Traders Glossary

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

Day Trade

The acquisition and disposal of an asset in the same day.

Day Trading

A trading style where positions are closed by the end of every day.

Debit Spread

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

Deep In the Money (DITM) Calls

Where the price of the underlying security is far greater than the Call Strike Price.

Deep In the Money (DITM) Puts

Where the price of the underlying security is far less than the Put Strike Price.

Delayed time quotes

Quotes which are delayed from real time.

Delta

The amount by which an option premium moves divided by the dollar for dollar movement in the underlying asset.

Delta Hedge

A strategy designed to protect the investor against directional price changes in the underlying asset by engineering the overall position delta to zero.

Delta Neutral

Where a spread position is engineered so that the overall position delta is zero.

Derivative

A financial instrument whose value is "derived" in some way from the value of an underlying asset source.

Diagonal Spread

2-legged option trade involving buying a long term option and selling a shorter term option with a higher strike price. A Calendar Spread must involve either all call or all put legs, you cannot mix calls and puts together for this strategy.

Discount Brokers

Low commission brokers who simply place orders, and do not provide advisory services.

Divergence

Where 2 or more indicators move in different directions indicating different outcomes.

Dividend

A payment made by an organization to its owners (shareholders), hopefully from profits.

Dow Jones Industrial Average (DJIA)

An index of 30 blue chip stocks traded on the New York Stock Exchange (NYSE). This index is often considered a bellwether of overall market sentiment.

Downside Risk

The potential risk of a trade if prices decline.

End of Day

The close of the trading day when prices settle.

EPS

Earnings per share. The amount of profits of an organization divided by the number of outstanding shares.

Equity Options

Same as Stock Options

European Style Option

An option which cannot be exercised before the expiration date.