Trading Glossary

(see also “scale in/out”) the strategy of placing a trade for only a portion of one’s standard lot size, on the idea that the price may continue to move away from target before rev

a philosophy of trading based on the idea that general market trends can add conviction to trading strategy. For example, if the whole market is on an upswing, then probability of

When a symbol is typed followed by a forward slash that indicates it is Futures trading. In this case /ES refers to Emini S P 500 futures, allowing an individual to hedge or specul

This is an indicator used by TT floor trader Ricky to figure out how much the stock is extended and he also uses it to spot profit targets for his trades. 5min20 is nothing but the

An A+ setup is a development in price action that meets all the fundamental criteria in the TrueTrader strategy set for a high-probability trade.

A type of corporate action that occurs when one company purchases a majority stake in another company. Acquisitions can be paid for in cash, stock, or a combination of the two.

The act of placing a second or additional trade on the same side of an initial trade, when the price moves further in the opposite direction away from target, hopefully temporarily

An American depositary share (ADS) is an equity share of a non-U.S. company that is held by a U.S. depositary bank and is available for purchase by U.S. investors. The entire issua

A computer program that scans the market and places live trades based on mathematical criteria. Algos are typically extremely fast and analytical, and therefore call for special sk

An all-cash, all-stock offer is a proposal by one company to purchase all of another company's outstanding shares from its shareholders for cash. In this type of offer, one way for

A Time in Force designation that is similar to Fill-or-Kill (FOC). The difference being that All-or-None (AON) designated orders do not require an immediate fill, but instead remai

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.

Simultaneously buying and selling similar assets with the intention of profiting from a market inefficiency.

The price at which a seller is offering to sell an option or stock.

The lowest available price to buy.

any publicly-traded stock, stock option (or other derivative), futures contract, commodity, precious metal, hard currency (e.g. forex), or cryptocurrency

Asset classes are groups of assets with similar financial characteristics that are subject to similar laws and regulations. The three main financial asset classes are equities (sto

Being forced to fulfill the obligation of an option contract.

The 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

Explanation An at-the-market order buys or sells a stock or futures contract at the prevailing market bid or ask price at the time it gets processed. An at-the-market order usually

At-the-money (ATM) means the strike price of an option is right at (or near) the market price of the underlying security.

Abbreviation for “all time high”, which is the highest price an asset has ever realized. TT Strategy generally warns against trading at or near ATH due to historic uncertainties ar

A procedure whereby the Options Clearing Corporation (OCC) attempts to protect the holders of certain in-the-money expiring options by automatically exercising the options on behal

To buy more of a security at a lower price, thereby reducing the holder's average cost. (Average Up: to buy more at a higher price.)

The difference between the bid and ask price of a security.

A term for a securities contract of any expiration month except the front month.

A spread in which more options are purchased than sold.

Relating to futures, a theory that involves the price of futures and the time to expiration. All else being equal, the theory suggests that as a futures contract approaches expirat

Overall Concept A bag holder refers to an investor who symbolically holds a “bag of stock” that has become worthless over time. Suppose an investor purchases 100 shares of a newly

A type of money market instrument, banker’s acceptances are short-term debt instruments used by companies that are guaranteed by a commercial bank.

The term “basis” has several common uses related to trading. One popular usage refers to the cost of a security as it relates to tax reporting. Basis is also commonly used in the f

The term basis point in finance refers to a unit of measurement. One basis point is equivalent to 0.01%, or .0001. Basis points are often used when percentage differences less than

A basis point is a standard measure for interest rates and other percentages in finance, representing one-one hundredth of one percent. The "basis" in basis point comes from the ba

Refers to an asset, or group of assets, in which prices are declining or expected to decline.

A spread that profits from a drop in the price of the underlying security.

A pessimistic outlook on the price of an asset. Traders who believe that an asset price will depreciate over time are said to be bearish.

Beta measures how closely an individual stock tracks the movement of the broader market. Beta is often used to estimate the systematic risk of a security in comparison to the marke

Beta-weighting is a technique used to convert deltas from different financial instruments (stocks, options, etc...) into standard units. One purpose of beta-weighting is to allow f

The price at which a buyer is willing to buy an option or stock.

The strikes are widened close to 1 standard deviation out to take additional risk and can act as a potential substitute for selling strangles. Click here to learn more.

A butterfly strategy in which we select wider strikes to yield a higher probability of success during periods of high IV Rank. Click here to learn more.

BK is short for “bankrupt” and refers to a company that has either filed for bankruptcy or is about to. The trading dynamics around a stock that is BK are unique and may not follow

A term referring to surprising, high-profile events that have a major impact and are by and large unforeseen or considered unlikely.

A mathematical model expanded and refined by Fischer Black and Myron Scholes that produces a theoretical estimate for the value of a European-style option. The model was originally

A term often used synonymously with fixed income security. Traditionally bonds are differentiated from other fixed income securities if they have maturities of one year or more.

A bounce is a behavior of an asset wherein the price reverses sharply from an extended move in one direction.

A type of option arbitrage in which both a bull spread and a bear spread are established for a near-riskless position. One spread is established using put options and the other is

all or part of a trade being closed out at the same price at which it was entered, resulting in basically neither a gain nor loss

The price(s) at which a position generates neither a profit nor a loss.

Breakout A breakout is a stock price moving outside a defined support or resistance level with increased volume. Trading a breakout is when someone enters a long position after the

Generally referring to an index, it indicates that the index is composed of a sufficient number of stocks or of stocks in a variety of industry groups. See also Narrow-Based.

A combination of a long call butterfly and a short OTM call vertical, or a long put butterfly and a short OTM put vertical, so one side is wider than the other. The short vertical

A person acting as agent in a securities transaction.

Refers to an asset, or group of assets, in which prices are rising or expected to rise.

A spread that profits from a rise in the price of the underlying security.

An optimistic outlook on the price of an asset. Traders who believe that an asset price will appreciate over time are said to be bullish.

A 3-strike price spread that profits from the underlying expiring at a specific price.

Buy the bid and sell the ask is a term that you will hear a lot, traders use it when they are trying to get in on a trade immediately. It's just like doing market order but with a

Buy to cover refers to a buy trade order that closes a trader's short position.

The simultaneous purchase of stock and sale of a covered call.

A contrarian trading approach that expresses a bullish (long) view when an asset price is declining.

The maximum amount of capital in your account available to make trades. Includes cash and margin.

A buyout is the acquisition of a controlling interest in a company and is used synonymously with the term acquisition. If the stake is bought by the firm’s management, it is known

An option trade that benefits from the passage of time, also called a time spread.

An option strategy in which a short-term option is sold and a longer-term option is bought, both having the same striking price. Either puts or calls may be used.

An Option contract that gives the holder the right to buy the underlying security at a specified price for a certain, fixed period of time. See also Put.

An option that gives the holder the right to buy stock at a specific price.

A person who sells a call and receives a premium.

A class of marketable securities, capital market securities include common stocks, corporate bonds, and government bonds.

A stock index which is computed by adding the capitalization (float times price) of each individual stock in the index, and then dividing by the divisor. The stocks with the larges

A capped option is an option with an established profit cap or cap price. The cap price is equal to the option's strike price plus a cap interval for a call option or the strike pr

Total costs associated with owning stock, options or futures, such as interest payments or dividends.

In finance, cash (along with cash equivalents) is one of the principal asset classes. Cash (i.e. currency) includes foreign currency.

A regular brokerage account that requires customers to pay for securities within two days of purchase.

The total amount of money in a financial account.

