Rally
| An upward movement of prices. Same as Recovery.
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Random Walk
| An economic theory that price movements in the commodity futures markets and in the securities markets are completely random in character (i.e., past prices are not a reliable indicator of future prices).
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Range
| The difference between the highest and lowest prices recorded during a given trading session, week, month, year, etc.
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Rate
| The price of one currency in terms of another.
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Rating
| The alphabetical designation attesting to the investment quality of a bond. Treasury and agency securities are AAA-rated, said to be "investment grade."
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Ratio Hedge
| The number of options compared to the number of futures contracts bought or sold in order to establish a hedge that is risk neutral.
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Ratio Spread
| This strategy, which applies to both puts and calls, involves buying or selling options at one strike price in greater number than those bought or sold at another strike price.
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RATS (Registered Certificates of Accrual on Treasu
| Another trade name for derivative zeros backed by U.S. Treasury obligations.
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Reaction
| The downward price movement tendency of a commodity after a price advance.
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Realized and Unrealized Profit and Loss
| One using an accrual type accounting system has an “unrealized profit” until he sells his shares. Upon the sale of one’s shares, the profit becomes “realized.”
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Receiver's Certificate
| A certificate issued when a company is in financial trouble. Its purpose is to provide the company with funds to complete processing cycles so that more money can be obtained through its liquidation.
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Record Date
| The day that an individual must be the owner of record to be entitled to an upcoming dividend.
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Recovery
| An upward price movement after a decline. Same as Rally.
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Red Herring
| The preliminary prospectus. The name comes from the advisory that is printed on the face of the prospectus in red ink.
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Redemption
| The retiring of a debt instrument by paying cash.
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Redemption Date
| The date on which a security (usually a fixed interest stock), is due to be repaid by the issuer at its full face value. The year is included in the title of the security; the actual redemption date is that on which the last interest is due to be paid.
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Redemption Notice
| A notice that a corporation or a municipality is calling or redeeming a certain issue of bonds.
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Refunding
| The retiring of a debt instrument by issuing a new debt instrument.
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Reg T Excess
| In a margin account, the amount by which the loan value exceeds the debit balance.
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Registered Bond
| A bond on which the owner's name appears on the certificate.
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Registered Commodity Representative (RCR)
| An individual who is registered with the exchange(s) and the CFTC to solicit and handle commodity customer business for his firm.
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Registered Form
| The recording of a security's ownership on the issuer's central ledger. Anyone delivering the security must prove that he or she is, in fact, the person to whom the securities is registered.
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Registered Security
| A security which will pay the owner whose name appears (is registered) on the face of the certificate. Securities can be fully registered (principal and interest) or registered as to principal only (coupons are in bearer form).
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Registered to Principal Only
| A feature of a bond whose ownership is recorded on a central ledger and whose interest payments are made only when coupons are detached and cashed in. Payments are not automatically sent to the owner.
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Registered Trader
| A member of an exchange who is responsible for adding "liquidity" to the marketplace by purchasing or selling assigned securities from his or her inventory. Also known as competitive market makers or option principal members.
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Registrar
| A commercial bank or trust company that controls the issuance of securities.
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Registration Statement
| Document filed with the Securities and Exchange Commission (SEC) explaining an impending issue and pertinent data about the issuer. Based on the information provided, the SEC either permits or prevents the issue from being offered.
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Regression Analysis
| A statistical technique used in modern stock portfolio analysis to compare returns on a particular stock or particular portfolio of stocks with the returns for a larger group of stocks or an index of stocks. The slope of the resulting regression line is called the Beta and it quantifies the stock's or the particular portfolio's sensitivity to systematic risk.
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Regular Warehouse
| A processing plant or warehouse that satisfies exchange requirements for financing, facilities, capacity, and location and has been approved as acceptable for delivery of commodities against futures contracts. See Licensed Warehouse.
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Regular Way
| Settlement on the 3rd business day following the trade date.
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Regular Way Contract
| The first contract sheet received from NSCC that contains compared, uncompared, and advisory data.
