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Trading Terms Starting With E

  • E-mini

    an electronically traded futures contract which represents a fraction of the value of the traditionally known (or "big") futures contract. There are several e-mini contracts available, including the e-mini S&P 500 futures contract (ticker symbol ES). This contract has a notional value of $50 times the S&P 500 index value. In comparison, the notional value of the "big" S&P 500 futures contract is $250. Futures trading is not currently available at TradeKing.

    the SEC's Electronic Data Gathering, Analysis, and Retrieval system. It performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the SEC.

    the Employee Retirement Income Security Act (1974), a federal law that establishes legal guidelines for the administration, investment practices and federal income tax effects of transactions associated with pension plans in private industry.
  • EU

    the European Union, an economic and political union of a number of member states.
  • Early exercise (assignment)

    the exercise (or assignment) of an option contract before its expiration. This is a feature of American-style equity options which may be exercised (or assigned) at any time before they expire.
  • Early withdrawal penalty

    a penalty paid by the holder of a fixed-term investment who withdraws funds before a specified maturity date. A certificate of deposit (CD) is such an investment.
  • Earnings

    a company's net income, or profit, over a given period of time. Calculated as revenues less sales costs and operating expenses, earnings reflect a company's potential for growth, capital appreciation and improved return on shareholder investment. Periodic earnings are reported on a regular basis, usually quarterly, and are summarized in detail in a company's annual report. With respect to a stock's market price, earnings are generally the key factor.
  • Earnings before interest and taxes (EBIT)

    a commonly used measure of the earning power of a company from ongoing operations, e.g., its profitability. It is calculated as revenues less expenses excluding interest and taxes owed, and sometimes referred to as operating earnings.same as above
  • Earnings before interest, taxes, depreciation and amortization (EBITDA)

    a commonly used measure of a company's efficiency and profitability. It is calculated as revenues less expenses excluding interest, tax, depreciation and amortization, and is sometimes referred to as operational cash flow.
  • Earnings estimate

    the expected quarterly or annual earnings of a given company as estimated by analysts or the company itself. These estimates are publically available, , and watched closely by investors because of their importance in assessing a company's current and future financial health.
  • Earnings growth

    a measurement of growth in a company's net income. Often expressed as actual earnings per share (EPS) and compared to results from the same period in the previous year. Projections for future earnings growth expressed on a per share basis are made by both analysts and the company itself.
  • Earnings per share (EPS)

    a measurement of a company's earnings expressed on a per share basis, it's calculated as: net income divided by the total number of shares outstanding for the same period, or a weighted average if the number of shares has changed.
  • Earnings surprise

    investors and traders have expectations for a company's earnings set by analysts' estimations that are accessible through a variety of public sources. It is not unusual, however, for the marketplace to be surprised by publically announced earnings that are higher or lower than expected, and to react with a significant and abrupt change in share price, up or down.
  • Easy monetary policy / easy money policy

    a term used to generalize a central bank's policy for stimulating real economic activity and growth by lowering short term interest rates and increasing the money supply, resulting in easier access to credit. Also termed Loose credit or Accommodative monetary policy. Opposite of Tight monetary policy.
  • Economic cycle

    long term patterns of alternating periods, or stages, of economic expansion (growth) and contraction that affects all aspects of economic health, including gross domestic product (GDP), employment, consumer spending and financial markets. Stock price trends are influenced by alternating periods of expansion and contraction in different ways. Prices in some industrial sectors tend to precede or predict a change in the cycle, while others tend to lag behind. Also, some industry sectors that perform better during one period of the cycle will underperform in another. Also termed Business cycle.
  • Economic growth

    a positive change in a country's capacity to produce goods and services. In the U.S. this is reflected by an increase in the country's gross domestic product (GDP). Among the stimulants of economic growth are a general increase in capital, technological advances, education and improvement in the level of literacy. Real growth refers to growth adjusted for inflation; if inflation is not excluded it is referred to as nominal growth. Economic growth can be positive or negative, with negative growth referred to as a shrinking economy. Relative levels of negative growth are associated with recessions and depressions.
  • Economic growth rate

    the percentage rate of change in the country's GDP from one period to another, usually expressed as an annual change. Growth rate can be positive or negative, with two consecutive quarters of rising growth indicating an expanding economy, and with two consecutive quarters of declining growth indicating a recession.
  • Economic indicator

    statistical data that indicates general conditions or trends in the economy. The more widely reported indicators and data generated by the U.S. government include: National Unemployment Rate, Consumer Price Index (CPI), Producer Price Index (PPI), Gross Domestic Product (GDP), housing starts and bankruptcies. Indexes with predictive value are called leading indicators; those reflecting current economic activity are called coincident indicators; those that change after the economy does are called lagging indicators. Also termed Business indicators.
  • Economy of scale

