Trading Terms Starting With M

  • MBIA

    Municipal Bond Insurance Association, which insures municipal bonds, asset-backed securities and mortgage-backed securities.
  • Majority shareholder

    an individual, or a member of a group, who owns a majority of a company's common shares, or technically 50% plus one share. See Controlling interest.
  • Management fee

    a financial advisor's fee for managing either an individual's or a mutual fund's portfolio.
  • Manipulation

    the act or attempt to artificially change or influence the price of a security in the marketplace by any means, with the intent of making a profit. One example is through matched trades, or the rapid buying and selling of a security at little or no profit or loss. This is done to create the artificial impression of increased trading interest in order to draw in more buying investors, and therefore raise the security's price. This practice is illegal.
  • Margin / margin requirement

    collateral, in either cash and/or securities, a stock trader is required to deposit and maintain in a brokerage account, pledged towards the value of a long stock or short stock position. Also, the amount of cash and/or securities an option writer is required to deposit and maintain in a brokerage account, pledged towards the value of an uncovered (naked) short option position. This is collateral pledged to the brokerage firm for the writer's obligation to buy (in the case of a put) or sell (in the case of a call) shares of underlying stock in case of assignment. This collateral will also be required to meet the obligation of an uncovered (naked) short index option position for the means of delivering cash upon assignment.
  • Mark to market

    an accounting standard that values securities on a daily basis, generally at the day's closing price. If a security did not actually trade on a given date, it will be assigned a value based on the bid and ask quotes at the session close. These prices are used to calculate an account's profit or loss as well as for margin calculations.
  • Market breadth

    with respect to technical analysis, it is an indicator of market sentiment. When the market is making an up or down move analysts consider the underlying strength, or breadth, of these moves when forecasting whether a bullish or bearish trend will or will not continue. A key indicator for gauging breadth is the advance-decline index. With a bullish move, the greater the ratio of advancing to declining issues the stronger and more sustained the move should be. With a bearish move the opposite is the case.
  • Market capitalization / market cap

    the market value of a company calculated by multiplying the number of shares outstanding by its market price. Also termed Capitalization or Cap.
  • Market maker

    an approved exchange member, individual or firm, with the primary responsibility of buying and selling securities for its own account and benefit. As a secondary responsibility, a Market Maker provides liquidity in the marketplace by maintaining current bid and ask prices in appointed securities. See also Specialist.
  • Market neutral

    the portfolio of either an individual investor or a fund that is hedged against moves in the broader market by balancing short positions and long positions. This strategy relies on the long positions outperforming the market (because they're considered undervalued) with the short positions underperforming the market (because they're considered overvalued). Overall portfolio performance depends on an investor or fund manager's choice of stocks, or the industries they represent, rather than any bullish or bearish market trend.
  • Market-on-close order (MOC)

    a type of option order with instructions that it be executed at or near the close of trading of the market, at the best currently available price. As a form of market order, the entire order should be executed, but the price will not be known until confirmation is received. Multiple transaction prices are possible.
  • Market order

    an order to buy or sell a security with instructions the entire order is executed immediately and at the best price available in the marketplace. Emphasis is being placed more on the timing of the order's execution than the price, with the actual price not known until confirmation is received. Multiple transaction prices are possible.
  • Market outperformer

    an individual investment whose return is greater than that of a market benchmark to which it is being compared, such as the S&P 500.
  • Market timer

    an individual investor, a financial advisor or a portfolio manager who makes investment decisions that are based primarily on his or her prediction of when the broader market will go up or down. These decisions may be based on either technical or fundamental analysis.
  • Market underperformer

    an individual investment whose return is less than that of a market benchmark to which it is being compared, such as the S&P 500.
  • Market value

    1. the price at which shares of a stock may currently be bought or sold in the marketplace, which is influenced by supply and demand rather than set by their book value. Also termed Market price.
    2. the current value of a company that is calculated as number of shares outstanding times the current market price. Also termed Market capitalization or Market cap.
  • Marking

    the act of influencing the closing price of a traded security on which the mark-to-market price is based. This may be done by entering an order at the market close to raise or lower the last trading price, or to raise the closing bid price or lower the last ask price. One motivation for doing this is to affect the mark-to-market price in a direction favorable to the one entering the order. This practice is generally not permitted by regulatory bodies.
  • Married put strategy

    an equity option strategy establishing the simultaneous purchase of a put and an equivalent number of underlying shares (one put for each 100 shares of stock). On the downside the stock risk is limited because the shares may be sold at the put's strike price upon exercise. On the upside the profit potential for the stock remains unlimited. See also Protective put strategy.
  • Maturity

