Sales Charge
| The amount added to the net asset value of a mutual fund to determine the offering price.
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Sallie Mae
| Nickname for the Student Loan Marketing Association and the securities it issues.
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Same-Day Substitution
| The buying of one security and the selling of another security, usually of equal value, on the same day.
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Sample Grade
| In commodities, usually the lowest quality acceptable for delivery in satisfaction of futures contracts. See Contract Grades.
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Sampling
| A method of evaluating the price performance of an individual group of stocks compared with the movement of the total stock market. This method involves choosing stocks whose aggregate movement reflects as closely as possible the movement of all stocks.
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Scale Down (or Up)
| To purchase or sell a scale down means to buy or sell at regular price intervals in a declining market. To buy or sell on scale up means to buy or sell at regular price intervals as the market advances.
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Scalper
| A trader who trades for small, short-term profits during the course of a trading session, rarely carrying a position overnight.
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Scalping
| The practice of trading in and out of the market on very small price fluctuations. A person who engages in this practice is known as a scalper.
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Secondary Market
| The market in which securities are traded after the initial (or primary) offering. Gauged by the number of issues traded. The over-the-counter market is the largest secondary market.
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Securities
| General name for all stocks and shares of all types. In common usage, stocks are fixed interest securities and shares are the rest, though strictly speaking, the distinction is that stocks are denominated in money terms.
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Securities and Exchange Commission (SEC)
| The federal agency responsible for the enforcement of laws governing the securities industry.
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Securities Industry Automated Corporation (SIAC)
| The computer facility and trade processing company for NYSE, AMEX, NSCC, and PCC.
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Securities Investor Protection Corporation (SIPC)
| Non-profit organization consisting of members of the securities industry who support it on an assessment basis. If a member should fail, that member’s customers are protected up to a maximum of $500,000, including up to $100,000 in cash.
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Security
| Common or preferred stock; a bond, of a corporation, government or quasi government body.
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Security Deposit
| See Margin.
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Segregated Account
| A special account used to hold and separate customers' assets from those of the broker or firm.
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Segregation
| The isolation of securities that the firm may not use for hypothecation or loan. The securities, which must be "locked up" by the firm, represent fully paid-for securities or the portion of a margin account in excess of loanable securities.
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Sell/Write
| An advanced option order that combines the short selling of an equity and the selling of a put option on the same underlying stock.
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Seller
| Also known as the option writer or grantor. The seller of an option is subject to a potential obligation if the buyer chooses to exercise the option.
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Seller's Call
| See Call.
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Seller's Market
| A condition of the market in which there is a scarcity of goods available and hence sellers can obtain better conditions of sale or higher prices. Also see Buyer's Market.
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Seller's Option
| The right of a seller to select, within the limits prescribed by a contract, the quality of the commodity delivered and the time and place of delivery.
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Selling Hedge (or Short Hedge)
| Selling futures contracts to protect against possible decreased prices of commodities which will be sold in the future. See also Hedging.
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Sell-Out
| Occurs when a contract brokerage firm's client incurs a margin or maintenance call and does not settle the balance by settlement date. The firm then sells the securities at the best price available and the buyer is held liable for the price and costs.
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Serial Bonds
| An issue of bonds that matures over a period of years.
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Serial Maturity
| Type of bond maturity in which part of the issue matures at different times until the whole issue has matured.
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Series
| Refers to options with the same underlying security, same expiration date, same exercise price and the same type.
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Settled Inventory
| The portion of a trader's position that the firm has paid for and maintains. This is the portion that must be financed.
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Settlement
| The act of fulfilling the delivery requirements of the futures contract.
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Settlement Date
| Date in which ownership and funds are transferred between buyer and seller for a securities transaction.
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Settlement Date Inventory
| The total of all positions in a security on settlement date, including fault, transfer, fails and elsewhere.
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Settlement or Settling Price
| The daily price at which the clearing house clears all trades and settles all accounts between clearing members of each contract month. Settlement prices are used to determine both margin calls and invoice prices for deliveries. The term also refers to a price established by the exchange to even up positions which may not be able to be liquidated in regular trading.