In finance, cash equivalents (along with cash itself) are one of the principal asset classes. Cash equivalents are investment securities with short-term duration, high liquidity, a

The process by which the terms of an option contract are fulfilled through the payment or receipt in dollars of the amount by which the option is in-the-money as opposed to deliver

Referring to an option or future that is settled in cash when exercised or assigned. No physical entity, either stock or commodity, is received or delivered.

A type of security (typically an option or future) that employs a method of settling payment between the buyer and seller using cash, as opposed to the physical exchange/delivery o

The Cboe Options Exchange; the first national exchange to trade listed stock options.

the act of placing a trade on an asset whose price has already “reversed” and begun a significant move in the direction of the desired target exit, or one for which the predominant

The short strikes are closer to the ATM strike to collect more premium (45-50% the width of the strikes); this increases potential profit and ROC. Click here to learn more.

description of price action (usually market-wide) within a specified time period as being indifferent, back-and-forth, lacking either an upward or downward trend. Chop is slightly

Option contracts of the same type (call or put) and Style (American, European or Capped) that cover the same underlying security.

Clearing houses act as intermediaries between counterparties (buyers and sellers) in financial transactions. In the securities industry, this structure is often referred to as cent

Exiting the open position on a certain asset. Ex: Closing out $AAPL for a 2 Points - Closing $AAPL trade for +$2/share

A transaction in which the purchaser's intention is to reduce or eliminate a short position in a given series of options.

A transaction in which the seller's intention is to reduce or eliminate a long position in a given series of options

A trade that reduced an investor's position. Closing buy transactions reduce short positions and closing sell transactions reduce long positions. See also Opening Transaction.

Financial assets against which loans are made.

Any position involving both put and call options that is not a straddle.

A combination of options positions that replicates owning the underlying stock.

A type of money market instrument, commercial paper is an unsecured, short-term debt security issued by corporations with maturities of 270 days or less.

A standardized contract calling for the delivery of a specified quantity of a commodity at a specified date in the future.

A type of equity, common stock is a class of ownership in a company. Common stock gives shareholders the right to elect the board of directors, to vote on company policies, and to

the phenomenon where two or more pivots and/or other key indicators are in close proximity, which adds strength to the conviction of probability

a pattern of short-term price action where the highs and lows both diminish consistently

Relating to futures, a theory that involves the price of futures and the time to expiration. All else being equal, the theory suggests that as a futures contract approaches expirat

CONTEXT is the backdrop that makes a trade desirable. Context of trade is NOT just "how much meat on the bone is there?". Many things factor into it and the more confluence the bet

An order which can be executed only if another event occurs; i.e. "sell Oct 45 call 7.25 with stock 52 or lower".

The month in which a securities contract expires.

The amount of an underlying asset covered by an option contract. For equity options, the contract size is typically 100 shares per contract.

The week in which a securities contract expires.

Having a contrarian viewpoint means that you reject the opinion of the masses. This is where buying into strength, selling into weakness comes from - it is a contrarian way of thin

A riskless transaction in which the arbitrageur buys the underlying security, buys a put, and sells a call. The options have the same terms. See also Reversal Arbitrage.

A security that is convertible into another security. Generally, a convertible bond or convertible preferred stock is convertible into the underlying stock of the same corporation.

A strategy equivalent in risk to purchasing a put option where an investor sells stock short and buys a call.

A security that is convertible into another security. Generally, a convertible bond or convertible preferred stock is convertible into the underlying stock of the same corporation.

the emotional point of decisiveness to enter (or exit) a trade based on the strength and simultaneity of two or more signals that agree with each other. For example: “I have strong

An event or process initiated by a company that affects securities it has issued.

Original price paid for a stock, plus any commissions or fees.

Limiting profitability on a trade to increase probability of success and reduce the cost of entering a trade.Click here to learn more.

A term referring to the periodic interest paid to investors of fixed income securities. Originated from early certificates of fixed income securities, which often came with detacha

The annual rate of interest paid on a fixed income security. For example, an investor holding a $1,000 bond paying interest annually with a coupon rate of 5% would receive $50 per

To close out an existing position.

A written option is considered to be covered if the writer also has an opposing market position on a share-for-share basis in the underlying security. That is, a short call is cove

A combination of a long stock position with a short call.

A strategy in which one sells call options while simultaneously owning an equivalent position in the underlying security or strategy in which one sells put options and simultaneous

A strategy in which one sells put options and simultaneously is short an equal number of shares of the underlying security.

An option strategy in which one call and one put with the same strike price and expiration are written against 100 shares of the underlying stock. In actuality, this is not a "cove

The term used to describe the strategy in which an investor owns the underlying security and also writes a straddle on that security. This is not really a covered position.

Money received in an account. A credit transaction is one in which the net sale proceeds are larger than the net buy proceeds (cost), thereby bringing money into the account. See a

A term that indicates cash will be credited to your trading account when executing a spread. Spreads may also be done for even (no cash is exchanged), or for a debit (cash is debit

The expiration dates (months) applicable to various classes of options.

advanced trading platform used by some TT master traders including @rickyanalog

The first day the stock is running or if it's still on the front side. So could be day 2 but it keeps going higher, you will see pro traders will put it as day 1, when they feel it

A Time in Force designation - Day Orders expire after the market closes on the day they are entered.

A trade that is opened and closed in the same trading session.

Traditionally a person that attempts to profit on intraday movements in stocks through long and short positions. Day traders typically do not hold positions overnight.

The number of days until an option or futures contract expires. Click here to learn more.

An expense, or money paid out from an account. A debit transaction is one in which the net cost is greater than the net sale proceeds. See also Credit.

A term that indicates cash will be debited from your trading account when executing a spread. Spreads may also be done for even (no cash is exchanged), or for a credit (cash is cre

A term used to describe how the theoretical value of an option erodes with the passage of time. May also be referred to as “time decay.” Decay is quantified by the Greek - theta.

The date when details of a dividend (timing and amount) are announced to the public.

A retirement plan that calculates employee benefits using a formula that accounts for length of service and salary history. Defined benefit plans include traditional “pension plans

A retirement plan in which a certain amount (or percentage) is set aside each year by a company for the benefit of each employee.

To take securities from an individual or firm and transfer them to another individual or firm. A call writer who is assigned must deliver stock to the call holder who exercised. A

The process of satisfying an equity call assignment or an equity put exercise. In either case, stock is delivered. For futures, the process of transferring the physical commodity f

One of the Greeks, delta measures the rate of change in an option’s theoretical value for a $1 change in the price of the underlying security.

Delta neutral refers to a trading approach/strategy wherein the delta exposure (directional bias) of an options position is reduced through an offsetting position in the underlying

A ratio spread that is established as a neutral position by utilizing the deltas of the options involved. The neutral ratio is determined by dividing the delta of the purchased opt

A corporation that will hold securities for member institutions. Generally used by option writers, the DTC facilitates and guarantees delivery of underlying securities if assignmen

A class of marketable securities, derivatives have a price that is dependent upon (or derived from) an underlying asset. Examples of derivatives include options, futures, and warra

A financial security whose value is determined in part from the value and characteristics of another security, the underlying security.

Any spread in which the purchased options have a longer maturity than do the written options as well as having different striking prices. Typical types of diagonal spreads are diag

A direct offering is sometimes referred to as direct placement. It is a type of offering that allows the issuing company to sell its securities directly to investors without using

An option is trading at a discount if it is trading for less than its intrinsic value. A future is trading at a discount if it is trading at a price less than the cash price of its

A riskless arbitrage in which a discount option is purchased and an opposite position is taken in the underlying security. The arbitrageur may either buy a call at a discount and s

Leeway given by an investor to his/her account executive regarding certain aspects of order execution.

