Account Value - The marked-to-market liquidation value of your account which includes the credit from any cash or money market funds, less any liabilities including short positions and debit balances.

Adjusted Strike Price - The change in the strike price of an option contract that results from a corresponding change in the underlying. In the case of a stock option, when a stock does a 2-for-1 split, the option strike prices will change to reflect the revised stock price. The resulting strike prices, in this case, will not fall in the standard $5 increments. For example, if you own 100 shares of a $100 stock and it does a 2-for-1 split, you will then own 200 shares of the same stock now valued at $50 per share. Likewise, if you owned one 55 call before the stock split, you would own two 22 1/2 calls afterwards. In either case, the value of the position remains unchanged. The table below shows some of the adjusted strike prices after a stock split.

 

All-or-None Order (AON) - An All-or-None order allows a trader to buy or sell a specified number of contracts at a single price. The number of contracts must meet or exceed a predetermined threshold level, and these orders must be executed during pit trading sessions. All Or None orders are routed to the primary exchange where they are manually held and executed when eligible. Furthermore, these orders are not reflected in the bid / ask quotes. Generally, AON is not recommended on orders of less than 20 contracts since order execution may be affected.

 

American Stock Exchange (or Amex or AMEX) - Founded in 1842 in New York City, the American Stock Exchange is one of the three major stock exchanges in the U.S. along with the New York Stock Exchange and the Nasdaq. It also trades a wide variety of equity and index options.

 

American Style Option - A contract that can be exercised at any point before expiration. Most equity options fall into this category.

 

Ask or Ask Price - The current lowest displayed price at which a seller would be willing to sell a given stock or option contract. The ask price is also known as the offer.

 

Assignment - The process through which an option seller is notified by the Option Clearing Corporation (OCC) that the person who bought an option contract has decided to exercise the right to buy or sell shares at the strike price. Upon notification, the option seller is obligated to deliver or receive shares according to the terms of the contract. Since not all contracts are exercised, the OCC processes assignments on a random basis.

 

At-the-market - Any trade executed at the prevailing bid or offer. For example, if the bid-ask spread on an option is 5.30 - 5.50, a customer who places a market order to sell the option will receive the current bid of 5.30. Likewise, a customer looking to buy the option will pay 5.50. \

 

At-the-money - An option is said to be at-the-money when the strike price is the same as the current market price of the stock or underlying instrument. For example, a 75 call and a 75 put would both be at-the-money with the stock trading at $75.

 

Automated Clearing House (ACH) - A collection of 32 regional electronic interbank networks used to process transactions electronically.

 

Automatic exercise - Also known as Exercise by Exception. The procedure implemented by the Options Clearing Corporation (OCC) to protect customers from losing the intrinsic value of options they forget to exercise. The OCC automatically exercises all stock option that have at least $0.25 of intrinsic value or an index option worth $0.01 or more.

B

Bearish - The term used to describe the market sentiment of people who expect a general market decline.

 

Best Ask or Best Offer - The lowest quoted offer of all competing market makers to sell a particular security at any given time.

 

Best Bid - The highest quoted bid of all competing market makers to buy a particular security at any given time.

BOX - The Boston Options Exchange.

 

Broker Call Rate - The broker call rate is the interest rate that banks charge brokerages to cover the security positions of the brokerage's customers. Most brokerages will charge you slightly above this amount when you borrow on margin. Usually the rate is about a percentage point higher than the Federal Funds Rate.

 

Bullish - The term used to describe the market sentiment of people who expect the general market to rise.

Buy-write - see Covered Call.

C

CBOE - Chicago Board Options Exchange.

Class of Options - Calls or puts relating to the same underlying instrument.

Close - A period of time at the end of the trading session when all orders are filled within the closing range.

Closing Range - A range of closely related prices in which transactions take place at the closing of the market; buying and selling orders at the closing might have been filled at any point within such a range.

Contingent Orders - Orders that are working based on a preset condition.