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Regular Way Delivery
| A type of settlement calling for delivery on the third business day after trade dates for stocks, corporate bonds, municipals. For government bonds and options, delivery is the first business day after trade.
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Regularity
| Term used to describe a processing plant, warehouse, mill, vault or bank that satisfies exchange requirements in terms of financing, facilities, capacity and location, and has been approved as acceptable for delivery of commodities against futures contracts.
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Regulated Commodities
| Effective April, 1975, U.S. futures markets in all commodities became regulated under the Commodity Exchange Act as amended by the Commodity Futures Trading Act of 1974. Trading by U.S. citizens on foreign futures markets, such as London silver, is not regulated.
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Regulation A
| A regulation governing the issuance of new securities.
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Regulation T (Reg T)
| A federal regulation that governs the lending of money by brokerage firms to its customers.
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Regulations (CFTC)
| The regulations adopted and enforced by the Commodity Futures Trading Commission in order to administer the Commodity Exchange Act.
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Reinvestment Opportunity
| Ability to reinvest interest and principal paid by income securities.
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Reinvestment Rate
| Rate of interest earned by reinvesting interest payments rather than consuming them as current income.
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Reinvestment Risk
| The prospect that securities will not be able to pay higher rates of interest when general interest rates rise or retain previous levels of interest when general interest rates fall.
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Renounceable Documents
| Temporary evidence of ownership, of which there are four main types. When a company offers shares to the public, it sends an Allotment Letter to the successful applicants; if it makes a rights issue, it sends a Provisional Allotment Letter to its shareholders, or in the case of a capitalization issue, a Renounceable Certificate. All of these are in effect bearer securities and are valuable. Each includes full instructions on what the holder should do if he wishes to have the newly-issued shares registered in his name or if he wishes to renounce them in favor of somebody else.
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Reparations
| Compensation payable to a wronged party in a futures or options transaction. The term is used in conjunction with the Commodity Futures Trading Commission's customer claims procedure to recover civil damages.
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Replicating Portfolio
| A portfolio of assets for which changes in value match those of a target asset. For example, a portfolio replicating a standard option can be constructed with certain amounts of the asset underlying the option and bonds. Sometimes referred to as a Synthetic Asset.
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Reportable Positions
| The number of open contracts specified by the Commodity Futures Trading Commission at which one must begin reporting total positions by delivery month to the authorized exchange and/or the CFTC.
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Reporting Level
| Sizes of positions set by the exchanges and/or the CFTC at or above which commodity traders or brokers who carry these accounts must make daily reports about the size of the position by commodity, by delivery month, and whether the position is controlled by a commercial or non-commercial trader.
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Reporting Limit, Reportable Position
| The number of futures contracts, as determined by the Commodity Futures Trading Commission, above which one must report daily to the exchange and the CFTC with regard to the size of one's position by commodity, by delivery month, and by purpose of the trading.
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Repurchase Agreement (Repo)
| An agreement used to finance certain government and money market inventory positions. The brokerage firm sells securities to the financing organization with the agreement that the firm will repurchase them in the short-term future.
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Resistance
| A term used in technical analysis indicating a specific price level at which a currency will have the inability to cross above. Recurring failure for the price to move above that point produces a pattern that can usually be shaped by a straight line.
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Resting Order
| An order to buy at a price below or to sell at a price above the prevailing market that is being held by a floor broker. Such orders may either be day orders or open orders.
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Restricted Account
| As defined by Regulation T, a margin account in which the debit balance exceeds the loan value.
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Restricted Securities
| Unregistered securities acquired in a transaction that does not involve a public offering.
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Retender
| The right of holders of futures contracts who have been tendered a delivery notice through the clearinghouse to offer the notice for sale on the open market, liquidating their obligation to take delivery under the contract; applicable only to certain commodities and only within a specified period of time.
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Retention Requirement
| The amount that must be retained in a restricted margin account if anything is to be withdrawn.
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Retracement
| A reversal within a major price trend.
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Return If Called
| The percentage gain that a covered writer would achieve if the underlying futures contract (instrument) is called away. The components of this return are: the original option premium plus any appreciation to the price. This is the maximum return achievable by a covered writer.
