A call option is a derivative contract that gives the holder the right, but not the obligation, to buy an underlying security at a specified price on or before a specified date. What is a Call Option There are a wide variety of uses for the purchase and sale of call options in contemporary […]
A put option is a derivative contract that gives the holder the right, but not the obligation, to sell an underlying security at a specified price on or before a specified date. What is a Put Option There are a wide variety of uses for the purchase and sale of puts in contemporary trading. […]
A long position is a trading term that defines the purchase of a security for example stock or option by a trader or investor with the goal of earning profits thanks to the security’s rise in value. Also referred to as long trading, it pertains to the act of an investor buying a position long. […]
Price averaging is the act of extending an existing position in a stock by buying or shorting additional shares at a different price than the current entry price of the position, which alters the average price of the position as a whole. For example, suppose that an investor buys 1 share of company A at […]
Buy to cover is an order type made against a stock with the purpose of closing an existing short position. Traders are required to place the buy order with a broker so as to fulfill the requirements of a margin call or to close a position for a profit. Short selling is the process of […]
Pink sheets refer to a daily list of bid/ask quotations for over-the-counter (OTC) stocks compiled by the National Quotation Bureau. Companies that trade on the pink sheets do not need to meet the stringent requirements for trading on a stock exchange, and the trading of pink sheet stocks is much more lightly regulated than trading […]
The Russell 2000 refers to an index that measures the performance of approx. 2000 small cap companies. As a small cap stock market index, it is maintained by the FTSE which is a subsidiary of the London Stock Exchange Group. It is one of the most common benchmark for mutual funds and the most quoted […]
Price action is a broad term meant to indicate any movement, or lack thereof, in the price of a stock that is the product of some technical or fundamental factor, or both, as opposed to merely the product of randomness or ‘noise’. The concept of price action is extremely important to all traders, as everyone […]
A bar chart is a graph characterized by a vertical bar and it’s used by technical analysts to learn more about trends. In trading, a single bar is used to represent a single day of trading. As one of the most popular chart type aside from candlesticks, it represents price activity within a given period […]
Net asset value, or NAV, is the present value of a share of a mutual fund or exchange traded fund (ETF). The net asset value is calculated by taking the total value of all assets that make up the mutual fund or exchange traded fund, deducting the total value of all liabilities, and then dividing […]