A Discretionary order is an order type offered by certain exchanges. This order is a limit order submitted with a hidden, specified ' discretionary ' amount off the limit price whi

A dividend is a payment made by a company to its shareholders, typically as a distribution of profits. Dividends are set by a company’s Board of Directors, and may be issued as cas

The total annual dividend divided by the price of the stock

A mathematical quantity used to compute an index. It is initially an arbitrary number that reduces the index value to a small, workable number. Thereafter, the divisor is adjusted

Generally used in connection with covered call writing, this is the cushion against loss, in case of a price decline by the underlying security, that is afforded by the written cal

A term referring to the underperformance typically observed in financial instruments that attempt to replicate the returns of other products. Drag, or underperformance, typically a

The term “duration” has several common uses related to trading. In options trading, duration refers to the period of time between initiation of a trade and the expiration of the co

For option strategies, describing analyses made during the course of changing security prices and during the passage of time. This is as opposed to an analysis made at expiration o

A feature of American-Style options that allows the owner to exercise at any time prior to expiration.

The exercise or assignment of an option contract before its expiration date.

A public company's guidance is its report to shareholders on the earnings it expects to achieve in the quarter or fiscal year ahead. Alternatively referred to as earnings guidance

Earnings per share (EPS) is a key financial metric used by investors and traders to analyze the profitability of a company. EPS is commonly defined as the portion of a company’s pr

EBITDA, or earnings before interest, taxes, depreciation, and amortization, is a measure of a company's overall financial performance and is used as an alternative to the net incom

a steep and quick spike or drop in the price of an asset that is not explained by change in intrinsic value of the asset. In the TT strategy, the premise of watching for emotional

In finance, equity is one of the principal asset classes. Equity securities (i.e. common stocks) represent ownership interest in a company.

Options on shares of an individual common stock. See also Non-Equity Option.

A receipt issued by a bank in order to verify that a customer (who has written a call) in fact owns the stock and therefore the call is considered covered.

high-end charting platform used by TT master trader @Adriano, that enables short time-period charts to host long time-period indicators. For example, a one‑minute chart can be conf

An exchange-traded fund, a basket of stocks meant to track an index or sector.

A feature of an option that stipulates that the option may only be exercised at its expiration. Therefore, there can be no early assignment with this type of option.

A type of option contract that can be exercised only on its expiration date, not before. (Note: It is important to confirm and understand all pertinent contract details prior to tr

An option contract that may be exercised only during a specified period of time just prior to its expiration.

The process whereby a stock's price is reduced when a dividend is paid. The ex-dividend date (ex-date) is the date on which the price reduction takes place. Investors who own stock

The date investors buying the stock will no longer receive the dividend. Because stock trades take two days to clear, the ex-dividend date usually falls one day prior to the record

A type of indirect investment, exchange-traded funds (ETFs) are professionally managed investment vehicles that contain pooled money from individual investors. ETFs are often built

Exchange-traded notes (ETNs) are unsecured, unsubordinated debt securities that are issued by an underwriting bank. ETNs are typically designed to provide investors with the return

In trading, exercise refers to the option owner invoking his/her right specified in the contract. For call owners, exercising means the underlying stock is purchased at the strike

The limit on the number of contracts which a holder can exercise in a fixed period of time. Set by the appropriate option exchange, it is designed to prevent an investor or group o

The price at which the option holder may buy or sell the underlying security, as defined in the terms of his option contract. It is the price at which the call holder may exercise

The difference between the exercise price of the option and the exercise settlement value of the index on the day an exercise notice is tendered, multiplied by the index multiplier

collective trader sentiment that is waning due to extended price movement in one direction. Usually associated with irrational/emotional trading, and a signal that reasonable convi

A type of option contract that is non-standard as compared to American-Style and European-Style options. Due to their complexity and customization, Exotic Options often trade over-

The amount that a stock is predicted to increase or decrease from its current price, based on the current level of implied volatility for binary events.Click here to learn more.

A rather complex mathematical analysis involving statistical distribution of stock prices, it is the return which an investor might expect to make on an investment if he were to ma

The date at which an option stops trading, and all contracts are exercised or become worthless.

An expiration cycle relates to the dates on which options on a particular underlying security expire. A given option, other than LEAPS®, will be assigned to one of three cycles, th

The day on which an option contract becomes void. For stock options expiring prior to February 15, 2015, this date is the Saturday immediately following the third Friday of the exp

The time of day by which all exercise notices must be received on the expiration date. Technically, the expiration time is currently 5:00PM on the expiration date, but public holde

a larger than normal price change within a specified (usually brief) time period

Together, extrinsic value and intrinsic value make up the two parts of an option’s total value. Extrinsic value, also referred to as “time value” or “risk premium,” is everything t

The stated value of a financial instrument at the time it is issued. For stocks, the face value is the original value shown on the stock certificate. For bonds, it is the amount pa

The process of providing a market for a security. Normally, this refers to bids and offers made for large blocks of securities, such as those traded by institutions. Listed options

Normally, a term used to describe the worth of an option or futures contract as determined by a mathematical model. Also sometimes used to indicate intrinsic value. See also Intrin

A "Fat Finger" is when one presses a key that they didn't mean to press, aka a typo when entering an order. For example, Dan may say "I am placing an order for 79.9 on $FSLR" and o

Fibonacci retracement levels are horizontal lines that indicate where support and resistance are likely to occur. They are based on Fibonacci numbers. Each level is associated with

the occurrence of an order being accepted and executed by the market. For example, “I got the fill” or “if it gets filled” or “no fill”.

A Time in Force designation that is similar to Immediate or Cancel (IOC). The difference being that Fill-or-Kill (FOK) designated orders cannot be partially filled. FOK orders are

In finance, fixed income debt is one of the principal asset classes. Fixed income securities (i.e. bonds) are debt instruments that represent loans made by companies or governments

The term “flat” has several common uses related to trading. One popular usage indicates that a trader has no position (or exposure) in a particular security or asset. “Flat” can al

Exchange traded equity or index options in which the investor can specify some terms of the contract, such as exercise price, expiration date, exercise type, and settlement calcula

Float is number the outstanding shares minus those that are restricted or held by insiders or major shareholders. Low float stocks tend to have higher spreads and higher volatility

A trader on an exchange floor who executes orders for other people.

A trader on an exchange floor who executes orders for his/her own account.

the proper approach to learning the TT strategy, this is when a member watches and learns the why and how of called trades, to develop their own custom style and approach based on

The Federal Open Market Committee (FOMC) is a committee within the Federal Reserve System that is charged under US law with overseeing the nation’s open market operations. The FOMC

A term for a securities contract with monthly expiration that is closest to the current date.

a shady practice involving the attempt to place and/or closeout a trade just slightly earlier than an expected large or significant trade (or flurry of trades), in order to gain a

when your profit target is barely missed and the price drops to the trader’s stop loss

(see also “standard lot size”) this refers to the full number of shares a given trader typically trades on a single A+ setup. For example, let’s say you have a 5K account and your

An investing/trading methodology that estimates a security’s fair value using relevant quantitative and qualitative information. The goal of this approach is to compare the result

A measurement of the magnitude of daily movement in the price of an underlying over a future period of time. Unlike historical volatility, future volatility is unknown. However, ma

A type of derivative, futures contracts require buyers and sellers to trade an asset at a specified price on a predetermined future date. The two participating parties agree to buy

Futures and options are the major types of stock derivatives traded in a share market. These are contracts signed by two parties for trading a stock asset at a predetermined price

A standardized contract calling for the delivery of a specified quantity of a commodity at a specified date in the future.

