Glossary

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TermDefinitionSource
Accrued InterestThe interest earned on a bond between interest payment periods (generally twice a year). A bond owner selling a bond before the next interest payment will receive the earned accrued interest on that bond from the buyer, who, in turn, will receive the full interest due on the payment date.NYSE
AdjustmentCertain events such as a stock split or a stock dividend (e.g., a 3-for-2 stock split). An adjusted option may cover more than the usual one hundred shares. For example, after a 3-for-2 stock split, the adjusted option will represent 150 shares. For such options, the premium must be multiplied by a corresponding factor. Example: buying 1 call (covering 150 shares) at 4 would cost $600.ISE
Agency BondsSecurities issued by federal agencies or private entities, such as the Federal National Mortgage Association and the Federal Home Loan Bank Board, that are also known as government sponsored enterprises (ôGSEös). GSEs are not backed by the full faith and credit of the U.S. government. NYSE
Agency OrderAn order to buy or sell that does not originate from the actual customer for whose account it is executed and who continues to bear all the risk. NYSE
AgentA person who buys or sells for the account and risk of another. Generally, an agent takes no financial risk and charges a commission for his services.NYSE
All-or-none order (AON)A type of option order which requires that the order be executed completely or not at all. An AON order may be either a day order or a GTC order.ISE
American Depository Receipt (ADR)A receipt that is issued by a U.S. depositary bank which represents shares of a foreign corporation held by the bank. Because ADRs are quoted in U.S. dollars and trade just like any other stock, they make it simple for investors to diversify their holdings internationally. NYSE
American Depository Share (ADS)An American Depository Share (ADS) is a security issued by a U.S. depositary representing ownership interest in the deposited security of a foreign company. One ADS may represent a fixed number, or fraction, of deposited securities. NYSE
American-Style Option An option contract that may be exercised at any time between the date of purchase and the expiration date. Most exchange-traded options are American-style.CBOE
AMEX/ASEAmerican Stock Exchange.ISE
ArbitrageThe process in which professional traders simultaneously buy and sell the same or equivalent securities for a riskless profit.CBOE
Ask PriceThe price at which a seller is offering to sell an option or stock.CBOE
Assigned (an exercise)Received notification of an assignment by The Options Clearing Corporation.ISE
AssignmentThe receipt of an exercise notice by an option writer (seller) that obligates him to sell (in the case of a call) or purchase (in the case of a put) the underlying security at the specified strike price. CBOE
At-the-moneyAn option is at-the-money if the strike price of the option is equal to the market price of the underlying security.CBOE
Auction MarketFloor brokers and specialists interacting with quotes and orders on the floor of the New York Stock Exchange to obtain the best price possible for their customer.NYSE
Automatic ExerciseA protection procedure whereby the Options Clearing Corporation attempts to protect the holder of an expiring in-the-money option by automatically exercising the option on behalf of the holder.CBOE
Automatic ExecutionsAn electronic and automatic trade of orders to buy or sell without human intervention.NYSE
AveragesThere are various statistical tools for measuring the performance of securities markets. The most common are averages such as the Dow Jones Industrial Average. The prices of 30 industrial stocks are totaled and divided by a divisor that is intended to compensate for past stock splits and dividends. As a result, point changes in the average have only the vaguest relationship to dollar price changes in stocks included in the average. NYSE
Average downTo buy more of a security at a lower price, thereby reducing the holder's average cost.CBOE