Trading Terms Starting With S

  • S&P 500

    Standard & Poor's 500®, a widely followed index composed of 500 large-cap common stocks publicly traded in the United States. Representing leading companies in leading industries, it is considered a bellwether for the American economy, and a benchmark against which the performances of diversified equity portfolios are commonly compared. See also Capitalization-weighted index.
  • SEC

    see Securities and Exchange Commission
  • SEP

    see Simplified Employee Pension Plan.
  • SIMPLE IRA

    see Savings Incentive Match Plan for Employees.
  • SPDR (SPY)

    Standard & Poor's Depositary Receipts, known as "Spiders," are units of an exchange traded fund (ETF) that holds shares of all component stocks in the Standard & Poor's 500 index (S&P 500), and which closely track the price performance and dividend yield of that index.
  • STRIPS

    an acronym for Separate Trading of Registered Interest and Principal of Securities, or the procedure for creating a strip bond out of a treasury note, a treasury bond or another eligible government debt security. It involves splitting apart the two separate cash flows of a note or bond, the principal and the coupons, and reselling them as individual "zero coupon" securities, each at a discount. The buyer of the principal portion of the strip is entitled to receive its original face value at maturity but none of the semi-annual interest payments. Each of the stripped coupons can be sold separately, with a different maturity, with its buyer receiving an interest payment only at redemption. Each of these securities has characteristics of zero-coupon bonds and may be traded in the secondary market up until their individual maturity dates.
  • Sallie Mae

    see Student Loan Marketing Association.
  • Savings Incentive Match Plan for Employees

    a type of retirement plan offered by an employer to employees in which both parties may make a contribution. The employer may make a matching or flat-rate contribution. Employees are able to make salary deferred contributions.
  • Scale order

    a buy or sell order with instructions that parts of the order are to be executed at increasingly higher prices as the market rises, or increasingly lower prices as the market declines. The size of each part and price increments may be specified in the instructions. An investor might scale in, or open a position, in this manner, or scale out to close.
  • Scalp / scalping

    to make multiple trades for small profits, opening and closing positions rapidly, within a trading day. This is a practice commonly employed by market makers and other exchange members who have direct access to the marketplace.
  • Secondary market

    a place of business, either a physical or electronic marketplace, where investors buy and sell securities directly with other investors and traders rather than buying from an issuer. See also Primary market.
  • Sector fund

    a mutual fund that tends to focus its investments in one or more industry sectors rather than across the broader market. This type of fund is generally more volatile than a broader fund because its portfolio is less diversified with respect to industry risk.
  • Sector rotation

    a procedure used by investors and fund managers who actively manage their portfolios, it is the movement of investment capital from one or more industry sectors to others during different points in the economic cycle.
  • Secured put

    see Cash-secured put.
  • Securities and Exchange Commission (SEC)

    a federal government agency with regulatory authority over the securities industry, created to protect the investing public against fraud and market manipulation. The mission of the Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
  • Securities exchange

    a facility, physical or electronic, through which a gathering of members provides and maintains a marketplace for the trading of securities (stocks and exchange listed options).
  • Securities Investor Protection Corporation (SIPC)

    a non-profit, non-government membership corporation funded by member broker-dealers that provides insurance for cash and securities in customer accounts held by approved brokerage firms. In the event a brokerage is declared insolvent, SIPC insures securities and cash in customer accounts up to $500,000 (including a maximum $100,000 for cash) and covers most types of securities, such as stocks, bonds, and mutual funds. SIPC does not, however, protect against losses caused by a decline in the market value of securities, and it does not provide protection for investment contracts not registered with the SEC. TradeKing is a member of SIPC.
  • Securitization

    the process of pooling various types of debt, such as mortgages, consumer and corporate loans and credit card debt, and converting them into negotiable securities backed by that debt.
  • Security / securities

    a fungible, negotiable investment instrument that represents financial value. Generally issued by a company, government agency or other organization, it may provide evidence of a debt (bonds), an ownership interest and right to share in the issuer's earnings (stocks), or a right in the distribution of property (options). Many securities may be traded in financial markets, such as securities exchanges, and may be evidenced by paper certificates or by book entry (electronic record).
  • Self Regulatory Organization (SRO)