Contingent Trailing Stop - A "trailing stop" order will be placed only if/when the market price for the security (stock) specified meets the criteria (greater than or less than a price entered). This means that you can trigger a "trailing stop" order, a stop order that moves along with a favorable movement in a security, when a stock or index reaches a desired price level based on the security's last trade price.

Cover - A term used to describe the act of purchasing options to close an existing short position. In this case, the purchase is also a closing transaction.

Covered Option - An option against which the seller has enough collateral (either in cash or stock) to fulfill the contract in the event of assignment. Covered Call - a call option is considered covered when the writer (seller) of the option already owns the shares and doesn't have to make an open market purchase should an assignment occur Covered Put - a put option is considered covered when the seller has enough cash in the account to purchase the shares at the strike price if the holder of the option exercises the right to sell the stock at that price.

Cycle - The expiration months associated with a particular series of options.

D

Day Order - An order to execute a trade that will automatically be cancelled at the end of the trading day if it has not been filled.

Debit - A decrease in the cash balance of an account resulting from a purchase or withdrawal.

Decay - Also known as time decay. The way in which the theoretical value of an option decreases as time passes. The specific measurement of the option's change in value over time is represented by the Greek letter theta. The rate at which an option loses its value increases more rapidly during the final 30 days of an option's life.

Delivery Notice - A notice stating a clearing member's intentions to deliver a stated quantity of a commodity with regard to the settlement of a futures contract.

Delta Neutral - The process by which professional traders offset option positions with stock to create a position that has 0 deltas. A zero delta position, by definition, is neither long nor short. Therefore, the position theoretically has limited risk.

Derivative - A financial contract whose value is "derived" from another security, such as stocks, bonds, commodities, or a market index such as the S&P 500 or the Wilshire 5000. The most common types of derivatives are options, futures, and mortgage-backed securities.

Discount - An option that trades below its intrinsic value is said to be trading at a discount.

Dow Jones Industrial Average (DJIA) - The oldest and most widely known index of the U.S. stock market, the Dow represents the price movements of the 30 companies that, in the opinion of the editors of The Wall Street Journal, most represent the American economy.

Downtick - When the most recent trade for a particular instrument occurs at a lower price than the trade immediately preceding it.

         E

Early exercise - The right provided by American options that allows the holder to buy or sell shares at the strike price before the expiration date.

Earnings per Share - A company's total earnings divided by the number of shares outstanding.

Equity option - A contract that allows the holder to buy or sell shares of a publicly traded stock at a predetermined price.

European Option - A contract that can be exercised only on the date of expiration, not before.

Exchange-traded fund (ETF) - A fund comprised of a basket of securities that is designed to track an index and trades like a regular stock.

Execution - The process of completing an order to buy or sell securities. Once a trade is executed, it is reported by a Confirmation. Also known as a "Fill".

Exercise - To invoke the right associated with a particular option contract. When exercising a call option, the holder buys stock at a predetermined price (strike) from the option seller. In the case of a put, the holder of the option sells the stock to the option seller at the strike price.

Exercise Price - Also known as Strike Price. The price specified by the option contract at which the holder can buy or sell the underlying stock.

Expiration Date - The date on which an option and all rights associated with it ceases to exist.

Extrinsic Value - Also known as time value. The amount by which the current price of an option exceeds its intrinsic value. The price of out-of-the-money and at-the-money options is made up exclusively extrinsic value.

F

Fair Value - When the market price of an option is in line with its theoretical value as predicted by a formula such as Black-Scholes.

Fast Market - A market in which the bids and offers change so quickly that the difference between what is quoted and where a trade actually takes place may be significant. In a fast market, it often happens that customers don't get filled on orders where they might expect. When this occurs during a fast market, brokers generally can't be held responsible.

Fill - See Execution.

Fill Or Kill - An order that must be filled immediately or canceled.

Floor Broker - A trader on the exchange floor who executes customer orders.

Floor Trader - A person on the exchange floor who buys and sells contracts for his or her own account. In this capacity, the person acts as a market maker.