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Settlement Price
| The price established by a clearinghouse at the close of each trading session as the official price to be used in determining net gains or losses, margin requirements, and the next day's price limits. The term "settlement price" is often used as an approximate equivalent to the term "closing price". The "close" in futures trading refers to a very brief period of time at the end of the trading day, during which transactions frequently take place quickly and at a range of prices immediately before the bell. Therefore, there frequently is no one closing price, but a range of closing prices. The settlement price is the closing price if there is only one closing price. When there is a closing range, it is as near to the midpoint of the closing range as possible, consistent with the contract's price increments. Thus, the settlement price can be used to provide a single reference point for analysis of closing market conditions.
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SFA (The Securities and Futures Authority, previou
| The Self-Regulating Organization responsible for regulating the conduct of brokers and dealers in securities, options and futures, including most member firms of the Exchange.
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Sharpe Ratio
| A measurement of trading performance calculated as the average return divided by the variance of those returns; named after William P. Sharpe.
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Shipping Certificate
| A negotiable instrument used by several futures exchanges as the futures delivery instrument for several commodities (e.g., soybean meal, plywood, and white wheat). The shipping certificate is issued by exchange-approved facilities and represents a commitment by the facility to deliver the commodity to the holder of the certificate under the terms specified therein. Unlike an issuer of a warehouse receipt who has physical product in store, the issuer of a shipping certificate may honor its obligation from current production or through-put as well as from inventories.
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Shock Absorber
| A temporary restriction in the trading of stock index futures which becomes effective following a significant intraday decrease in stock index futures prices. Designed to provide an adjustment period to digest new market information, the restriction bars trading below a specified price level. Shock Absorbers are generally market specific and at tighter levels than circuit breakers.
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Short
| (1) The selling side of an open futures contract; (2) a trader whose net position in the futures market shows an excess of open sales over open purchases. See Long.
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Short Account
| Account in which the customer has sold short securities. Before a customer may sell short, a margin account must be opened.
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Short Covering
| See Cover.
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Short Exempt
| A phrase used to describe a short sale that is exempt from the short sale rules. For example, buying a convertible preferred, submitting conversion instructions, and selling the common stock before the stock is received.
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Short Hedge
| Selling futures contracts to protect against possible declining prices of commodities. See also Hedging.
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Short Position
| An investment position that results from short selling. Benefits from a decline in market price because the position has not been covered yet.
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Short Sale
| The sale of securities that are not owned or that are not intended for delivery. The short seller "borrows" the stock to make delivery with the intent to buy it back at a later date at a lower price.
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Short Selling
| Selling a futures contract with the idea of delivering on it or offsetting it at a later date.
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Short Squeeze
| See Squeeze.
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Short the Basis
| The purchase of futures as a hedge against a commitment to sell in the cash or spot markets. See Hedging.
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Short-Life Option
| An option contract having from several weeks to a few months until expiration.
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Short-Term Bonds
| Those maturing within five years.
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Size
| The number of shares available in a quote. For example, if the quote and size on a stock is 9-3/8 to 9-1/2 3x5, it means that the bid is 9-3/8, the offer is 9-1/2, 300 shares are bid, and 500 shares are offered.
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Small Traders
| Traders who hold or control positions in futures or options that are below the reporting level specified by the exchange or the CFTC.
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Soft
| A description of a price which is gradually weakening. Also refers to commodities such as sugar, cocoa, and coffee.
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Soften
| The process of a slowly declining market price.
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Sold-Out-Market
| When liquidation of a weakly-held position has been completed, and offerings become scarce, the market is said to be sold out.
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Specialist
| A member of certain SEC-regulated exchanges who must make a market in assigned securities. Specialists also act as two-dollar brokers in executing orders entrusted to them.
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Specialist System
| A type of trading commonly used for the exchange trading of securities in which one individual or firm acts as a market-maker in a particular security, with the obligation to see that trading in that security is fair and orderly by offsetting temporary imbalances in supply and demand by trading for his own account. Also see Board Broker System and Free Crowd System.