    a non-government organization responsible for regulating its members through the adoption and enforcement of rules and regulations governing the members' business conduct. In the financial industry, each securities and futures exchange is an SRO, as is OCC (The Options Clearing Corporation), FINRA (Financial Industry Regulatory Authority) and the NFA (National Futures Association). Futures trading is not currently available at TradeKing.
  • Sell limit order

    see Limit order.
  • Sell out

    see Liquidate (position).
  • Sell stop order

    see Stop order.
  • Sell to close

    a closing sell transaction to eliminate or reduce a long option position.
  • Sell to open

    an opening sell transaction to create or increase a short option position
  • Selling short (stock)

    see Short stock.
  • Senior debt

    when several parties have debt claims on the same asset or property, those claims that have priority over subordinated, or junior debt.
  • Sentiment

    outlook of an individual investor, or among investors in general, on future market trends, characterized as bullish, bearish or neutral.
  • Series (options)

    all options of the same underlying with the same strike price and expiration month.
  • Settlement (options)

    after an option transaction on a securities exchange, the premium will be paid by the option buyer to the option seller in cash no later than T+1 , an abbreviation for trade date plus one day; e.g., the cash involved in the transaction will change hands on the next business day. Regarding exercise and assignment, equity option settlement refers to the exchange of underlying shares, and full payment for those shares. Index option settlement refers to the payment of an exercise settlement amount to the option owner who exercises by the option writer who is assigned.
  • Settlement (stock)

    after a stock transaction, it is the process of transferring shares and cash payment between the parties involved in the trade. Assuming regular-way settlement, the period during which settlement must take place is known as T+3, an abbreviation for trade date plus three days. This means that the stock buyer must transfer cash to the stock seller, and the shares traded must be transferred by the seller to the buyer, within three business days after the transaction date.
  • Share

    one unit of stock ownership.
  • Share buyback / share repurchase

    when a company buys its own shares in the open market, primarily because the management and/or board feel the shares are undervalued. This repurchase reduces the number of shares outstanding, which in turn increases the stock's price/earnings ratio, and for fundamental reasons the stock price may generally rise. Also termed Stock buyback or Stock repurchase.
  • Shareholder

    any individual, group, organization or fund who has purchased and owns shares of a specific stock issue.
  • Shareholder value

    worth gained from owning stock in a company, usually in the form of increased share price, dividends, or distributions.
  • Shares outstanding

    the number of shares issued by a company that have not been repurchased and remain available for trading in the open market.
  • Short call (equity)

    after the opening sale transaction of an equity call contract, the investor writing the call will then maintain a short equity call position in a brokerage account. The investor has assumed the obligation to sell 100 underlying shares at the strike price if assigned on the short call.
  • Short call (index)

    after the opening sale transaction of an index call contract, the investor writing the call will then maintain a short index call position in a brokerage account. The investor has assumed the obligation to pay a cash amount based on the option's intrinsic value, or the cash settlement amount, if assigned on the short call.
  • Short covering

    to close an existing short stock position with a buy-to-cover transaction.
  • Short interest

    the total number of shares of a particular stock, or of all stocks listed on an exchange, that have been sold short (opening the position) but not yet purchased (closing the position). To many investors and traders increasing short interest is considered a bullish indicator or signal because those short shares will have to be purchased at some point, possibly driving prices higher.
  • Short interest ratio

    with respect to technical analysis, it is a stock's short interest divided by its average daily trading volume. To many investors and traders an increasing short interest ratio is considered a bullish indicator or signal because those short shares will have to be purchased at some point, possibly driving prices higher.
  • Short market value

    with respect to a particular brokerage account, the total value of shares borrowed and sold short.
  • Short option

    a position that results from making an opening sale (or write) of a call or put contract, which is then maintained in a brokerage account.
  • Short put (equity)

    after the opening sale transaction of an equity put contract, the investor writing the put will then maintain a short equity put position in a brokerage account. The investor has assumed the obligation to buy 100 underlying shares at the strike price if assigned on the short put.
  • Short put (index)

    after the opening sale transaction of an index put contract, the investor writing the put will then maintain a short index put position in a brokerage account. The investor has assumed the obligation to pay a cash amount based on the option's intrinsic value, or the cash settlement amount, if assigned on the short put.
  • Short sale

    see Short stock.
  • Short squeeze

    a rise in share price that can begin to feed itself for purely technical reasons. If a particular stock's price begins to increase, some short sellers might begin covering their positions to prevent or cut losses by purchasing shares. This increase in buy orders can drive the price up even further, triggering more covering by nervous short sellers, and so on. The result can sometimes be a technically induced buying frenzy, termed a short "squeeze" on the stock's price.
  • Short stock