    The length of time until the principal amount, or face value, of a bond must be repaid by the bond issuer (borrower or debtor) to the bondholder (lender or creditor). Also termed Maturity date.
  • Mean reversion

    the theory that a number or value that changes over time will return to an average or mean after a period above or below that level. This theory may be applied to such things as stock prices, market returns, interest rates, volatility and others.
  • Mergers & acquisitions

    strategic methods by which two separate companies are legally unified into one with a single management team, generally under the advisement of an investment bank. Also termed M&A.
  • Mid cap

    a stock with a market capitalization worth between $1 billion and $5 billion.
  • Mid cap fund

    a mutual fund that focuses its investments primarily in mid-capitalization stocks. See mid-cap.
  • Minus tick

    last sale of a security when it sells at a price less than the preceding sale. Also termed Downtick. Opposite of Uptick or Plus tick.
  • Modern portfolio theory

    a basic tenet of modern portfolio theory is to balance the return expected from a portfolio in relation to its potential risk. The objective is to minimize risk and maximize a consistent return through diversification and asset allocation. An individual security should not be considered on a standalone basis, with respect to its own strengths or weaknesses as an individual investment. Instead, the investor should consider how that security might perform with respect to the portfolio as a whole. Another tenet of the theory is that the greater the risk assumed an investor should be rewarded with greater returns.
  • Momentum

    with respect to technical analysis, the tendency of a security to continue its present up or down movement, and is the primary factor in security price trend analysis. Momentum traders watch the relative change of a security's price over specific time intervals, considered the speed or velocity of the change, as measured by the security's relative strength index (RSI). Generally, these traders will buy or sell a security that has already risen or declined in price with the expectation of holding the position short-term for a continued move in the same direction. May be regarded as a fairly risky strategy for most novice investors.
  • Monetary policy

    a primary function of the Federal Open Market Committee (FOMC), the actions taken to influence the availability and cost of money and credit through open market operations, direct lending to depositary institutions and reserve requirements. The objective is to control inflation, stabilize the currency and promote national economic goals. See also Federal Open Market Committee.
  • Money market fund

    a type of mutual fund that that focuses on the safety of both principal and income by investing primarily in short-term (one year or less) money market instruments: Treasury bills; certificates of deposit; commercial paper. The net asset value (NAV) of shares is usually fixed at $1.00; the interest rate paid generally fluctuates.
  • Moneyness

    the degree to which a call or put option is currently in- or out-of-the-money.
  • Moody's

    or Moody's Investor Services, a credit rating agency whose business is assigning credit ratings for debt securities as well as for the issuers of those securities.
  • Moral obligation bond

    a tax-exempt, municipal or state-issued bond that is backed only by the issuer's stated intention to repay.
  • Morningstar

    a respected source for research information and ratings on stocks, mutual funds, variable annuities, closed-end funds and exchange-traded funds.
  • Mortgage-backed security (MBS)

    a debt security backed by pools of mortgages, usually on residential property, that represent claims on both the principal amounts and payments on the loans in the pool. Mortgage-backed securities issued by government-sponsored enterprises such as the Federal National Mortgage Association Fannie Mae and the Federal Home Loan Mortgage Corporation Freddie Mac come only with limited guarantees. Those guaranteed by a government agency such as the Government National Mortgage Association Ginnie Mae, are backed by the full faith and credit of the U.S. government.
  • Mortgage pool

    a group of mortgage loans of the same type, and having the same maturities, used to collateralize certain debt securities (e.g., mortgage-backed securities) available to investors in a secondary market.
  • Moving average

    with respect to technical analysis, one of the oldest and most widely used tools used by investors of all types. It is an average of a stock's closing prices (typically daily) calculated over a period of time, from a few days to as much as a few years. Tending to flatten out large fluctuations in a stock's price, moving average data is used to indicate whether a stock's price is trending either up or down. The longer timeframe it represents the less volatile the moving average will be.
  • Municipal bond

    a debt security, or bond, issued by a state or local government to raise capital for highways, schools, hospitals, and other infrastructure projects. In general, interest received by the bondholder is exempt from federal income tax as well as some state and local taxes. Also termed Muni.
  • Municipal Bond Insurance Association (MBIA)

    an entity which insures municipal bonds, asset-backed securities and mortgage-backed securities.
  • Mutual fund

    a pool of money raised from individuals and organizations through the sale of shares that is invested and managed with a common financial objective in mind. Some funds may focus on generating income on a regular basis for its shareholder, while other funds may specialize in long-term growth of shareholders' assets. See also Open-end fund, Closed-end fund, Front-end load, Back-end load.