Trading Terms Starting With T

  • T+3

    see Settlement (stock).
  • T-bill

    see Treasury bill.
  • T-bond

    see Treasury bond.
  • T-note

    see Treasury note.
  • TED spread

    the difference between the interest rates of the three-month U.S. Treasury bill and three-month LIBOR, and thought to reflect the perceived credit risk in the general economy.
  • TIPS

    see Treasury Inflation-Protected Security.
  • Take the offer

    the practice of an investor agreeing to buy a security at the current ask price disseminated from its marketplace with the goal of the trade being executed immediately. Opposite of Hit the bid.
  • Takeover

    a merger of two companies in which one company (the acquirer, bidder or buyer) purchases the other (the target). The process may be either a "friendly" one in which the target company's management and board of directors are in favor of the transaction terms, or a "hostile" one that proceeds against the wishes of the target company's management and directors.
  • Takeover bid

    an offer of one company to acquire, or takeover, a target company, usually through the purchase of shares with cash and/or other securities. See also Takeover.
  • Takeover target

    in a takeover, it is the company being purchased.
  • Tape / ticker tape

    for every stock transaction on a major stock exchange (the primary ones as well as many of the regionals) there is a running record made available to the public. Originally, these records were punched into a paper tape, or ticker tape, but today these records appear digitally on the internet and/or television screens in very near real-time. The information displayed is a series of characters that identify the stock issue (via its ticker symbol), the size of the transaction, where it took place, and the price. Even though this stream of information is electronic it still commonly referred to as "the tape."
  • Tax basis

    the cost of a security or other asset on which a capital gain or loss is assessed for tax purposes.
  • Tax deductible

    an expense or gift amount that may be subtracted from gross income to reduce taxable income. Possible examples include charitable contributions or depreciation of assets.
  • Tax deferral / tax deferred

    certain situations in which a taxpayer may delay paying taxes on certain income until a later date, such as through an Individual Retirement Account (IRA), 401(k) or Keogh plan.
  • Tax-equivalent yield

    given an investor's tax rate, it is the pretax yield on a taxable debt security needed to produce the same yield from a tax-free debt security. Calculated as: tax-free security's yield Ö (1 Ð investor's tax rate). Also termed After tax yield.
  • Technical analysis

    a discipline of security analysis that assumes prior market data, such as price charts and volume numbers, can be used as a predictor of future market trends.
  • Tenancy in common

    a type of joint ownership of property by two or more people in which each owner may leave his or her ownership interest to any beneficiary(ies) instead of necessarily to the other owners.
  • Tender offer

    an action possibly used by an acquiring company in an attempt to takeover a target company in which the acquiring company makes a public offer for the target's stock. The offer is higher than the current market value. The target's stockholders are asked to tender their shares for sale within a specific timeframe, with an actual purchase generally depending on a minimum and/or maximum number of shares tendered. In a friendly takeover the target company's directors have endorsed the tender offer and price. In a hostile takeover the directors have not done so.
  • Theoretical value

    the estimated value (price) of an option derived from an option pricing model. The option's actual market price may vary from this estimation.
  • Theta

    one of the Greeks derived from a pricing model, it is amount an option's theoretical value will change for a corresponding one-unit (one day) change in the number of days to an option's expiration. It is a measurement of an option's theoretical time decay.
  • Thick market

    see Liquid market.
  • Thin market / thinly traded

    see Illiquid market.
  • Third market

    over-the-counter trading of securities listed and primarily traded on major exchanges. Typically these transactions are block trades between broker-dealers and large institutional investors and take place via an electronic communications network (ECN). See also Electronic Communication Network.
  • Tick

    the minimum amount by which the price of a security can change up or down from one trade to the next. Also termed Minimum price fluctuation.
  • Ticker symbol

    a series of characters that identifies a particular stock issue. See also Tape.
  • Tight market

    see Liquid market.
  • Tight monetary policy / tight money policy

    a general term used to describe a central bank's policy for curbing inflation by reducing the money supply and making credit more difficult to secure. Opposite of Easy monetary policy.
  • Time decay / time erosion