    reduction in lower average cost per unit through increased production, realized through operational efficiencies. This is one benefit many businesses expect to see from expansion.
  • Electronic Communication Network (ECN)

    an electronic system that brings institutional and individual buyers and sellers to trade. The networks internally match buy and sell orders, and/or represent the highest bid prices and lowest ask prices available in the system. Benefits of trading through an ECN may include after-hours trading, lower costs and anonymity (often important for block trades).
  • Electronic exchange

    an exchange environment that is totally electronic and without the traditional physical exchange trading floor. All trading activity, from order placement, organization of orders, transactions, reports and dissemination of bid/ask prices and size, is conducted electronically. In some respects it may be considered a virtual exchange.
  • Embargo

    a government-ordered suspension of the import and/or export of some or all goods and services to or from a certain nation for political, military, health or other reasons.
  • Embedded option

    an option that is an inseparable part of another security, such as a convertible bond, convertible preferred stock, and other specialized securities. This option is not only for the right to convert, or buy its underlying, it may also represent the right to "put," or sell. For instance: a "callable" bond is one the issuer has the right to buy back, or redeem, on demand before its maturity; a "puttable" bond may be sold, or early redemption demanded, by the bondholder before maturity; a share of convertible preferred stock may be converted, or exercised, into long underlying shares.
  • Embezzle

    the fraudulent appropriation of another's asset by a person in a position of trust, as an employee.
  • Emerging markets

    the financial markets of developing countries in the process of growth, industrialization, and/or building a market-based economy.
  • Employee contribution

    an individual employee's contribution to his or her own retirement plan, as opposed to the employer making a contribution in behalf of the employee. The contribution is often tax-deferred. See also [#,override="Defined Contribution Plan"].
  • Employee stock option (ESO)

    an option that is generally issued by an employer corporation to its employees as a form of non-cash compensation. This option contract is not listed or traded on any exchange, but is instead strictly an agreement between employer and employee. An ESO is essentially a call option in that it gives the employee who owns it the right, but not the obligation, to exercise and buy shares of the employer's stock at the strike price given certain restrictions. Upon exercise, the employee buys stock directly from the employer; there is no clearing entity and no one is assigned as with exchange-listed options. Also termed Stock option or Incentive stock option.
  • Encumbered

    an asset owned by one party but subject to another party's valid claim, e.g., a home that is mortgaged or has a lien against it is an encumbered asset.
  • Endowment

    a gift of money or property to an institution (e.g., university, museum hospital) to be used for a specified purpose.
  • Equity option

    a contract that gives its owner the right, but not the obligation, to either buy (call) or sell (put) 100 shares of a specific (underlying) stock or exchange-traded fund (ETF), at the strike (exercise) price, upon the contract's exercise. Equity options are American-style, and so may be exercised at any time before they expire. Their value is based on the value of the underlying stock or ETF.
  • Equivalent taxable yield

    the yield an investor would need to see on any taxable investment that would give the same yield as a tax-exempt investment. It may be calculated as: tax-exempt interest rate Ö (100 Ð investor's tax rate).
  • Estate planning

    preparing a plan for the administration and disposition of one's assets before or after death. This includes writing a will, setting up trusts, signing powers of attorney and giving property to heirs before death if it reduces estate taxes.
  • Estate tax

    a tax on the transfer of assets (sometimes including insurance proceeds) from a deceased to his or her heirs and beneficiaries. Also termed Inheritance tax.
  • Euro

    the European Currency Unit, the official currency in a number of the European Union's (EU) member states.
  • Eurobond

    a corporate or government bond that is: issued and traded outside the country whose currency it is denominated in; outside the jurisdiction of any single country; usually underwritten by an international syndicate; often a bearer bond. Also termed Global bond.
  • Eurodollar

    deposits denominated in U.S. dollars (not in euros) held in any non-U.S. bank account (not just European).
  • European-style option

    a call or put contract that may be exercised, and therefore assigned, only at its expiration. This is a feature of the majority of cash-settled index options.
  • Even (money)

    with an option strategy involving multiple parts (legs), an even money transaction results when the total cash amount received is the same as the total cash amount paid. There is no change to the cash balance of an account.
  • Excess accumulation

    that portion of the required minimum distribution an IRA holder failed to make from his or her IRA within a specified timeframe, on which a penalty tax is applied.
  • Excess contribution

    that portion of a contribution an IRA holder makes to his or her IRA that exceeds the allowable limit, on which a penalty tax is applied.
  • Excess distribution