Funds Available to Withdraw - Estimated based on cash available and for margin accounts, it is based on the leverage from your current marginable securities. Requests to withdraw funds may be effected by the pricing of positions and the settlement of transactions. Withdrawal is subject to approval and may be delayed or refused due to the processing of trades, other withdrawals or position risk.

Fundamental Analysis - The practice of evaluating the attractiveness of a particular stock using financial information (e.g., revenue, profit, and management performance) as it relates to the current stock price. See Technical Analysis.

Fungibility - The ability to trade the same instrument interchangeably across exchanges or other marketplaces.

G

Gamma - The Greek letter used to represent the rate of change of an option delta as the underlying price changes. This information is primarily only helpful to professional traders who manage large positions.

Good-Until-Cancelled (GTC) - An order to execute a trade that remains open until the trade is completed or the customer cancels the order. Unlike a day order, which expires at the end of a trading day, a GTC order will remain in effect until it is filled or cancelled.

"The Greeks" - A term that refers to the analytical tools used by traders to manage risk. These include: Delta, Gamma, Theta, Vega and Rho

H

Hedge - A trade initiated for the primary purpose of protecting an established position (e.g., the purchase of puts to protect a long stock position).

Historical Volatility - A measurement of the actual movement of stock price over a specific period of time. This number can be plugged into an option pricing formula like Black-Scholes to determine if current option prices are high or low relative to the stock's past performance. See Implied Volatility.

Holder - The person who currently owns calls, puts or stock.

I

ISE - (International Stock Exchange). The ISE is a completely electronic exchange

Implied Volatility - The amount of movement expected in the stock given the current price of the options.

Index - As it relates to stocks, an index is created by combining multiple stocks and monitoring their performance as a group. A change in the index, therefore, represents the cumulative change of all individual components. The S&P 100 is an index that tracks the performance of 100 top companies.

Index Option - An option based on an index, such as the S&P 100, rather than an individual stock. These options are typically cash-settled because it would be too cumbersome to buy or sell all of the stocks that make up the index in the event of an assignment.

Individual Account - Account ownership by a single individual in their legal name only which, upon death of the owner, the account typically passes to the control of his or her estate.

Individual Retirement Account (IRA) - A tax-deferred retirement account set up with a financial institution such as a bank, broker, or mutual fund in which contributions may be invested in many types of securities such as stocks, bonds, money market funds, CDs, etc. Also known as a "Traditional" IRA. For other types of IRAs, see Keogh plan, Simplified Employee Pension (SEP) plan, 401(k), Roth, or Rollover IRA.

In-the-Money - An option with intrinsic value because its strike price is below (in the case of a call) or above (in the case of a put) the current market price of the underlying stock.

Intrinsic Value - The portion of an option's price that can be account for by the amount the option is in-the-money. For example, with the stock at $74, a 70 call trading at 5.25 has $4 of intrinsic value (74-70) and 1.25 of extrinsic or time value (5.25 - 4).

J

Joint Tenants with Rights of Survivorship - Account ownership by two or more people in which, upon death of an owner, the surviving account owners automatically retain ownership of the account.

Joint Tenants in Common - Account ownership by two or more people in which, upon death of an owner, a proportional percentage of the account typically passes to his or her estate.

L

Last Trading Day (LTD) - The final day in which trading may occur for a particular delivery month. After the last trading day, any remaining commitment must be settled for delivery.

LEAPS® - Long-term Equity Anticipation Securities, or LEAPS®, are long-term stock or index options that expire more than 9 months in advance, and can last as long as 2 years. LEAPS trade like normal options but allow investors to benefit from the appreciation of equities while placing a lot less money at risk than is required to purchase stock.

Leg - Part of a larger position consisting of multiple options. By legging into a spread, a trader does part of the spread at one price and hopes the market will move so the rest of the spread can be completed at a better price.

