Traders Glossary

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

Chicago Mercantile Exchange (CME)

An exchange in which many types of futures contracts are traded in an open outcry system.

Class of options

Options of the same type, style and underlying security.

Clearing House

A separate institution to establish timely payment and delivery of securities.

Close

The last price quoted for the day.

Closing Purchase

A transaction which closes an open short position.

Closing Sale

A transaction which closes an open long position.

Collar

A low risk bullish strategy involving buying a stock, buying near the money puts and selling out of the money calls.

Commission

A charge made by the broker for arranging the transaction.

Commodity

A tangible good that is traded on an exchange. Eg oil, grains, metals.

Commodity Futures Trading Commission (CFTC)

An institution charged with ensuring the efficient operation of the futures markets.

Condor

See Condors

Consumer Price Index (CPI)

An index measuring the change in prices of consumer prices. An important inflation indicator.

Contract

A unit of trading for an option or future.

Correction

A post rise decline in a stock price or market.

Covered Call

A bullish strategy involving buying or owning a stock and selling near term ATM or OTM calls to generate regular income. See "Buy-Write".

Covered Put

A bearish strategy involving shorting stock and shorting a near term put option to create regular income. Considered a high risk strategy.

Covered Short Straddle

A bullish strategy involving buying (or owning a stock), selling near term puts and calls at the same strike price and expiration date. This is a risky strategy, involving almost certain exercise of the put or call and a significant downside risk if the stock price falls.

Covered Short Strangle

A bullish strategy involving buying (or owning a stock), selling near term OTM puts and OTM calls at the same expiration date. This is a risky strategy, involving significant downside risk if the stock price falls.

Credit Spread

Where the simultaneous buying and selling of options creates a net credit into your account (ie you receive more for the ones you sell than those you buy).

Day Order

An order good for the day only.