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Speculative Bubble
| A rapid, but usually short-lived, run-up in prices caused by excessive buying which is unrelated to any of the basic, underlying factors affecting the supply or demand for the commodity. Speculative bubbles are usually associated with a "bandwagon" effect in which speculators rush to buy the commodity (in the case of futures, "to take positions") before the price trend ends, and an even greater rush to sell the commodity (unwind positions) when prices reverse.
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Speculative Limit
| See Position Limit.
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Speculative Position Limit
| See Position Limit.
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Speculator
| In commodity futures, an individual who does not hedge, but who trades with the objective of achieving profits through the successful anticipation of price movements.
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Spin Off
| Giving stock dividend in another CUSIP, usually a subsidiary.
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Split Close
| Term which refers to price differences in transactions at the close of any market session.
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Split Fund
| A mutual fund or unit trust that contains Treasury securities and other types of investments.
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Spot
| Refers to the characteristic of being available for immediate (or nearly immediate) delivery. An outgrowth of the phrase "on the spot" it usually refers to a cash market price for stocks of the physical commodity that are available for immediate delivery. "Spot" is also sometimes used in reference to the futures contract of the current month, in which case trading is still "futures" trading but delivery is possible at any time.
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Spot Commodity
| (1) The actual commodity as distinguished from a futures contract
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Spot Month
| See Current Delivery Month.
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Spot Price
| The price at which a physical commodity for immediate delivery is selling at a given time and place. See Cash Price.
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Spread
| The difference between the bid and offer (ask) prices; used to measure market liquidity. Narrower spreads usually signify high liquidity.
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Spread (or Straddle)
| The purchase of one futures delivery month against the sale of another futures delivery month of the same commodity; the purchase of one delivery month of one commodity against the sale of that same delivery month of a different commodity; or the purchase of one commodity in one market against the sale of the commodity in another market, to take advantage of a profit from a change in price relationships. See also Arbitrage, Switch. The term spread is also used to refer to the difference between the price of a futures month and the price of another month of the same commodity. A spread can also apply to options.
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Spread Order
| An advanced option order that combines the purchase and sale of two puts or two calls on the same underlying security.
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Spreading
| The purchase of one futures contract and sale of another, in the expectation that the price relationships between the two will change so that a subsequent offsetting sale and purchase will yield a net profit. Examples include the purchase of one delivery month and the sale of another in the same commodity on the same exchange, or the purchase and sale of the same delivery month in the same commodity on different exchanges, or the purchase of one commodity and the sale of another (wheat vs. corn or corn vs. hogs), or the purchase of one commodity and the sale of products of that commodity (soybeans vs. soybean oil and soybean meal).
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Squeeze
| A market situation in which the lack of supplies tends to force shorts to cover their positions by offset at higher prices.
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SRO (Self-Regulating Organization)
| An organization recognized by the SIB and responsible for monitoring the conduct of business by, and capital adequacy of, investment firms.
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Standby Commitment
| A put option in Ginnie Mae trading which gives the holder the right, but not the obligation, to make delivery.
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Sterling
| Another term for the Great British Pound.
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Stock
| A security that represents ownership in a corporation and that is issued in "shares".
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Stock Ahead
| Refers to a limit order that has not been executed because of other orders at the same limit that were entered earlier.
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Stock Dividends
| A dividend paid by corporations from retained earnings in the form of stock. The corporation declares the dividend as a percentage of shares outstanding.
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Stock Power
| A form that may be endorsed in lieu of endorsing the back of the stock certificate.
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Stock Record
| A ledger on which all security movements and positions are recorded. The record is usually in two formats: One shows movements of the security the previous day and the other shows the current security positions.
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Stock Splits
| The exchange of existing shares of stock for more newly issued shares from the same corporation. Since the number of shares outstanding increase, the price per share goes down. Splits do not increase or decrease the capitalization of the company, just redistributes it over more shares. The effect is the adjustment to the trading price.
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Stockholder’s Equity
| Company’s net worth. Total liabilities are subtracted from the total assets to arrive at this figure.
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Stop Limit Order
| This order is similar to a stop order, but it becomes a limit order instead of a market order when the price is reached or passed. Buy stop limit orders are entered above the current market; sell stops are extended below it.