Leverage - A characteristic of options that makes it possible for option holders to realize a greater percentage of profit and loss than they would with a long or short position in the same underlying stock. For example, a 5% move in the stock might increase (or decrease) the value of the option position by 50%.

Limit Order - To buy or sell a predetermined number of shares at a specified price (or better than specified price, if available). Limit orders guarantee a price (or better price than specified), but do not guarantee an execution.

Liquid Market - A high volume trading environment in which buyers and sellers benefit from narrow bid-ask spreads. Under these conditions, large orders can be executed without significantly impacting the market price.

Liquidity - A measure of how quickly a security can be sold at a fair price and converted to cash. Illiquid securities are ones that don't trade in high volume. For example, having too many shares of a stock that doesn't trade frequently would make for a position that cannot necessarily be sold.

Listed Option - An exchange traded put or call contract issued by the OCC with standardized strike prices and expiration dates.

Long Position - 1) A position that results from an initial purchase of stock or options—i.e., long calls, long puts, long stock 2) a position in which the holder expects to benefit from an increase in the price of the underlying—e.g., long stock, long call, short put.

M

Maintenance Margin - A sum, usually smaller than the initial margin, which must remain on deposit in the customer's account for any position. A drop in funds below this level requires a deposit back to initial margin levels.

Margin - The amount of collateral or equity required to borrow money for investing purposes. Traders who buy on margin borrow a percentage of the purchase price from their brokerage firm.

Margin Balance - For cash accounts including IRAs the "margin location" is used by our system in order to custodize spread transactions and positions eligible for spread transactions. Use of the margin location in cash accounts results in custody of balances in "margin" but does not indicate an extension of credit.

Margin Call - A brokerage firm's demand that a customer deposit enough money or securities to bring a margin account back up to the minimum maintenance amount.

Margin Equity Percentage - Calculates the value of your securities in relation to the money you have borrowed. Keep in mind, a negative margin balance does not necessarily indicate borrowed funds.

Market Maker - A floor trader who provides two-sided markets (bid-ask) and takes the opposite side of a customer trade. In this capacity, market makers provide liquidity in the market. Market makers may trade for their own accounts or they may represent a proprietary trading firm.

Market-Not-Held-Order - An order issued by a customer allowing the floor broker to use his or her best judgment regarding the price and timing of the trade.

Market Order - A customer order that is to be executed as quickly as possible at the prevailing market price.

 

N

Naked Option - Options that are sold on securities when the seller does not actually own shares of the underlying securities or options.

NASD - See National Association of Securities Dealers.

Nasdaq (National Association of Securities Dealers Automated Quotations) - A computerized system that stores and displays up-to-the-second price quotations for securities traded over the counter.

National Association of Securities Dealers (NASD) - The largest securities-industry self-regulatory organization in the United States. Through its subsidiaries -- the NASD Regulation, Inc. and The Nasdaq Stock Market, Inc. -- the National Association of Securities Dealers develops rules and regulations and conducts regulatory reviews of members' business activities.

National Best Bid or Offer (NBBO) - A term applying to the SEC requirement that brokers make their best effort to offer customers the best available ask price when they buy securities and the best available bid price when they sell securities.

New York Stock Exchange (NYSE) - The oldest and largest stock exchange in the United States.

Non-equity Option - An option that has an underlying security other than stock—e.g., futures, commodities.

O

One Cancels Other (OCO) - A qualifier used when multiple orders are entered and the execution of one order cancels a second or alternate order. For example, with OCO you can place two orders linked to each other, allowing you to place a stop loss order on the same option.

One Triggers Other (OTO) - An optionsXpress qualifier used when multiple stock or option orders are entered and the execution of one order submits a second or alternate order.

Opening Range - Range of closely related prices at which transactions took place at the opening of the market; buying and selling orders at the opening might be filled at any point within such a range.

Opening Transaction - A trade that creates a new position or adds to an existing one. The new position can consist of either short or long options or stock.

Open Interest - The number of contracts, either long or short, traded on a particular option that have not been offset by a closing transaction. A closing transaction lowers open interest while an opening transaction increases open interest.