A type of option in which the underlying asset is futures. Futures options expire into long/short futures contracts.Click here to learn more.

G2C or Gap to Close is an alert that that uses a pre/post-market gap followed by a return to the previous day's closing price - typically at the market open after 9:30a EST. Combin

One of the Greeks, gamma measures the rate of change in an option’s delta for a $1 change in the price of the underlying.

A synonym of initial public offering (IPO).

A designation applied to some types of orders, meaning the order remains in effect until it is either filled or canceled. See also Stop Limited and, Trading Limit.

A Time in Force designation - Good-‘Til-Cancelled (GTC) orders remain active unless cancelled by the trader or completely executed. GTC designated orders automatically expire 120 c

In finance, the “Greeks” are parameters that measure the sensitivity of an option’s value to changes in the following: underlying price, time, volatility, and interest rates. These

price behavior that is trending gently but consistently upward or downward over time, and fairly consolidated (not breaking out).

A market with a tendency to decline rather than up trending, this is typically caused by the market having more sellers than buyers on that given day. A particular stock may also b

A conservative strategy used to limit investment loss by effectinga transaction which offsets an existing position.

The mathematical quantity that is equal to the delta of an option. It is useful in that a theoretically neutral hedge can be established by taking offsetting positions in the under

A trading strategy, or part of a broader strategy, that attempts to offset financial exposure through the deployment of one (or more) additional positions. Click here to learn more

High-frequency trading refers to technologically and quantitatively intensive, high-volume trading strategies that rely on computer algorithms and transaction speed. Click here to

Trade setups we use during times of rich option prices. We like to collect credit/sell premium, and hope for a contraction in volatility.Click here to learn more.

any setup for which similar price history followed a particular pattern a high percentage of the time.

A measurement of the magnitude of daily movement in the price of an underlying over a period of time (in history). Future volatility is unknown.

Someone who has bought an option or owns a security.

An option strategy in which the options have the same striking price, but different expiration dates.

A term that implies the target company of an acquisition is not a willing participant.

Under the wash sale rule, if you sell a security at a loss and then buy it back within 30 days, you cannot claim a loss on your tax return for the sale. The loss is considered a wa

In these volatile markets, it’s prudent for traders to have the capacity to play both directions of a stock’s price move – up and down. This means being able to trade stocks long a

short for hard to borrow / easy to borrow Hard to borrow stocks are the ones which a brokerage firm finds difficult to borrow for short selling. Hard to borrow list of a broker sho

this means “I’ve closed out [the trade in question] with an opposite fill”. For example, “I’m out $XYZ at +85 cents” means either “I sold the lot of XYZ that I previously purchased

When a True Trader Pro calls a developing A+ setup with the group, they will often qualify it with “if it comes” to remind the group that the price has not quite yet reached the de

A pre-market condition characterized by lopsided volume of buyer vs. seller interest in a particular asset. Imbalance may occur at any time; however, it is most commonly studied as

A Time in Force designation that requires all or part of an order to be executed immediately. The portion of an IOC order that is not filled immediately (if any), is automatically

A term that refers to the current market price of volatility for a given option. While historical volatility is observable, future volatility is unknown. The current price of volat

A term describing any option that has intrinsic value. A call option is in-the-money if the underlying security is higher than the striking price of the call. A put option is in-th

In-the-money (ITM) means the the strike price of a call is below the market price of the underlying security, or that the strike price of a put is above the market price of the und

A strategy of covered call writing in which the investor is striving to earn an additional return from option writing against a stock position which he (she) has targeted to sell -

A compilation of the prices of multiple entities into a single number.

A type of option in which the underlying asset is an index.

a mathematical formula derived from historic market data and usually represented as a line graph over time and overlaid on an asset’s price chart. Used to measure and compare convi

A class of marketable securities. Unlike direct investments, which investors own themselves, indirect investments are made in vehicles that pool investor money to buy and sell asse

Inducement grants are primarily used for hiring top executives, often when there are insufficient shares in an equity plan's reserve to accommodate large grants. The exception may

An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance. Public share issuance allows a company to

A large financial organization engaged in professional investing and trading.

Institutional ownership is the amount of a company’s available stock owned by mutual or pension funds, insurance companies, investment firms, private foundations, endowments, or ot

Intraday trading is a term usually used to refer day trading. Type of trading in which you take a position in an asset or security and close that position before the market close o

Together, intrinsic value and extrinsic value make up the two parts of an option’s total value. The intrinsic value of an in-the-money (ITM) option is equal to the difference betwe

a price level beyond which a previously-determined A+ setup fails to retain its A+ status, due to degradation of probability

Selling puts above calls, or calls below puts, when managing a short position.Click here to learn more.

short for “initial public offering” which is the point when a new equity is created and released for public trading. Special caution and experience are called for with trading IPO’

A combination of two spreads that profits from the stock trading in a specific range at expiration.

Implied volatility reverting to the mean.Click here to learn more.

A metric which tells us whether implied volatility is high or low in a specific underlying based on a given time frame of IV data.Click here to learn more.

The January Effect is an economic phenomenon wherein stock markets experience gains in the month of January. This is because investors sell stocks to incur year-end capital gains t

an asset that is subjectively not trustworthy for trading purposes due to historical and/or experiential reasons, which may have to do with any number of influences including reput

Junk bonds are fixed income securities that carry low credit ratings. Consequently, junk bonds theoretically possess a higher risk of default than investment grade fixed income sec

A trading approach that uses options to lock in gains at certain price points (strikes).

The very last full day of open trading before an options expiration day, usually the third Friday of the expiration month.

Adding additional exposure to an existing position while maintaining the original trading assumption.

Options with an expiration month more than one year in the future.

A term used when referring to the execution of positions with more than one component. For example, when trading a straddle, both the call and put must be bought or sold. In this c

A term used when referring to the execution of positions with more than one component. When trading one component of a position prior to the other(s), a trader is said to be “leggi

A letter from a bank to a brokerage firm which states that a customer (who has written a call option) does indeed own the underlying stock and the bank will guarantee delivery if t

The use of a small amount of money to control a large number of securities.

Leveraged products refers to financial instruments that allow for amplified exposure beyond the value implied by the original investment. Click here to learn more.

a brokerage that offers several professional-grade trading platforms aimed at high volume traders, including Trader, Sterling, Eze EMS (formerly RealTick), etc.

The exchange-imposed maximum daily price change that a futures contract or futures option contract can undergo.

A conditional order type that indicates a security should be bought or sold at a specific price, or better. Limit orders require a Time in Force designation.

The ability to get in and out of an asset or stock without affecting or changing the market price. In particular, that measures how many unfilled orders are active. Distinguished f

The risk that a position can't be closed when desired.

A call or put traded on a national options exchange.

A trader on a futures exchange who buys and sells for his own account and may sometimes also fill public orders.

Explanation A lock-up period is a window of time when investors are not allowed to redeem or sell shares of a particular investment. There are two main uses for lock-up periods, th

A statistical distribution that is often applied to the movement of stock prices. It is a convenient and logical distribution because it implies that stock prices can theoretically

The Long Continuation Trigger (LCT) is a critical concept in technical analysis used by traders to predict potential price movements. This concept involves recognizing a certain pa

A position wherein an investor's interest in a particular seriesof options is as a net holder (i.e., the number of contractsbought exceeds the number of contracts sold).

(see also “standard lot size”) the number of shares being bought or sold in a single trade. Lot size is important in managing risk, because the less conviction a trader has about a

the TrueTrader Lounge is where speculative (not actual live) trade setups are discussed and shared, and where Members can and should ask their non-beginner questions about trading

Trade setups that benefit from increases in volatility as well as more directional strategies.Click here to learn more.

the condition where the number of shares being traded within a short time frame is small enough to cause concern within the TT strategy, that the price may not move far enough and

Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. The MACD is calc

The amount being borrowed to purchase securities. Click here to learn more.

