.

Trading Bands
Lines plotted in and around the price structure to form an envelope, answering whether prices are high or low on a relative basis and forewarning whether to buy or sell by using indicators to confirm price action.

Trading Account
An account opened with a brokerage firm from which to place trades. Opening an account takes several steps including signing a risk disclosure statement (a document which indicates that the signer understands the risks involved in trading), performance bond agreement (binds the trader to pay for any losses incurred in the course of trading), and a futures account agreement (outlines how the account is to be handled by the broker).

Trading Halt
A pause in the trading of a particular security on one or more exchanges, usually in anticipation of a news announcement or to correct an order imbalance. During a trading halt, open orders may be canceled and options may be exercised.

Trading Range
The difference between the high and low prices traded during a period of time; with commodities, the high/low price limit established by the exchange for a specific commodity for any one day's trading.

Trading Units
Different par values make up trading units for the over-the-counter market.

Trailing Stop
A stop-loss order that follows the prevailing price trend.

Transaction Date
The date on which the purchase or sale of a security takes place.

Transfer Agent
A trust company appointed by a corporation to keep a record of the names, addresses and number of shares held by its shareholders. Transfer agents are often responsible for distributing dividend checks to the company's shareholders.

Treasury Bill (T-Bill)
These are short-term government securities with maturities of no more than one year. Treasury bills are issued through a competitive bidding process at a discount from par; there is no fixed interest rate.

Treasury Bond (T-Bond)
A fixed-interest U.S. government debt security with a maturity of 10 years or more.

Treasury Note (T- Note)
A fixed-interest U.S. government debt security with a maturity of between one and ten years.

Treasury Securities (Treasuries)
Treasury bills, notes and bonds are direct obligations backed by the full faith and credit of the U.S. government who guarantees full payment of principal and interest at maturity.

Treasury Shares
Authorized but unissued stock of a company, or previously issued shares that have been re-acquired by the corporation.

Trend
The general drift, tendency or bent of a set of statistical data as related to time.

Trend Channel
A parallel probable price range centered about the most likely price line. Historically, this term has been used to denote the area between the base trendline and the reaction trendline defined by price moves against the prevailing trend.

Trend Day
A day in which the price of a futures contract moves consistently away from the opening range and does not return to the opening range prior to the close.

Trend-Following
Moving in the direction of the prevailing price movement.

Trendless Price
Movement that vacillates to the degree that a clear trend cannot be identified.

Trendline
A line drawn that connects either a series of highs or lows in a trend. The trendline can represent either support as in an uptrend line or resistance as in a downtrend line.

Triangular Moving Average
A moving average in which each day's data are multiplied by a weight that increases in value at steady increments to a peak value and then declines to zero at equivalent increments. The sum of the weighted daily data is divided by the number of variables.

TRINSee Arms Index True Range
The largest of the following: Today's high minus today's low, today's high minus yesterday's close, today's low minus yesterday's close.

Triple Witching Day
Refers to the third Friday in March, June, September and December when, in the U.S., options, index options and futures contracts all expire simultaneously. This may result in massive trades in options, index futures and underlying stocks by arbitrageurs, hedge strategists, and other investors which results in volatile markets on those days. Small-scale witching days occur in the other eight months of the year, usually on the third Friday, when futures contracts and index options expire concurrently.

Trough
The end of a period of declining business activity throughout the economy, one of the four stages of the business cycle.

True Strength Index
A momentum indicator developed by William Blau that double-smoothes the ratio of the market momentum to the absolute value of the market momentum.

T-Test
A statistical test of significance for a distribution that changes its shape as N gets smaller; based on a variable equal to the difference between the mean of the sample and the mean of the population divided by a result obtained by dividing the standard deviation of the sample by the square root of the number of individuals in the sample.

Turning Point
The approximate time at which there is a change in trend. Tweezers Bottoms and Tops Candlestick Formations Both candles must have identical highs and lows. Significant when found at contract highs or lows, and can indicate a breakout.

Turnover
Mutual Funds: A measure of trading activity during the previous year, expressed as a percentage of the average total assets of the fund. A turnover ratio of 25 % means that the value of trades represented one-fourth of the assets of the fund.
1. Finance: The number of times a given asset, such as inventory, is replaced during the accounting period, usually a year.
2. Corporate: The ratio of annual sales to net worth, representing the extent to which a company can grow without outside capital.
3. Markets: The volume of shares traded as a percent of total shares listed during a specified period, usually a day or a year.

12B-1 Fees
The percent of a mutual fund's assets used to defray marketing and distribution expenses. The amount of the fee is stated in the fund's prospectus. The SEC has recently proposed that 12b1 fees in excess of 0.25% be classed as a load. A true "no load" fund has neither a sales charge nor 12B-1 fee.

Two-tier Bid
Refers to a takeover bid in which the acquirer offers to pay more for the shares needed to gain control than for the remaining shares.

Type
The classification of an option contract as either a put or a call.

Back to top

A -> C D -> H I -> N O -> R [ S T U V W X Y Z ]


		Copyright © 1994-2005 Global Investment Research Corp. All Rights Reserved See our important Legal Notices and Disclaimers, Privacy Policy and Terms of Use. Contact Us \| FAQs \| Tech Help \| Site Map \| Search