    a short position that is opened by selling shares in the marketplace that are not currently owned (short sale), but instead borrowed from a broker/dealer. At a later date, shares must then be purchased and returned to the lending broker/dealer to close the short position. If the shares can be purchased at a price lower than their initial sale a profit will result. If the shares are purchased at a higher price a loss will be incurred. Unlimited losses are possible with short stock.
  • Short-term capital gain

    a gain realized from a security that has been held for a period of less than one year. As of this writing, short-term capital gains are taxed as ordinary income.
  • Sideways trend

    when the price of a stock, or prices in the broader market, do not show a sustained upward (bullish) or downward (bearish) trend. On a price chart the overall movement of the graph line would be moving sideways, not up or down. Also termed Flat, Neutral or Stagnant market.
  • Simplified Employee Pension Plan (SEP)

    a retirement program that's similar to an Individual Retirement Account (IRA), but for either self-employed individuals or companies with less than 25 employees. Tax-free contributions are made by an employee, or tax-deductible contributions made by an employer on behalf of an employee, and upon retirement withdrawals are taxed at the retiree's current tax bracket
  • Single stock futures

    a physically-settled futures contract with 100 shares of a single stock issue as its underlying. Futures trading is not currently available at TradeKing.
  • Sinking fund

    in anticipation of cash that will be required for the redemption of outstanding debt securities and/or preferred stock, a company may create this type of fund for which money is added regularly to cover these costs.
  • Size (bid-ask)

    along with each bid and ask price disseminated from a securities exchange there will generally be a "size" indicated. This is simply the number of shares or contracts buyers are willing to trade at the bid price, and the number of shares or contracts sellers are willing to trade at the ask price. This is notated as 100 x 200, where the number on the left corresponds to the quantity bid and the number on the right corresponds to the quantity offered. Depending on the security, the quantity displayed may be shorthand for a larger amount, or the actual amount.
  • Skip strike butterfly

    an option strategy established by purchasing one option with a given strike price, selling (writing) two options with a higher strike, skipping a strike, and then buying an option with a still higher strike. The options must be either all calls or all puts, and have the same underlying, expiration month and strike price intervals (difference between strikes), including the skipped one. The strikes of the two short options and the skipped strike may appear in reverse order. Profit and loss potential are both limited. Also termed Split strike butterfly or Broken wing butterfly.
  • Slippage

    for either a buy order or a sell order, the difference between the expected price to be paid or received and the actual transaction price(s). This most often is a concern with market orders when the execution price is not known until a confirmation is received.
  • Small cap

    a stock with a market capitalization worth between $250 million and $1 billion.
  • Small cap fund

    a mutual fund that focuses its investments primarily in small-capitalization stocks. See Small-cap.
  • Smart money

    those experienced, thoughtful investors who do their research, stay diversified over time and who can often identify trends in their early stages. Through well informed decision making and careful asset allocation, these investors tend to consistently make profits over time. This term may also describe individuals who trade on inside information, which is illegal.
  • Solvent

    a company (or individual) with assets exceeding liabilities and capable of meeting debt obligations.
  • Sophisticated investor

    see Accredited investor.
  • Special dividend

    a dividend paid by a company to its shareholders that is "special" because it is not part of a regular dividend cycle and not likely to be repeated. It is usually in the form of cash, but could also be stock with or without cash, and usually has more value that a regular cash dividend.
  • Specialist

    an approved exchange member, individual or firm, with the primary responsibility of providing a liquid market by maintaining current bid and ask prices in appointed securities. As a secondary responsibility, a Specialist remains ready, willing and able to buy and sell securities for its own account and benefit. See also Market maker.
  • Speculation

    making investment decisions based primarily on the expectation that an individual stock or the broader market is going to move in a certain direction, and within a certain timeframe. The motive is usually to make short-term profits rather than long-term gains and/or dividend income.
  • Speculator

    in the futures industry, an individual or group buying and/or selling contracts purely for profit, who will be subject to position limits and/or having to account for very large positions if so requested by a futures exchange. Opposite of Hedger. Futures trading is not currently available at TradeKing.
  • Spider

    see SPDR (SPY).
  • Spinoff

    a parent company's divestiture of an internal business unit or a subsidiary by creating a new, independent business entity. This is generally done by issuing shares in the new entity and either selling them in the open market or issuing them to existing stockholders.
  • Split