The amount an uncovered (naked) option writer is required to deposit and maintain to cover a position. The margin requirement is calculated daily.

A term referring to the current market value of a security. Derives from “mark-to-market,” which is a system of valuing assets by the most recent market price.

An accounting process by which the price of securities held in account are valued each day to reflect the last sale price or market quote if the last sale is outside of the market

A portfolio of common stocks whose performance is intended to simulate the performance of a specific index. See Index.

A theory focusing on the degree to which asset prices reflect all relevant and available information. Proponents of strong market efficiency believe all pertinent information is al

When you hear a floor trader comment "market is pulling", they refer to the drop or rapid decline in price of overall markets like $SPY, $QQQ's, Nasdaq Future contracts etc., Since

Also a market order, but the investor is allowing the floor broker who is executing the order to use his own discretion as to the exact timing of the execution. If the floor broker

An order type for immediate execution at current market prices. If willing buyers or sellers exist to take the other side, market orders are filled. Market orders are generally use

An exchange member whose function is to aid in the making of a market by making bids and offers in the absence of public buy or sell orders.

Marketable securities are equity or debt instruments listed on an exchange that can be bought and sold easily. Maturities of marketable debt securities must be one year or less. Cl

A combination of a long stock position with a long put

The simultaneous purchase of stock and the corresponding number of put options. This is a limited risk strategy during the life of the puts because the stock can be sold at the str

A put and stock are considered to be married if they are bought on the same day, and the position is designated at that time as a hedge.

Meat on the bone: When there’s a good amount of profit in your trade idea. You will see traders mention "there's still a lot of meat on the bone" when they think there's still a go

the TT chatroom set aside exclusively for members to post actual, live trades that they’re entering or exiting. Posts must include ticker, entry/exit price and side (long or short)

Overall Concept A memorandum of understanding is a document that describes the broad outlines of an agreement that two or more parties have reached. MOUs communicate the mutually a

A type of corporate action that occurs when two companies unite and establish a single, new company.

mirror (verb) (see also “follow”) the potentially-dangerous practice of attempting to mechanically take identical trades as another trader at the same times, especially those of a

any one of the professional traders in the TT network who has been granted Moderator status in the TT chat rooms

A mathematical formula designed to price an option as a function of certain variables - generally stock price, striking price, volatility, time to expiration, dividends to be paid,

A class of marketable securities, money market instruments are short-term equity and debt securities with maturities of one year or less that trade in liquid markets. Examples of m

A statistics-based simulation used to model the probability of different outcomes.

short for “TrueTrader monthly pivot point” (see also “pivot” and “quarterly” and “weekly”)

TT master trader @rickyanalog’s thoughtful and accurate answer to the inevitable daily question of why a given asset price moved up or down unexpectedly.

the first hour of market open, beginning at 9:30 ET each business day; the key hour in which the TT strategy is shown to be most effective.

A type of indirect investment, a mutual fund is a professionally managed investment vehicle that contains pooled money from individual investors. Mutual funds use the pooled money

A call or put that does not have an offsetting stock or option position.

A written option is considered to be uncovered if the investor does not have an offsetting position in the underlying

See Uncovered call writing and Uncovered put writing.

Generally referring to an index, it indicates that the index is composed of only a few stocks, generally in a specific industry group. See also broad-based.

The value of an asset if it were sold immediately and all debts associated with it were repaid.

Describing an opinion that is neither bearish nor bullish. Neutral option strategies are generally designed to perform best if there is little or no net change in the price of the

A list of specific assets that a trader has decided he/she will not trade regardless of signal strength, due to any number of reasons that may or may not include some personal hist

An option whose underlying entity is not common stock; typically refers to options on physical commodities and index options.

Nonfarm payrolls is the measure of the number of workers in the U.S. excluding farm workers and workers in a handful of other job classifications. This is measured by the Bureau of

(see also “low volume”) an observation that the volume reported for the current and/or most recent time periods on a given asset chart is less than ideal for A+ entry.

Also a market order, but the investor is allowing the floor broker who is executing the order to use his own discretion as to the exact timing of the execution. If the floor broker

The time during which the buyer of a futures contract can be called upon to accept delivery. Typically, the 3 to 6 weeks preceding the expiration of the contract.

The total number of outstanding contracts for a given option series.

a trade position that has been filled but not yet closed out (see also “position”).

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

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

A trade which adds to the net position of an investor. An opening buy transaction adds more long securities to the account. An opening sell transaction adds more short securities.

A type of derivative, an option is a contract that grants the right, but not the obligation, to buy or sell an underlying asset at a set price on (or sometimes before) a specific d

A graphical representation of the projected price of an option at a fixed point in time. It reflects the amount of time value premium in the option for various stock prices, as wel

A stock which has associated listed options.

Options are contracts that give the bearer the right, but not the obligation, to either buy or sell an amount of some underlying asset at a pre-determined price at or before the co

The Options Clearing Corporation (OCC) provides central counterparty clearing and settlement services to 15 exchanges. Financial instruments cleared through the OCC include options

a submitted request for a buy or sell trade at a bid price, especially before it is “filled”.

The exchange employee in charge of keeping a book of public limit orders on exchanges utilizing the "maker-maker" system, as opposed to the "specialist system", of executing orders

A call option is out-of-the-money if the strike price is greaterthan the market price of the underlying security. A put optionis out-of-the-money if the strike price is less than t

Out-of-the-money (OTM) means the strike price of a call is above the market price of the underlying security, or that the strike price of a put is below the market price of the und

Trades that are negotiated and executed directly between two parties, without the use of an exchange or other intermediary.

An option traded off-exchange, as opposed to a listed stock option. The OTC option has a direct link between buyer and seller, has no secondary market, and has no standardization o

Explanation Overhead refers to the ongoing business expenses not directly attributed to creating a product or service. It is important for budgeting purposes but also for determini

Describing a security trading at a higher price than it logically should. Normally associated with the results of option price predictions by mathematical models. If an option is t

The profit and loss (P L) statement is a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period, usually a fiscal quarter or year.

Trading a discrepancy in the correlation of two underlyings. Click here to learn more.

The term parity has several common uses in finance. As it relates to options trading, parity means that an option is trading at a price equivalent to intrinsic value.

(see also “full size” and “scale in/out” and “small size” and “start small”) an entry where the trader is buying or selling only a specified fraction of normal (full) lot size, aka

Defined by FINRA Rule 4210 as a stock trader who executes 4 (or more) round-trip day trades over the course of five business days in a margin account. However, if the number of day

A graphical representation of the potential outcomes of a strategy. Dollars of profit or loss are graphed on the vertical axis, and various stock prices are graphed on the horizont

short for “previous day’s high”, the highest price traded during the most recent trading day prior to today

An option whose underlying security is a physical commodity that is not stock or futures. The physical commodity itself (a currency, treasury debt issue, commodity) - underlies tha

The risk that a stock price settles exactly at the strike price when it expires. For option sellers, pin risk means there exists uncertainty around how many contracts may get assig

Pivots are the average of significant price levels from the historical performance of an asset or security. according to TT strategy the price level at which a trading strategy sug

the difference of $1.00 between two prices of the same stock. For example: “I’m out $SBUX for one point” means “I closed an open trade of $SBUX and gained $1.00 per share”.

A POP is a sudden spike in the price of a stock to a certain level. You will see Floor traders mention "I will short $XYZ on pop to $100". This means they are looking to short sell

A system of calculating margin requirements using a risk-based methodology.