    that portion of a distribution an IRA holder makes from his or her IRA that exceeds the limit, on which a penalty tax is applied.
  • Exchange seat

    membership of a particular exchange that is required for transacting business on that exchange.
  • Exchange traded fund (ETF)

    a security that represents shares of ownership in a fund or investment trust that holds a basket (collection) of specific component stocks. ETF shares are listed and trade on securities exchanges just like stock, and so may be bought and sold throughout the trading day.
  • Ex-dividend date / ex-date

    when a corporation declares a dividend, it will simultaneously declare a "record date" on which an investor must be recorded into the company's books as a shareholder to receive that dividend. Also included in the declaration is the "payable date," which comes after the record date, and is the actual date dividend payments are made. Once these dates are established, the exchanges will then set the "ex-dividend" date ("ex-date") for two business days prior to the record date. Assuming regular-way settlement, if you buy stock or exercise a call option no later than the day before the ex-dividend date you will be eligible to receive the upcoming dividend payment; if you buy stock or exercise a call option on the ex-date or afterwards, you will not receive the dividend. If you short the stock or exercise a put option the day before the ex-date, you will owe the dividend. If you are assigned on the short call of a call spread the day after the ex-date, you will owe the dividend.
  • Execution

    to complete, or to fill, an order to buy or sell a security on an exchange.
  • Executor

    a person or institution (e.g., bank) named in a will and appointed by a court to administer and carry out the terms of the estate.
  • Exempt security

    a security that is exempted from most provisions of the securities laws, including the margin rules. Such securities include: private offerings to a limited number of persons or institutions; offerings of limited size; intrastate offerings; and securities of municipal, state, and federal governments.
  • Exercise

    to employ the rights an equity option contract conveys to its owner to either buy (in the case of a call) or sell (in the case of a put) 100 underlying shares at the strike price, at any time before the contract expires.
  • Exercise price

    a term of any equity option contract, it is the price per share at which shares of stock will change hands after an option is exercised or assigned. Also termed Strike price, Striking price or strike.
  • Exercise Style

    with respect to exchange listed options, a term of the contract that determines when the option may be exercised. An option is either American-style (may be exercised at any time before expiration) or European-style (may be exercised only at or very near expiration).
  • Exit strategy (options)

    an investor's plan with respect to when and how an option position will be closed under a variety of scenarios. These might include: when to realize a profit or cut a loss; whether to exercise an expiring long equity option or to sell it in the marketplace; whether to accept assignment on a short equity option at expiration or to close the position beforehand; whether or not to exercise an equity call early to receive a dividend. There are numerous other scenarios and strategies for exiting which an investor should discuss with his or her broker, financial planner and/or tax advisor.
  • Exotic option

    a non-standardized option contract, generally more complex than a simple call or put, that trades over-the-counter. Opposite of a standardized option listed and traded on an options exchange. Also termed Over-the-counter option.
  • Expiration cycle

    a recurring sequence of expiration months on which available expiration months for a given class of options are based. They are: January cycle (January, April, July, October); February cycle (February, May, August, November); March cycle (March, June, September, December). Equity option classes are appointed to a cycle when first listed, and will generally have the following expiration months available: the first two consecutive calendar months followed by the next two months from the appointed cycle. Index option classes may have varying available expirations: certain consecutive calendar months as well as months from a specific cycle. Equity LEAPS generally expire in January of their expiration years.
  • Expiration date (abbrev: expiry)

    the day on which an option contract literally expires and ceases to exist. For equity options, this is the Saturday following the third Friday of the expiration month. The last day on which expiring equity options trade, is the business day prior to the expiration date, or generally the third Friday of the month. For index and ETF options, these dates will vary.
  • Expiration Friday

    the third Friday of an expiration month, it is the last day expiring equity options trade, and the last day expiring equity options may be exercised by their owners. If the third Friday is an exchange holiday, the last day of trading and exercise will be the preceding business day, or Thursday.
  • Expiration month

    the calendar month during which a specific expiration date occurs.
  • Exposure

    the condition of being unprotected and open to risk of suffering a loss. An investor should understand the potential risk of each individual investment. By diversifying a portfolio an investor is seeking to balance his exposure with investments that are not expected to perform in the same way in different market environments.
  • Extraordinary item

    a materially large loss or gain that stems from a non-recurring event, that does not derive from a company's normal course of business, and that materially affects a company's finances during a reporting period. These must be explained to shareholders in an annual or other periodic report.
  • Extrinsic value

    for a call or put, it is the portion of the option's premium (price) that exceeds its intrinsic value, if it is in-the-money. If the option is out-of-the-money, the extrinsic value is equal to the premium. Also termed Time value.