    see Stock split.
  • Spot market

    with respect to futures, it is the actual market in which a contract's underlying may be bought for cash and for immediate delivery. For physical underlying commodities this market is wherever there is an infrastructure to make a transaction. For underlying currencies and securities this market is generally electronic. Also termed Cash market. Futures trading is not currently available at TradeKing.
  • Spot price / spot

    with respect to futures, the price paid for an underlying commodity that is to be delivered immediately (in one or two days). As expiration approaches, expiring futures contracts may be referred to as the spot contract, and their trading price referred to as the spot price or cash price. Futures trading is not currently available at TradeKing.
  • Spread / spread order

    a complex option position established by the purchase of one option and the sale of another option with the same underlying. The two options may be different types (calls/puts), and may have different strike prices and/or expiration months. A spread order is executed as a package, with both parts (legs) traded simultaneously, at a net debit, net credit, or for even money.
  • Stabilization

    actions taken by a managing underwriter for an initial public offering (IPO) to stem a decline in the price of a new issue during the offering period by placing buy orders below its initial offering price.
  • Standard & Poor's (S&P)

    a leading provider of financial services and data, it is very well known by investors worldwide for its credit rating service and the indexes it publishes, as in the benchmark S&P 500.
  • Standard deviation

    a measure of the extent to which a set of randomly occurring values in a normal distribution are spread around the mean; it measures the variability of the distribution. Statistically, about 68% of total values fall within one standard deviation above and below the mean, about 95% within two standard deviations, and about 99% within three standard deviations. With respect to options these values are generally daily changes in the closing underlying stock price or index level, with standard deviation measuring the volatility of these changes.
  • Statistical volatility

    see Historical volatility.
  • Stock

    a security that represents an ownership (equity) share in a corporation, as well as a claim on a proportional share of it profits, and on its assets in case of liquidation. There are two primary types of stock: common stock that generally comes with a voting right but no guarantee of receiving dividends or preferred stock that generally does not carry a voting right but in most cases a dividend payment is expected. Also termed Equity security or Corporate stock. See also Share, Security, Common stock, Preferred stock.
  • Stock buyback / stock repurchase plan

    See Share buyback / share repurchase.
  • Stock dividend

    see Dividend.
  • Stock locate

    see Locating stock.
  • Stock option (employee)

    see Employee stock option.
  • Stock option (listed)

    an informal term used loosely by many investors and brokers to refer to listed equity options. When this term is heard or read, its reference to a listed equity option or an employee stock option should be clear in its context. See Equity option, Employee stock option.
  • Stock picking

    the act of choosing securities with which to invest. There are many theories on how to successfully pick stocks and numerous factors come into play. Other considerations include the investor's financial situation, investment objectives and tolerance for risk. See also Fundamental analysis, Technical analysis, Top down analysis, Bottom up analysis.
  • Stock split

    a corporate action that in effect increases the number of a company's outstanding shares, and decreases the share price proportionately so it has no effect on the value of the company's market capitalization or of what shareholders own. There are even splits in which whole new shares are issued for each existing share, such as 2:1, 3:1 and 4:1. There are odd splits in which whole and fractional new shares are issued for each existing share, such as 3:2, 4:3, or 5:4. As an example, in a 3:1 split a shareholder would receive 3 new shares for each 1 share currently held, but a new shares is worth 1/3 the value of an existing pre-split share. Companies tend to split their shares after a run-up in price to make them more affordable to a larger number of individual investors.
  • Stockholder

    any individual, group, organization or fund who has purchased and owns shares of a specific stock issue.
  • Stop limit order

    a type of order to buy or sell a stock or option with instructions that if a trigger price (the specified stop price) is reached the order becomes a live limit order. It is entered above the current security price for a buy stop limit order or below the current security price for a sell stop limit order. See also Stop order, Limit order.
  • Stop loss order

    see Stop order.
  • Stop order

    a type of order to buy or sell stock with instructions that if a trigger price (the specified stop price) is reached or passed it becomes a live market order. It is entered above the current stock price for a buy stop order or below the current stock price for a sell stop order.
  • Stop price

    the price specified that triggers a stop order or a stop limit order.
  • Stopped out

    usually to limit losses or to preserve gains, the act of liquidating an investor's position using a mental or actual stop order after the stop feature has been triggered.
  • Straddle (long)