    a regular phenomenon, it is the gradual loss in value of an option contract with the passage of time until expiration. Generally speaking, the rate of decay increases as expiration nears, with the theoretical rate quantified by "theta," one of the Greeks. It is only the time value portion of an option's price that decays.
  • Time horizon

    timeframe over which an investor expects to have money invested in a particular securities position.
  • Time spread

    see Calendar spread.
  • Time to maturity / term to maturity

    the time remaining until a debt security matures and is redeemed for face value.
  • Time 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. By definition, the premium of at- and out-of-the-money options consists only of time value. It is time value that is affected by time decay as well as changing volatility, interest rates and dividends. Also termed Extrinsic value.
  • Time value of money

    the added value that a dollar has today over its inflation-adjusted value in the future, primarily from the interest that can be earned if it is invested.
  • Timing the market

    see Market timer.
  • Tombstone

    a notice published in newspapers announcing an upcoming securities issue or IPO, its underwriters and other basic details.
  • Top down analysis

    an approach to stock investing that begins with an evaluation of the overall economic picture, then determines industry sectors that offer the better opportunities for profit, and finally narrows in on the best particular companies within those industries.
  • Top holdings

    the largest individual securities positions held in an individual or a fund's portfolio.
  • Tracking error

    the difference between a portfolio or fund's performance compared to the performance of the benchmark index it tries to imitate.
  • Trade confirmation

    notification from a customer's brokerage firm of an executed trade, either in written or electronic format.
  • Trading curbs

    in volatile equity securities markets, a temporary restriction on program trading. See Program trading.
  • Trading halt

    a cessation of securities trading ordered by an exchange during the trading day, usually before a company is to announce important news, or when there is a significant order imbalance between buyers and sellers in the marketplace.
  • Trailing P/E ratio

    see Price/earnings ratio.
  • Transaction costs

    all costs involved with the execution of a securities trade, including commissions, exchange fees, and SEC fees. Option exercise or assignment will also incur a fee.
  • Treasuries

    debt obligations issued by the United States Department of the Treasury to finance the debt of the United States Federal government. See Treasury bill, Treasury bond, Treasury Inflation Protected Security (TIPS) and/or Treasury note.
  • Treasury bill (T-bill)

    a short-term debt security issued by the U.S. Treasury maturing in one year or less, and sold at a discount to its face value. At maturity a T-bill owner receives its full face value, with the difference between the purchase price of the T-bill and its face value equaling the effective interest earned.
  • Treasury bond (T-bond)

    an interest-bearing debt security issued by the U.S. Treasury maturing in ten years or more after the issue date. T-bonds pay interest on a semi-annual basis, and at maturity the bond owner receives its full face value.
  • Treasury Inflation-Protected Security (TIPS)

    a bond issued by the U.S. Treasury that provides protection from inflation, the bond's principal is periodically adjusted with an increase for inflation (or a decrease for deflation) as measured by the Consumer Price Index. Regular interest payments are paid at a fixed rate, but are based on the adjusted principal amount. At maturity, the bond will be redeemed for the adjusted principal amount or for par value, whichever is greater.
  • Treasury note (T-note)

    an interest-bearing debt security issued by the U.S. Treasury that has a fixed maturity of not less than one year and not more than ten years from the issue date. T-notes pay interest on a semi-annual basis, and at maturity the note owner receives its full face value.
  • Treasury stock

    shares of its own common stock that a company has repurchased, or bought back, to either cancel or sell back to investors at some point. This stock is held in the company's treasury, generally does not carry voting rights and should not be considered outstanding for calculating earnings per share (EPS) or dividend amounts. See Share buyback.
  • Trend

    directional movement of a security's price, either in the past or as anticipated in the future. May also be used to describe the broader market, interest rates, etc.
  • Trigger (stop order)

    with respect to a stop order, it is the specified stop price that activates the order.