As a noun, specific securities in an account or strategy. (A covered call writing position might be long 1,000 XYZ and short 10 XYZ January 30 calls). As a verb, to facilitate; to

The maximum number of put or call contracts on the same side of the market that can be held in any one account or group of related accounts. Short puts and long calls are on the sa

A position trader buys an investment for the long term with the expectation that it will appreciate in value. This type of trader is less concerned with short-term fluctuations in

A type of equity, preferred stock is a class of ownership in a company. Preferred stock has a higher claim on earnings and assets than common stock, but does not come with voting r

The value of an option contract which is paid by the buyer to the option writer.

Often called OHLC, the Open, High, Low, and Close of the previous day can tell you important things about the stock. Below is a bar chart which can tell us the OHLC from the previo

Once the market opens, you have imbalances in buy/sell orders from institutions that use MOO (market on open) orders. Plus, you have a lot of discrepancy between what all the marke

A stock index which is computed by adding the prices of each stock in the index, and then dividing by the divisor. See also Capitalization-weighted index, Divisor.

A term referring to the segment of the capital markets where new securities are issued, like an initial public offering (IPO). Such offerings are underwritten by investment banks o

The “Pro Trader’s room” is one of many chatrooms in the TT system, and is read-only except for the seasoned Pros. The pro room is critically important because this is where all Pro

The likelihood in percentage terms that a stock or index will land above or below some price on the day of expiration. The probability of expiring doesn't care about what happens b

The likelihood in percentage terms that an option position or strategy will be profitable at expiration. For spreads like short verticals or iron condors, you can estimate the prob

The likelihood in percentage terms that a stock or index will reach some higher or lower price at any time between now and expiration. The probability of touching takes into accoun

The PPI is different from the CPI in that it measures costs from the viewpoint of industries that make the products whereas the CPI measure prices from the perspective of consumers

A graphical representation of the potential outcomes of a strategy. Dollars of profit or loss are graphed on the vertical axis, and various stock prices are graphed on the horizont

The range within which a particular position makes a profit. Generally used in reference to strategies that have two break-even points - an upside break-even and a downside break-e

A table of results of a particular strategy at some point in time. This is usually a tabular compilation of the data drawn on a profit graph. See also Profit Graph.

A position that has limited risk. A protected short sale (short stock, long call) has limited risk, as does a protected straddle write (short straddle, long out-of-the-money combin

The orders to buy or sell, entered by the public, that are generally away from the current market. The order book official or specialist keeps the public book. Market-Makers on the

A pullback is a pause or moderate drop in a stock or commodities pricing chart from recent peaks. In the example above, the SPDR S P 500 ETF (SPY) experiences four pullbacks within

the nefarious practice by some trading programs where the principals encourage their members or students (aka followers) to enter a particular trade with the intent of using the fo

An option contract that gives the holder the right to sell the underlying security at a specified price for a certain fixed period of time. See also Call.

An option that gives the holder the right to sell stock at a specific price.

A person who sells a put and receives a premium.

Often viewed as an indicator of investor sentiment, the Put-Call Ratio provides information regarding the volume of put contracts relative to call contracts. Traditionally, a ratio

Quadruple witching refers to a date on which stock index futures, stock index options, stock options, and single stock futures expire simultaneously. While stock options contracts

short for “TrueTrader quarterly pivot point” (see also “pivot” and “monthly” and “weekly”)

A term referring to the current bid/ask price of an asset in the marketplace.

A strategy consisting of a simultaneous position of a ratio calendar spread using calls and a similar position using puts, where the striking price of the calls is greater than the

Selling more near-term options than longer-term ones purchased, all with the same strike; either puts or calls.

A spread in which more options are sold than purchased.

A strategy in which one has an unequal number of long securities and short securities. Normally, it implies a preponderance of short options over either long options or long stock.

Selling of call options in a ratio higher than 1 to 1 against the stock that is owned.

The Realized Gain/Loss tab displays realized profit or loss information for any positions closed during the current day.

A synonym of historical volatility.

advanced trading platform offered by Lightspeed (distinct from Lightspeed ‘Trader’) and used by TT master trader @Adriano.

The date by which an investor needs to own a stock in order to receive the dividend.

When you hear Pro's call out red to green (r/g) move, it means the stock is moving back above current day's open. Red to green move is bullish indication and if you can combine two

A "Potential Regulation T Call" note on a stock indicates a warning related to margin trading. Under Regulation T, set by the Federal Reserve Board, investors are required to depos

a price level for a given asset that is calculated with respect to previous highs (see also “support”). Its value in searching for high probability trades is based on the fact that

Refers to all the shares held by a company’s officers and other insiders. Restricted stock must be traded in compliance with SEC regulations. The restricted stock and float in a co

a common price action behavior where all or much of a recent and significant gain or loss is recovered shortly thereafter.

The percentage profit that one makes, or might make, on his investment.

The return that a covered call writer would make if the underlying stock were called away.

This is potential maximum return you could make on an option trade. It's calculated by taking the maximum potential profit and dividing it by the margin requirement of the position

A riskless arbitrage that involves selling the stock short, writing a put, and buying a call. The options have the same terms. See also Conversion Arbitrage.

A reverse stock split is a measure taken by companies to reduce their number of outstanding shares in the market. Existing shares are consolidated into fewer, proportionally more v

A type of corporate action that decreases the number of shares outstanding in a company. Reverse stock splits do not affect the total market capitalization of a company, only the n

(see also “bounce”) price action that has completed an extended move in one direction and “turned the corner” and begun to retrace in the opposite direction.

One of the Greeks, rho measures the expected change in an option’s theoretical value given a 1% change in interest rates.

A type of corporate action in which a company offers shares to existing shareholders. Technically a rights issue is a type of dividend, but in this case it isn’t a payment, but rat

A form of arbitrage that has some risk associated with it. Commonly refers to potential takeover situations where the arbitrageur buys the stock of the company about to be taken ov

A synonym of extrinsic value.

the dollar threshold below which a trader is financially and emotionally willing and able to place a prescribed amount of funds into a trade with the understanding that such funds

A type of arbitrage in which a profit is theoretically guaranteed. May also be referred to as "Risk-Free Arbitrage."

To close an existing option and replace it with an option of a later date or different strike price. Click here to learn more.

Close out options at one strike and simultaneously open other options at a lower strike.

Close-out options at a near-term expiration date and open options at a longer-term expiration date.

Close out options at a lower strike and open options at a higher strike.

A follow-up action in which the strategist closes options currently in the position and opens other options with different terms, on the same underlying stock. See also Roll Down,

A restricted stock unit (RSU) is a form of compensation issued by an employer to an employee in the form of company shares. Restricted stock units are issued to an employee through

(see also “room to add”) the practice of entering or exiting a trade with only a specified portion of desired lot size (such as 25 or 50%) instead of the whole lot size, with the i

A trading approach that hinges on increasing position size as an asset’s price moves against you or as capital available in a trading account increases, as opposed to making the fu

trading style that specializes in profiting from small price changes, and involves entering and exiting quickly, as in within a few seconds or minutes.

A trader who enters and exits a position quickly for a small profit or loss.

A trading strategy, or part of a broader strategy, that attempts to make profits on movement in an underlying asset. Click here to learn more.

an application or software widget that watches asset prices in realtime, filtering and publishing results based on select criteria. For example, a simple scanner may look for any s

The market where securities are bought and sold after their initial offering to public investors.

The Securities and Exchange Commision (SEC) is an agency of the United States government that is charged with monitoring and regulating the securities industry.