Open Outcry - The term used to describe the pit-trading environment in which market makers compete for trades.

Option - A contract that grants the holder the right, but not the obligation, to buy or sell a particular security at a predetermined price for a set period of time. Conversely, the seller of the option has an obligation to fulfill the terms of the contract in the event of exercise by the option buyer.

Option Buying Power - Calculated based upon account equity less any requirements and pending purchases.

Option Chain - A way of quoting options prices through a list of all of the options for a given security, including the various strike prices, expiration dates, and whether they are calls or puts.

Option Period - The time from the creation of an option to its expiration.

Option Clearing Corporation (OCC) - The firm responsible for issuing and standardizing all exchange traded options. The OCC, which serves as an intermediary between buyers and sellers, guarantees that all option contracts are honored and executed according to their terms.

Option Writer - The person who sells an option in an opening transaction thereby creating the obligation to meet the terms of the contract in the event of assignment.

Out-of-the-Money - An option that has no intrinsic value because its strike price is above (in the case of a call) or below (in the case of a put) the current market price of the underlying. Extrinsic or time value is the only component of an out-of-the-money option's price.

Over the counter (OTC) - A geographically decentralized market in which stock and other securities transactions are not conducted in person -- as on the much-televised floor of the New York Stock Exchange -- but through a telephone and computer network. The over-the-counter market is a highly risky market with limited liquidity.

P

Pacific Exchange PCX - Located in San Francisco, an exchange that trades equities and options.

Parity - The term used to describe an in-the-money option with a price that is the same as its intrinsic value. For example, with a stock at $50, a 40 call trading at $10 would be trading at parity because its price does not include any extrinsic or time value. In contrast, a 40 call trading at 10.25 would not be considered at parity because it includes a .25 of time value.

Partial Fill - A partial fill is when part of a limit order has been filled. A partial fill may be completed in the same day and then subsequently cancelled or the remainder may be filled. A day limit order that is partially filled will have the remainder cancelled at the end of the day if it has not been entirely filled. A partial fill on a GTC order may be carried over to the next market day until it is cancelled or filled in its entirety. (Note: If a Good-Until-Cancelled (GTC) order is partially filled one day and the balance of the order is filled on another day, you will be charged two separate commissions. If you do not want to accept a partial fill for an order, you may indicate it is an "All-or-None" order, however All-or-none orders have unique risks. See also All-or-None, GTC, split fill. Also, an order that is partially filled during the day but then modified (cancelled and replaced) will create a separate commission charge since this is a new order in the marketplace).

Price-to-earnings ratio (P/E) - The share price of a stock, divided by its per-share earnings over the past year.

P/E (Forward) - Price/earnings ratio, using earnings estimates for the next four quarters.

PEG Ratio - A stock's price/earnings ratio divided by its year-over-year earnings growth rate.

Pending Purchases - The current market value, based on real-time data, for the orders you have open. This sum includes OCO ("one cancels other") orders; it does not include open contingent orders.

Philadelphia Stock Exchange (PHLX) - The Philadelphia Stock Exchange (PHLX) was founded in 1790. The PHLX trades stocks, equity options, index options and currencies.

Pin Risk - When an underlying security settles at the option's strike price. The risk results from short option holders not knowing if they will be assigned.

Pit - The area at an exchange where traders meet to buy and sell specific contracts (e.g., 30-year bond options, IBM options, DELL options).

Portfolio - All the securities held by an individual, institution, or mutual fund.

Position - The net of all open long and short contracts in a specific trading account.

Position Limits - Set by an exchange, this is the number of option contracts (or deltas) that an individual trader cannot exceed. The specifics of this limit differ by exchange and option type.

Premium - The extent to which an option price exceeds its intrinsic value. 2) the total price of an option including both intrinsic and extrinsic or time value.

Primary Market - In cases where the same contract is traded on multiple exchanges, the exchange that handles the most volume is considered the primary market. This can change day to day.

