Traders Glossary

Explore, learn, and discover all trading-related terms here in our comprehensive glossary.

Short Strangle

A low volatility direction neutral trade that involves simultaneously selling a call and put at different strike prices (the put strike being lower than the call strike – ie both OTM) and with the same expiration date. Requires the underlying asset to be rangebound in order to make the trade profitable.

Short Synthetic Future

Selling calls and buying the same amount of puts with the same strike and expiration date, effectively forming the same risk profile of shorting a stock but with no net credit.

Sigma

Sigma is generally a term used to represent volatility. It is generally represented as a percentage. The term "one sigma level" refers to the actual change in the underlying asset price.

Small-cap Stocks

Smaller (and sometimes newer) companies which are associated with high risk and high potential rewards. Can be illiquid to trade with large bid-ask spreads.

Speculator

A trader who aims to make profit by correctly assessing the direction of price movement of the security. Generally distinguished from investors in that speculators are associated with short term directional trading.

Spread

The difference between the bid and ask of a traded security.A trading strategy which involves more than one leg to create a (hedged) position.A price spread is the difference between the high and the low of a price bar.

Standard & Poor's (S&P)

A company that rates stocks and bonds and produces and tracks the S&P indices.

Stochastic

A technical indicator, which is an oscillator based on the relationship of the open, high, low, close of price bars.

Stock

A share of a company's stock is a unit of ownership in that company.

Stock Exchange or Stock Market

An organised market where buyers and sellers are brought together to trade stocks.

Stock Split

Where a company increases the amount of outstanding stock, thus increasing the number of shares, reducing the value per share. Generally a sign that the stock has been rising and management's way of assisting the liquidity in the stock.

Stop Orders

Buy Stops: where the order price is specified above the current value of the security. Sell Stops: where the order price is specified below the current value of the security.

Straddle

A neutral trade that involves simultaneously buying a call and put at the same Strike price and with the same Expiration date. Requires the underlying asset to move in an explosive nature (in either direction) in order to make the trade profitable.

Strangle

A neutral trade that involves simultaneously buying a call and put at different Strike prices (the Put Strike being lower than the Call Strike – ie both OTM) and with the same Expiration date. Requires the underlying asset to move in an explosive nature (in either direction) in order to make the trade profitable.

Strap

A neutral to bullish trade that involves simultaneously buying two calls and a put with the same strike price and expiration date. Requires the underlying asset to move in an explosive nature (preferably upwards) in order to make the trade profitable.

Strike Price (Exercise Price)

The price at which an asset can be bought or sold by the buyer of a call or put option.

Strip

A neutral to bearish trade that involves simultaneously buying two puts and a call with the same strike price and expiration date. Requires the underlying asset to move in an explosive nature (preferably downwards) in order to make the trade profitable.

Support

A price threshold on a price chart which is thought to be difficult for the price to fall down through because of past price movements.

Synthetic Call

Buying a share and a put, or going long a future and a put, replicating the risk profile shape of a Long Call.

Synthetic Long Stock

Buying a call and shorting a put.