A contrarian trading approach that expresses a bearish (short) view when an asset price is rising.

Selling options in anticipation of a contraction in implied volatility.Click here to learn more.

All options of the same class that have the same expiration date and strike price.

The official price at the end of a trading session. This price is established by The Options Clearing Corporation and is used to determine changes in account equity, margin require

(see also “A+ setup) the confluence of indicators and conviction that signal an entry point for a trade.

Share classes are a way of assigning different rights to different stockholders. They can address issues such as voting authority, dividends, and rights to the company’s assets and

Refers to the total number of shares in a company that are held by shareholders, including restricted shares (those held by the company’s officers and insiders). Shares outstanding

Shelf registration is a procedure, included in the regulation that a corporation can evoke to comply with U.S. Securities and Exchange Commission (SEC) registration requirements fo

A position wherein a person's interest in a particular seriesof options is as a net writer (i.e., the number of contracts soldexceeds the number of contracts bought).

A position that is opened by selling borrowed stock, with the expectation the stock price will fall.

the condition where an asset price (and/or the market in general) is consolidating into a narrow range of price fluctuation, with no significant upward or downward trend.

any fundamental or technical criterion that contributes to a potential trade setup. For example, a price reaching a pivot point would be considered one signal.

A defined risk strategy that uses two varying vertical spread widths, thus creating a directional bias.Click here to learn more.

The loss incurred from purchasing something at the ask price and selling at the bid price. Slippage costs are inversely related to liquidity, which is why we like to trade extremel

Small cap is a term used to classify companies with relatively small market capitalization. A company's market capitalization is the market value of its outstanding shares. The def

(see also “scale in/out” and “room to add”) a smaller-than-average lot size (number of shares) being bought or sold on a given trade. (see also partial lot size).

Like regular dividends, special dividends are payments made by a company to its shareholders. If a company has a recurring schedule of regular dividends, then any additional divide

An exchange member whose function is to make markets and keep the book of public orders.

A type of corporate action in which an existing publicly-traded company sells a segment of its assets, or distributes new shares, with the purpose of forming an independent company

A position involving a long and short option of different strike prices or expirations, or both.

An order to simultaneously transact two or more option trades. Typically, one option would be bought while another would simultaneously be sold. Spread orders may be limit orders,

Any option position having both long options and short options of the same type on the same underlying security.

a tradeable large cap S P index ETF generally regarded as one of the most stable and indicative baskets of US exchange-based financial assets in existence, and often used by TT Pro

A statistical measure of price fluctuation. In volatility trading, standard deviation is often used to measure how stock price movements are distributed around the mean.

the seemingly-arbitrary number of shares a trader typically buys or sells in a single, high-conviction trade, but is actually based on a combination of [a] stock price; [b] account

enter a trade with a partial lot size (see also “lot size” and “scale in”) with the intention of better managing risk.

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

A stock (also known as equity) is a security that represents the ownership of a fraction of a corporation. This entitles the owner of the stock to a proportion of the corporation's

A type of corporate action that increases the number of outstanding shares in a company. Stock splits do not affect the total market capitalization of a company, only the number of

short for “stoploss” which is a pre-determined price at which a trader plans to exit a trade before it goes too far in the negative (loss) direction.

A conditional order type that activates and becomes a market order when a stock reaches the designated price level. Stop Orders are typically placed with the intent of protecting a

Similar to a stop order, the stop-limit order becomes a limit order, rather than a market order, when the security trades at the price specified on the stop. See also Stop Order.

A stop-loss order is an order placed with a broker to buy or sell a security when it reaches a certain price. Stop-loss orders are designed to limit an investor’s loss on a positio

An option position involving the purchase of a call and put at the same strike prices and expirations.

An option position involving the purchase of a call and put at different strike prices.

With respect to option investments, a preconceived, logical plan of position selection and follow-up action.

The price at which stock is purchased or sold when an option is exercised.

A term referring to the price differential between strikes in a given option series. In general, stocks valued less than $50/share have strikes listed in $2.50 increments, stocks v

The distance between striking prices on a particular underlying security. Normally, the interval is 2.50 points for stocks under $25, 5 points for stocks selling over $25 per share

any graphic indicator overlaid on a price chart, and which is based on various historic criteria. For example, TT offers its own proprietary studies that combine certain types of h

Generally referring to an index, it indicates that the index is composed of only a few stocks, generally in a specific industry group. See also broad-based.

In finance, suitability refers to a guideline (at times a legal requirement) that a particular investment approach/strategy is appropriate for a particular investor given his/her r

Describing a strategy or trading philosophy in which the investor is operating in accordance with his (her) financial means and investment objectives.

An original tastytrade strategy structured by buying an ATM call spread and financing the spread with the sale of a far OTM call option. Click here to learn more.

Meaning The law of supply and demand is a theory that explains the interaction between the sellers of a resource and the buyers for that resource. The theory defines what effect th

a price level for a given equity that is calculated with respect to previous lows (see also “support”). Its value in searching for high probability trades is based on the fact that

An option sweep is a market order that is split into various sizes to take advantage of all available contracts at the best prices currently offered across all exchanges. By doing

Swing trading is a speculative trading strategy in financial markets where a tradable asset is held for a few days to few months in an effort to profit from price changes or 'swing

A term used to describe a position that is built to simulate another position, but utilizes different financial instruments. For example, synthetic long stock may be constructed by

A strategy equivalent in risk to purchasing a put option where an investor sells stock short and buys a call.

An option strategy that is equivalent to the underlying stock. A long call and a short put is synthetic long stock. A long put and a short call is synthetic short stock.

Risk inherent to the marketplace that cannot be eliminated with diversification.

When TT master trader @Dan says “I might take some heat”, he means the trade in question may be developing some additional risk of going green, and based on his own risk tolerance

A synonym of acquisition (see above).

The subject of an acquisition (or merger) attempt.

A investing/trading methodology used to forecast price direction using historical price and volume data. Technical analysts rely on charts and other data to evaluate a security’s s

Term: Adding to your Position Adding to your Position: When you are sure about the future price of a stock, even if the current price is lower than your initial entry price. You ca

Term: Bear Market Bear Market: Market in which the sellers are in control resulting in a steady decline in the share price, encouraging selling.

Term: Bid Bid: An offer of price; The highest price at which a buyer is willing to pay for a stock.

Term: Broker Broker: Broker is a individual or a firm which connects investors and security exchange.

Term: Bull Market Bull Market: Market in which the buyers are in control resulting in a steady increase in the share price, encouraging buying.

Term: Buying the Ask Buying the Ask: Whenever you want to get long on a stock that is moving fast, you cannot expect your orders to get filled immediately. So in that case, you can

Term: Cover Cover: When you want to exit/close your short position, you send out a cover order. Covering is also called buying back shares that you sold(short sell).

Term: Fade A trader who fades would sell when a price is rising and buy when it's falling. The premise behind a fade strategy is that the market has already factored in all informa

Term: Limit Order Limit order: executes your buy/sell order at a specific price.

Term: Long Long: Going long(long position) is a conventional investing strategy that involves buying at a lower price in speculation that the price of that stock or commodity will

Term: Market Order Market Order: executes your order at the next available price.

Term: Selling the Bid Selling the Bid: At times of crazy price movements if you want to exit your position you have to match the bidding price to sell the shares that you own to th

Term: Short Short: Shorting a.k.a short selling is when a trader borrows shares(typically at a small borrowing fee/commission) from his broker and sells it in the open market at a

Term: Slippage Slippage is the difference between the expected price of a particular trade and the executed price. Slippage occurs most often when there is high volatility and when

Term: Spread Spread: The price difference between the bid and ask price.