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Revaluation Rates
| The revaluation rates are the market rates used when a trader runs an end-of-day to establish profit and loss for the day.
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Revenue Anticipation Note (RAN)
| A short-term debt instrument that is issued by municipalities and that is to be paid off by future (anticipated) revenue.
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Revenue Bond
| A municipal bond whose issuer’s ability to pay interest and principal is based on revenue earned from a specific project.
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Reversal
| A change of direction in prices.
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Reverse Conversion
| With regard to options, a position created by buying a call option, selling a put option, and selling the underlying futures contract.
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Reverse Repurchase Agreements
| The sale of securities with the understanding that these securities will be bought back from the original seller in the future. This drains liquidity from the banking system, creating downward pressure on short rates. Also referred to as Matched Sales.
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Rich
| Slang for a security that is relatively overpriced.
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Riding the Yield Curve
| Trading in an interest rate futures according to the expectations of change in the yield curve.
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Right
| A certificate showing that the stockholder has the privilege of purchasing new securities in proportion to the number of shares he owns before the general public.
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Rights Arbitrage
| The simultaneous purchase and sale of different securities in anticipation of a merger or tender offer.
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Rights Issue
| An invitation to existing shareholders to purchase additional shares in the company
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Rights Offering
| An offering that gives each shareholder a chance to exercise his preemptive rights.
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Ring
| A circular area on the trading floor of an exchange where traders and brokers stand while executing futures trades. Some exchanges use pits rather than rings. See Pit.
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Rings
| Trading arenas located on the floor of an exchange in which traders execute orders. Sometimes called Pits.
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Risk
| The degree of likelihood that a particular investment or speculative transaction will produce a loss due to uncertain and volatile price behavior. Systematic or market risk is the kind of risk that affects virtually all commodity. Unsystematic or firm-specific risk relates specifically to the commodity in question and has little influence on the price of commodity in general.
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Risk Capital
| The amount of money that an individual can afford to invest, which, if lost would not affect their lifestyle.
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Risk Factor
| See Delta Value.
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Risk Management
| To hedge one’s risk they will employ financial analysis and trading techniques.
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Risk/Reward Analysis
| The analysis of risk being reduced and reward (or profits) being increased, thereby maximizing the Risk/Reward Ratio.
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Risk/Reward Ratio
| The relationship between the probability of loss and profit. This ratio is often used as a basis for trade selection or comparison.
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RNS (Regulatory News Service)
| A service operated by the Exchange, in its role as competent authority for listing, which ensures that price-sensitive information from listed and USM companies is collected and then disseminated to all RNS subscribers at the same time.
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Rolling Out
| Substituting an option of the same class and striking price, but with a later expiration.
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Rolling Up
| Substituting an option of the same class and expiration, but with a higher striking price (a lower striking price in the case of puts).
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Rollover
| The settlement of a deal is rolled forward to another value date with the cost of this process based on the interest rate differential of the two currencies.
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Roll-Over
| A trading procedure involving the shift of one month of a straddle into another future month while holding the other contract month. The shift can take place in either the long or short straddle month. The term also applies to lifting a near futures position and re-establishing it in a more deferred delivery month.
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Roth IRA
| An individual retirement fund. Contributions are not tax deductible, but withdrawals are tax exempt if an individual has been in the plan at least five years and is at least 59-1/2. Income limits and additional rules apply.
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Round Lot
| A quantity of a commodity equal in size to the corresponding futures contract for the commodity, as distinguished from Job Lot, which may be larger or smaller than the contract.
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Roundturn
| The combination of an initiating purchase or sale of a futures contract and the offsetting sale or purchase of an equal number of futures contracts of the same delivery month. Commission fees for commodities transactions cover the round turn.
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Rule 144
| Rule that governs the sale of control and restricted securities.
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Rules
| The principles for governing an exchange. In some exchanges, rules are adopted by a vote of the membership, while regulations can be imposed by the governing board.
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Rules (NFA)
| The standards and requirements to which participants who are required to be Members of the National Futures Association must subscribe and conform.
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Rules of Fair Practice
| Part of the NASD rules that govern the dealings of firms with the public.
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