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Trading Terms Starting With A

  • ACAT

    Automated Customer Account Transfer.
  • ACAT transfer

    the automated transfer of stocks, options and bonds from an account at one brokerage firm to another firm.
  • ACH

    Automated Clearing House. A collection of regional interbank networks through which participating financial institutions can process debit and credit transactions electronically.
  • AMEX

    formerly the American Stock Exchange, which was acquired by NYSE Euronext.
  • AON

    see All-or-none order.
  • Account balance

    the net amount of money in an account, equal to credits less debits, at any given time.
  • Accounting basis

    the accounting method used to calculate taxable income. There are primarily two, accrual basis and cash basis.
  • Accredited investor

    certain investment partnerships and funds are exempt from SEC filing requirements if they market unregistered securities or investment opportunities to qualified, knowledgeable, and financially secure "accredited investors." These individuals or organizations are deemed suitable to undertake higher risk investments without the protection provided by such filings.

    With respect to individuals an accredited investor should be:

    • a natural person who has individual net worth, or joint net worth with the person's spouse, that exceeds $1 million at the time of the purchase, or
    • or a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year
    For a more comprehensive set of requirements to be met by accredited investors see SEC Rule 501 of Regulation D.
  • Accretion

    with respect to accounting, the process of adjusting the book value of a bond purchased at a discount to its par value at maturity. Accretion is treated as interest.
  • Accrued interest

    with respect to a bond or other fixed income security, the interest accumulated but not yet paid since the last payment.
  • Acid test ratio

    a simple calculation that indicates whether a company has adequate short-term assets to cover its short-term liabilities. It is a measure of a company's current liquidity and may be calculated as:
    (current assets - inventories) / current liabilities.
  • Acquisition

    when one company buys another, generally through a stock purchase or exchange. This may be a friendly or hostile action.
  • Actively managed fund

    a mutual fund whose managers construct and adjust its portfolio based on their own judgment in order to outperform a given index or other benchmark.
  • Actual rate of return

    the return in fact seen from an investment as opposed to a return that was expected.
  • Actuals

    the physical commodities or financial instruments that underlie futures contracts. Futures trading is not currently available at TradeKing.
  • Adjusted gross income (AGI)

    an individual's gross income, less any allowable deductions, on which income tax liability is calculated.
  • After-hours trading

    buying and selling securities after the major markets are closed, generally through an electronic, over-the-counter market. This is part of TradeKing's Extra Hours Trading service.
  • Agency bond

    a bond issued by a government-sponsored agency that is backed, but not guaranteed by the government. Examples of these issuers include SLMA/Sallie Mae, FNMA/Fannie Mae, and FHLMC/Freddie Mac.
  • Aggressive growth fund

    a fund whose managers seek the highest capital gains, but are not risk-averse in their choice of investments.
  • All-or-none order (AON)

    a type of stock or option order with instructions the order be executed completely or not at all. It may be a day order or a good 'til cancelled (GTC) order.
  • Alternative minimum tax (AMT)

    a tax mechanism, part of the Federal income tax system, with its own rates and rules for deductions. It's aimed at ensuring high income individuals, corporations, trusts and estates pay at least a minimum amount of tax.
  • American Depository Receipt (ADR)

    a negotiable certificate issued by a U.S. bank and denominated in U.S. dollars that represents a certain number of shares of a foreign stock traded on a U.S. exchange. This allows an American investor to easily invest in foreign companies.
  • American-style option

    an option contract that may be exercised by its owner, and a writer assigned, at any time before its expiration date. All equity options in the U.S. are American-style.
  • Amortization

    1. the elimination of a debt, such as a mortgage, over a period of time through regular payments sufficient to cover both interest and principal.
    2. writing off the cost of certain intangible assets through a series of deductions over a specific time period.
  • Annual meeting

    a company's annual meeting of shareholders during which performance for the previous year and outlook for the future are discussed, company initiatives are voted on, and directors are elected.
  • Annual percentage rate (APR)

    1. a periodic rate or return that is annualized.
    2. the costs of a loan or mortgage that includes interest, insurance and points paid on origination, expressed as an annual percentage rate.
  • Annual percentage yield (APY)

    the rate of return earned on an investment for a period of one year, or a periodic return that is annualized.
  • Annual report

    a yearly statement issued by a publicly-held company that includes a full description of its operations, a balance sheet, statements on its income and cash flow, and its outlook for the future. The SEC requires such a statement be distributed to all shareholders.
  • Annuity

    a contract sold by an insurance company that provides an income to the policy holder, generally after retirement, in the form of periodic payments.
  • Anti-cyclical stock

    shares issued by a company whose sales show the pattern of improving during downturns in the economy, and slowing during a stronger economy
  • Arbitrage

    taking opposite positions in the same or identical financial instruments in different markets, or in different forms, with the intent of eliminating or significantly reducing risk while producing a profit.
  • Arbitration

    resolution of a disagreement by a panel of impartial individuals called arbitrators. This process takes place outside the court system to avoid the costs and time involved with litigation.
  • Ask / Ask price

    the lowest price in a particular market at which a stock or option is offered for sale.
  • Asset

    anything owned that has cash value, or value as an exchange
  • Asset allocation

    a proportionate distribution of investment capital among categories of assets such as equities, fixed income instruments, cash or cash equivalents, or real estate.
  • Asset-backed financing

    a secured loan that is collateralized by a specific asset or group of assets.
  • Asset-backed security (ABS)

    a financial security that is secured by short-term collateral such as account receivables, loans, or installment contracts on personal property (not including mortgages).
  • Assignment

    the receipt of an exercise notice by an option writer that obligates him/her to fulfill the terms of the contract. For an equity option, the writer must sell (for a call) or buy (for a put) 100 shares of underlying stock at the strike price per contract. For a cash-settled index option the writer must deliver a cash amount based on the option's intrinsic value.
  • At-the-market

    usually referring to an order to buy or sell a security with a price equal to the current bid or ask quotation.
  • At-the-money

    a call or put option is at-the-money when its strike price is the same as or near the current underlying stock price (for an equity option) or index value (for an index option).
  • Automatic exercise

    a procedure literally termed "exercise by exception" in which The Options Clearing Corporation ( OCC) will automatically exercise expiring equity and index options in-the-money by $0.01 or more, unless issued instructions not to do so.
  • Average daily volume

    the average number of shares traded per day over a period of time, usually one year. This average may reflect trading in a particular stock or in an entire marketplace.
  • Averaging down

    adding to a stock position by purchasing additional shares as its price drops. This lowers the average price of the accumulated shares, as well as the position's upside break-even point. This increases risk as more capital is added to the position with each additional purchase.
  • Away from the market

    with respect to limit orders for stocks or options, a buy order that is lower than, or a sell order that is higher than, the current market price.