Term: Stock market The Stock market is a place where investors connect to buy and sell the shares of a company in order to profit by making a percentage gain on the money that they

Term: Uptick Rule The Uptick Rule (also known as the "plus tick rule") is a rule established by the Securities and Exchange Commission (SEC) that requires short sales to be conduct

Term: Volatility Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the se

The collective name denoting the expiration date, striking price, and underlying stock of an option contract.

Estimated fair value of an option, derived from a mathematical model.

One of the Greeks, theta measures the rate of change in an option’s theoretical value relative to the passage of time.

the ubiquitous trading platform offered by TDAmeritrade, and for which TT has developed custom charting indicators that facilitate execution of the TT strategy.

The tick index (symbol: $TICK ) compares the number of stocks that are rising to the number of stocks that are falling on the New York Stock Exchange (NYSE). The index measures sto

A term referring to the minimum price movement in a trading instrument.

A term used to describe how the theoretical value of an option "erodes" or reduces with the passage of time. Time decay is especially quantified by Theta..

Designations that dictate the length of time over which an order will keep working before it is cancelled. Examples include: Day Order, Good ‘Til Cancelled (GTC), Immediate or Canc

An option strategy in which a short-term option is sold and a longer-term option is bought, both having the same striking price. Either puts or calls may be used.

A synonym of extrinsic value.

The amount by which an option's total premium exceeds its intrinsic value.

Time-based pivots are an often-overlooked concept in trading but can be a powerful tool when combined with price action. They represent key moments in the trading day when the mark

Too Light refers to when a stock doesn't have much volume. For example: No entry on $MHK, too light.

A covered call writing strategy in which one views the potential profit of the strategy as the sum of capital gains, dividends, and option premium income, rather than viewing each

The amount of difference between the performance of a specific portfolio of stocks and a broad-based index with which they are being compared. See also market basket.

An investor or professional who makes frequent purchases and sales.

The exchange-imposed maximum daily price change that a futures contract or futures option contract can undergo.

Your trade size. example: if you normally trade 3 contract for a given strategy or underlying, 2 tranches would be 6 contracts.

(90/10 strategy) a method of investment in which one places approximately 90% of his funds in risk-free, interest-bearing assets such as Treasury bills, and buys options with the r

Treasury Bills (T-Bills) are short-term debt securities backed by the US government with maturities of less than one year. Like zero-coupon bonds, T-Bills are sold at a discount to

Treasury Bonds (T-Bonds) are debt securities backed by the US government with maturities ranging from ten to thirty years. T-Bonds pay a coupon every six months (semiannual) and ha

Treasury Inflation-Protected Securities (TIPS) are debt securities backed by the US government that are indexed to inflation to protect investors from the negative effects of infla

A Treasury note, sometimes called a T-note, is a marketable U.S. government debt security with a fixed interest rate and a maturity between one and 10 years. Treasury notes are ava

Treasury Notes (T-Notes) are debt securities backed by the US government with maturities ranging from one to ten years. T-Notes pay a coupon every six months (semiannual) and have

the behavior of either a specific asset price or a whole market or market sector, where the moving average is consistently moving either upward or downward over a specified time pe

Tastytrade return on capital, which is Theta/Buying Power Reduction.

abbreviation for TrueTrader. Depending on context, it may refer to the company, or the membership at large, or the system/strategy.

abbreviation for the specialized “TrueTrader strategy” as a whole, which involves a combination of timing, custom indicators and rulesets.

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

A short call option position in which the writer does not own an equivalent position in the underlying security represented by his option contracts.

A written option is considered to be uncovered if the investor does not have an offsetting position in the underlying security. See also Covered.

A short put option position in which the writer does not have a corresponding short position in the underlying security or has not deposited, in a cash account, cash or cash equiva

Risk that is accompanied with naked options and when your possible max loss is unknown on order entry. Click here to learn more.

The security subject to being purchased or sold upon exercise of the option contract.

Describing a security that is trading at a lower price than it logically should. Usually determined by the use of a mathematical model. See also Overvalued and Fair Value.

The minimum quantity or amount allowed when trading a security. The normal minimum for common stock is 1 round lot or 100 shares. The normal minimum for options is one contract (wh

The Johnson Redbook Index is a sales-weighted of year-over-year same-store sales growth in a sample of large US general merchandise retailers representing about 9,000 stores. Same-

Company-specific risk that can, in theory, be reduced or eliminated through diversification.

Upside refers to the potential increase in value, measured in monetary or percentage terms, of an investment. Analysts commonly use either technical analysis or fundamental analysi

An option strategy in which the investor owns 100 shares of the underlying security and writes two call options against it, each option having a different striking price.

One of the Greeks, vega measures the rate of change in an option’s theoretical value given a 1% change in implied volatility.

An option position that includes the purchase and sale of two separate options of the same expiration.

(1)Most commonly used to describe the purchase of one option and sale of another where both are of the same type and same expiration, but have different strike prices. (2)It is als

An index that calculates the implied volatility of the S&P 500 index.

A measure of the fluctuation in the market price of a security or index. Also defined as the annualized standard deviation of returns. Volatility is frequently used as an input in

Often referred to as the market’s “fear gauge,” the Chicago Board Options Exchange Volatility Index (VIX) formulates a theoretical estimation for the 30-day implied volatility of S

The underlyings in the volatility asset class used to gauge fear or uncertainty for various financial instruments and commodities.Click here to learn more.

The difference in implied volatility of each opposite, equidistant option. Click here to learn more.

the number of shares being traded by all traders on a particular asset or market as a whole, within a specified time period.

Volume weighted average price (VWAP) and moving volume weighted average price (MVWAP) are trading tools that can be used by all traders to ensure they are getting the best price. H

To stop trading for the day and leave the computer. This is what the Mods encourage Members to do when either [a] the opening emotion never materializes or it fades; and/or [b] the

Definition Warrants are a derivative that give the right, but not the obligation, to buy or sell a security—most commonly an equity—at a certain price before expiration. The price

A type of derivative, warrants entitle the holder to buy the underlying stock of an issuing company at a specified price during a set period of time. Unlike options, the party requ

(see also “flush”) a sudden and extreme drop aka retracement in price immediately after an extended move upward; often emotionally-motivated by fear.

Wash sale happens when a trader closes his trade for a loss and 30 days before or after closing his position, buys similar security. Usually, investors make wash sales in order to

the practice of keeping an eye on the price action of $XYZ because it’s behaving in a way that may bring it near or across a valid entry point.

A list of securities being monitored for potential trading or investing opportunities. Click here to learn more.

A term for securities contracts with one-week expiration periods.

short for “TrueTrader weekly pivot point” (see also “pivot” and “monthly” and “quarterly”).

In this short clip, pro trader RickyAnalog explains what "R" means when speaking about risk management.

Any stock for which one of the Mods (or their acquaintances) has lost a large amount on a previous trade; one that has experienced highly unpredictable price movement.

Window dressing is a strategy used by mutual fund and other portfolio managers near the year or quarter end to improve the appearance of a fund’s performance before presenting it t

To sell an option. The investor who sells is called the writer.

A colloquial expression that means “selling an option to open.” The “writer” of the option is the seller. Not used when closing a long position because opening sales represent a di

the attribute of a brokerage or trading platform where commission are generally not charged against select types of trades. Does not mean there are never any commission for any and

Zero-coupon bonds are sold at a discount to face value and do not pay interest prior to maturity. Theoretically zero-coupon bonds produce a positive yield to maturity when they are

the screensharing platform used by TT each morning to collaborate with TT membership on. live trading and strategy discussion among the TT professionals.