Put/Call ratio - A ratio of the trading volume of put options to call options. It is used to gauge investor sentiment. For example, a high volume of puts compared to calls indicates a bearish sentiment in the market.

Put Option - In the case of an equity option, a contract that gives the holder the right, but not the obligation, to sell a stock at a set price for limited period of time. The seller or writer of the option is obligated to buy the stock at the strike price in the event that the option is assigned.

       R

Range - The difference between the highest and lowest prices recorded during a given trading session, week, month, or year.

Realized Profit & Losses - The profit or loss that results from closing a position.

Repair Strategy - A stock/option strategy designed to compensate for a losing long stock position. In this case, an in-the-money call is purchased and two out-of-the-money calls are sold. The credit received effectively lowers the break-even point of the stock thereby covering some of the unrealized losses.

Resistance - A price level at the top of a trading range that a stock has reached on several occasions but has not penetrated due to increased selling pressure at that price. This is a key concept of technical analysis.

RHO(rho) - The Greek letter representing the expected change in an option's price given a 1% move in interest rates.

Rolling - A strategy in which the trader closes one position and immediately opens another position at a different strike or expiration.

S

Scalper - A floor trader who profits from the spread between the bid and the offer as well as from short-term price fluctuations.

SEC (Securities and Exchange Commission) - The federal agency charged with protecting investors and maintaining the integrity of the securities markets.

Securities - Assets such as shares of stock, bonds, or any kind of financial asset that can be traded.

Securities Investor Protection Corporation (SIPC) - The SIPC maintains a special reserve fund authorized by Congress to help investors with assets in the hands of bankrupt and otherwise financially troubled brokerage firms. SIPC either acts as trustee or works with an independent court-appointed trustee in a fraud case to recover funds. The statute that created SIPC rules provides that customers of a failed brokerage firm receive all non-negotiable securities that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash.

Sell To Close - An order entered to close a long position. Generally used in futures/options investing to distinguish between establishing vs. closing a position. Consequently, a "buy to open" order is always used to open a long position.

Sell To Open - An order entered to establish a new short position. Generally used in futures/options investing to distinguish between establishing vs. closing a position. Consequently, a "buy to close" order is always used to close a short position.

Series of Options - Calls and puts based on the same underlying stock with the same strike and expiration.

Settlement Price - The price established by the Options Clearing Corporation at the end of the trading day as a standard to value the securities in individual trading accounts or in the morning in the case of some European Options. The settlement price is based on the opening prices of all the stocks in a particular Index. These figures are then used to find the settlement price.

Short Position - An option or stock position that will profit from a decrease in the price of the underlying (e.g., short stock, short call, long put).

Short Stock Position - A position initiated by selling stock in an opening transaction with the goal of buying it later at a lower price (i.e., sell high, buy low). To accomplish this, the stock must be borrowed from a broker-dealer before it can be sold.

Side - A side considers the buy and sell actions of a trade as separate events. Each matched trade, and each contract, has two sides - the buyer side and the seller side. Taken together, these two sides equal one round turn. Measuring matched trade volume "per side" counts volume on each side of the trade.

SIPC - See Securities Investor Protection Corporation

Spread - 1) the difference between the bid and the offer (e.g., if the bid-ask is 5- 5.30, the spread is $0.30). 2) a limited risk, limited reward strategy established by combining options that would, if separate, profit from opposite moves in the price of the underlying.

Spread Stop Order - A contingency order to buy or sell an option spread when the market reaches a particular level. When the price reaches that level specified in the stop order, the stop order triggers a sell/buy to close/open the spread at the customer's predetermined price (Limit or Market).

Standard & Poor's 500 Index - An index of 500 of the biggest publicly traded companies in the United States. The S&P 500 is generally thought of as the best measurement of the overall U.S. stock market.

Static Return - The return that an investor would make on a particular position if the underlying were unchanged in price at the expiration of the options in the position.