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Stop Order
| This is an order that becomes a market order when a particular price level is reached. A sell stop is placed below the market, a buy stop is placed above the market. Sometimes referred to as Stop Loss Order.
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Stop-Close-Only Order
| A stop order which can only be executed, if possible, during the closing period of the market. See also Market-on-Close Order.
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Straddle
| The purchase or sale of an equivalent number of puts and calls on a given underlying instrument with the same exercise price and expiration date. The straddle purchaser seeks to profit from relatively large movements in the price of the underlying instrument, regardless of direction.
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Strangle
| The purchase or sale of an equivalent number of puts and calls on a given underlying instrument, with the same expiration date but different exercise prices. The strangle purchaser seeks to profit from large movements in price of the underlying instrument, regardless of direction.
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Street Book
| A daily record kept by futures commission merchants and clearing members showing details of each futures transaction, including date, price, quantity, market, commodity, future, and the person for whom the trade was made.
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Street Name
| A form of registration in which securities are registered in the name of a brokerage firm, bank, or depository; it is acceptable as good delivery.
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Striking Price (Exercise or Contract Price)
| (1) The price at which Ginnie Mae securities can be sold on a standby commitment. (2) The price at which the holder of a call (put) option may choose to exercise his right to purchase (sell) the underlying futures contract.
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STRIPS
| Separate Trading of Registered Interest and Principal Securities. A book-entry system operated by the Federal Reserve permitting separate trading and ownership of the principal and coupon portions of selected Treasury securities. It allows the creation of zero coupon Treasury securities from designated whole bonds.
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Strong Hands
| When used in connection with delivery of commodities on futures contracts, the term usually means that the party receiving the delivery notice probably will take delivery and retain ownership of the commodity; when used in connection with futures positions, the term usually means positions held by trade interests or well-financed speculators.
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Subject Quote
| A quote given to indicate the current market status but is not to be taken as a firm ask or bid.
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Subordinated Debenture
| A debenture whose claim to interest and principal of the corporation comes after those of regular debentures and other debt securities.
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Subscription Right
| A stockholder's right to maintain his proportionate ownership in the company by being given the opportunity to buy newly issued stock before the general public.
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Supplemental Contract
| A contract issued by the clearing corporation that includes the total of the regular way contract, adjustments made through advisories, and adds by seller processing.
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Support
| In technical analysis, a price area where new buying is likely to come in and stem any decline. Also see Resistance.
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Support Levels
| A term used in technical analysis indicating a specific price level at which a currency will have the inability to cross below. Recurring failure for the price to move below that point produces a pattern that can usually be shaped by a straight line.
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Swap
| In general, the exchange of one asset or liability for a similar asset or liability for the purpose of lengthening or shortening maturities, or raising or lowering coupon rates, to maximize revenue or minimize financing costs. In securities, this may entail selling one issue and buying another in foreign currency, it may entail buying a currency on the spot market and simultaneously selling it forward. Swaps may also involve exchanging income flows; for example, exchanging the fixed rate coupon stream of a bond for a variable rate payment stream, or vice versa, while not swapping the principal component of the bond.
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Swaps
| A swap occurs when one currency is temporarily exchanged for another, then the currency is held and exchanged later after a fixed period of time. To calculate the swap take the interest rate differential between the two underlying currencies, thus it may be used for speculative purposes to exploit anticipated movement in the interest rates.
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Swaption
| An option to enter into a swap -- i.e., the right, but not the obligation, to enter into a specified type of swap at a specified future date.
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Switch
| Liquidation of a position in one delivery month of a commodity and simultaneous initiation of a similar position in another delivery month of the same commodity. When used by hedgers, this tactic is referred to as Rolling Forward the hedge.
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Synthetic Futures
| A position created by combining call and put options. A synthetic long futures position is created by combining a long call option and a short put option for the same expiration date and the same strike price. A synthetic short futures is created by combining a long put and a short call with the same expiration date and the same strike price.
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Systemic Risk
| Market risk due to price fluctuations which cannot be eliminated by diversification.
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