    an option strategy that is established by the purchase of both a call and put on the same underlying, with the same strike price and expiration month. On the downside profit potential for the long put is substantial. To the upside profit potential for the long call is theoretically unlimited. Loss is limited to the premium amount paid for both options.
  • Straddle (short)

    an option strategy that is established by writing both an uncovered call and an uncovered put on the same underlying, with the same strike price and expiration month. On the downside the potential loss from the uncovered put is substantial. To the upside the potential loss from the uncovered call is theoretically unlimited. Profit is limited to the premium amount sold for both options.
  • Strangle (long)

    an option strategy that is established by the purchase of both a call at one strike price and a put with a different strike price. Both options have the same underlying and expiration month. Generally speaking, both options are usually out-of-the-money. On the downside profit potential for the long put is substantial. To the upside profit potential for the long call is theoretically unlimited. Loss is limited to the premium amount paid for both options.
  • Strangle (short)

    an option strategy that is established by writing an uncovered call at one strike price and writing an uncovered put with a different strike price. Both options have the same underlying and expiration month. Generally speaking, both options are usually out-of-the-money. On the downside the potential loss from the uncovered put is substantial. To the upside the potential loss from the uncovered call is theoretically unlimited. Profit is limited to the premium amount sold for both options.
  • Strap

    an option strategy that is established by the purchase of one put and two calls on the same underlying, with the same strike price and expiration month. On the downside profit potential for the long put is substantial. To the upside profit potential for the long calls is unlimited. Loss is limited to the premium amount paid for all options.
  • Street name

    describes the registration of securities held by a brokerage firm for its clients in the brokerage firm's name. An overwhelming majority of securities are held in street name.
  • Strike price (equity)

    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 and assigned. Also termed Exercise price, Striking price, or Strike.
  • Strike price (index)

    a term of any cash-settled index option contract, it is used to calculate the cash settlement amount that a call or put owner will receive upon exercise, and that a writer must pay upon assignment. Also termed Exercise price, Striking price, or Strike.
  • Strike price interval

    for equity options, the difference between strike prices in dollar amounts. For index options, the difference between strike prices in index points.
  • Strip

    an option strategy that is established by the purchase of two puts and one call on the same underlying, with the same strike price and expiration month. On the downside profit potential for the long puts is substantial. To the upside profit potential for the long call is unlimited. Loss is limited to the premium amount paid for all options.
  • Strip bond

    see STRIPS.
  • Student Loan Marketing Association (SLM)

    an independent and publicly traded company, it is the largest education finance company in the U.S. Commonly known as Sallie Mae.
  • Subject quote

    see Nominal quote.
  • Subordinated debt

    when several parties have debt claims on the same asset or property, those claims that have lower priority or are unsecured. Also termed Junior debt.
  • Support

    with respect to technical analysis, a presumed lower limit on a security's price due to past buying pressure at this level. The price is expected to drop to this level, bounce off and increase upward. If the price breaks through the lower limit this is considered a sell signal for a technical analyst.
  • Swing trade

    a strategy with which a trader hopes to generate short-term profits by holding positions from two days to approximately two weeks.
  • Syndicate

    commercial banks, investment banks and other financial institutions that join together for the purpose of underwriting and distributing a new security offering.
  • Synthetic long call

    an option strategy established when buying one put and buying 100 underlying shares. As with any long call position, upside profit potential is theoretically unlimited and downside loss potential is limited.
  • Synthetic long put

    an option strategy established when buying one call and selling short 100 underlying shares. As with any long put position, downside profit potential is substantial and upside loss potential is limited.
  • Synthetic long stock

    an option strategy established when buying one call and selling one put with same underlying, strike price and expiration month. As with any long stock position, upside profit potential is theoretically unlimited and downside loss potential is substantial. Also termed Long combo.
  • Synthetic short call

    an option strategy established when selling one put and selling short 100 underlying shares. As with any short call position, downside profit potential is limited and upside loss potential is theoretically unlimited.
  • Synthetic short put

    an option strategy established when selling one call and buying 100 underlying shares. As with any short put position, upside profit potential is limited and downside loss potential is substantial.
  • Synthetic short stock

    an option strategy established when selling one call and buying one put with same underlying, strike price and expiration month. As with any short stock position, downside profit potential is substantial and upside loss potential is theoretically unlimited. Also termed Short combo.