Stop-Limit Order - Like a stop order, this order will be triggered by a move up or down to a particular price level. Once that level is reached, the order becomes a limit order, which must be executed at a specific price. In contrast, a regular stop order will be executed at the market price rather than at a specified price.

Stop Order - A contingency order to buy or sell a stock when the market reaches a particular level. When the price reaches that level specified in the stop order, the stop order becomes a market order and is executed at the best possible price.

Strike Price - Also known as Exercise Price. The price, specified by the option contract, at which the holder can buy or sell the underlying stock.

Strike Price Interval - The standard price difference between consecutive options. For stocks over $25, the strikes generally occur at $5 intervals (e.g., 30,35,40). Stocks below $25 have options that trade at $2.50 intervals.

Support - In a period of falling prices, the support level is a price below which the stock tends not to trade because of the reemergence of buyers. For example, a stock that has fallen near $27 on several occasions only to reverse the trend and increase in price is said to have support at $27.

Symbol - Ticker symbol.

T

Theoretical Value - The fair value of an option as predicted by a mathematical formula such as Black-Scholes. This takes into account the following factors: strike price, the current price of the underlying, interest rates, time remaining until expiration, dividends (if any), and volatility.

Theta - The Greek letter representing the change in an option's value given a one-unit (day) change in time.

Tick - The smallest increment an option, stock, or commodity price can change.

Time Decay - The way in which an option naturally loses value as time passes.

Time Value - Also known as extrinsic value. The amount by which the current price of an option exceeds its intrinsic value. The price of out-of-the-money and at-the-money options is made up exclusively of extrinsic value .

Total Money Markets & Cash - Defined as the net sum of your balances held in cash, margin, and money market funds. This does not include your mutual funds balances. Cash/Margin/Money Market sweep movements update daily before the market opens.

Trading Level - Your trading level has been determined based on your trading experience, income level, age and overall knowledge of options. The list below outlines the various trades permitted at each trading level.

-1	Trading Disabled
0	Buy Stocks/Bonds/ Mutual Funds
1	Covered Calls / Sell Stock Short
2	Buy Calls and Puts / Cash Secured Put Writing
3	Debit Spreads (purchase a spread)
4	Credit Spreads / Equity Put Writing (sell a spread)
5	Naked Equity Call Writing / Naked Index Put & Call Option Writing

Trailing Stop - A "trailing stop" order is a stop order that moves along with a favorable movement in a security. Trailing sell stop orders will move upward a defined distance as long as the security moves upward. Trailing buy stop orders will move downward a defined distance as long as the security moves downward.

Trailing (Stop) Trigger - The price at which a trailing stop will activate.

Contingent Trigger - On entry of the order the customer can choose bid, ask or last. If last is chosen, it will only be used if it is in between the consolidated bid and ask.

Transaction Costs - The fees related to initiating and maintaining a position. These include commissions, margin fees, and exchange fees.

Triple witching - It occurs when the contracts for stock index futures, stock index options and stock options all expire on the same day. This happens four times a year: The 3rd Friday of March, June, September and December.

U

Uncovered Option - Also known as a naked option. A short position, not protected by offsetting options, in which the writer of the options lacks the stock or collateral that would be required upon assignment. For example, a naked call writer doesn't own the stock that would have to be sold at the strike price if the calls were exercised. Similarly, a naked put writer doesn't have the full amount in the account to buy the underlying shares at the strike price in the event of an exercise. For obvious reasons, naked option writing is a risky strategy.

Underlying Security - The stock, commodity, or other financial instrument on which an option contract is based.

Uptick - When the most recent trade for a particular instrument occurs at a higher price than the trade immediately preceding it.

V

Vega - The Greek letter representing the change in an option's theoretical value given a 1% change in the volatility of the underlying.

Volatility - The mathematical measure of stock price fluctuation over a period of time. See Implied Volatility.

W

Write - To sell an option in an opening transaction.

Writer - a person who has sold an option in an opening transaction and is now short a contract that may or may not be offset by stock or other options.