C - Return to Index
Cage - Is the area of the back office where securities, checks, and limited amounts of cash are processed and held.
Calendar Spread - See Horizontal Spread.
Call Option - Is a contract whereby the purchaser, owner or holder is given the right but is not obligated to purchase the underlying security or commodity at a fixed strike price within a limited time frame.
Cancel - Is the instruction to terminate an order either in its entirety or remainder.
CAO - Is the Chief Administrative Officer.
Cap - Is the ceiling, upper limit price, or interest rate which would be paid. It is analogous to a long call position.
Capital Asset Pricing Model - Is a tool that relates an asset's expected return to the market's expected return. It combines the concepts of efficient capital markets with risk premiums. The idea of capital market efficiency assumes immediate - instantaneous - response to perfect or near perfect information. The risk premiums relate an investment to the market's risk-free or riskless rate of return. Typically, this risk-free rate is viewed in terms of principal safety for short term U.S. government obligations. Here, beta relates the volatility of an asset to the market.
Capital Stock - Refers to all the common and preferred shares, if any, for a corporation.
Capital Surplus - Refers to the accounting difference between the amount received by the initial sale of a corporation's stock less the par value of that stock. Since many new issues are sold at prices in excess of the par value, the proceeds component can be significant. Other related terms are Paid-In Capital or Paid-In Surplus.
CAPM - See Capital Asset Pricing Model.
Carry - See Positive Carry and Negative Carry.
Carryin - Is the amount of inventory or supply which is brought into a new crop year or season.
Carrying Broker - Is the clearing member Futures Commission Merchant (FCM) which clears trades for customers and/or other Futures Commission Merchants.
Carrying Charge - Is the amount to carry an inventory or carry a position for a set period such as a month. In the case of securities it is the funding with an allowance for dividends or interest income. For commodities, it includes storage, insurance and cost of funds.
Carrying Charge Market - Is the implied term structure for a commodity market. It lists progressively higher prices for the more distant delivery months. This progression in prices reflects the assumption of cumulatively higher storage and financing costs over time.
Carryover or Carryout - Is the amount of inventory or supply which exists at the end of a season or crop year and is added to the supply for the new crop year.
Cash - Is a term used in several ways. Sometimes refers to immediate funds, the settlement payment on the trade date, instruments which display high degrees of liquidity and act as cash equivalents, or the spot market.
Cash Cow - Is a security, investment or a project which generates or throws off lots of funds due to contacts or contracts. Sometimes, the basis for this asset is an excellent customer, a monopolistic market position, or special advantage afforded by patents, licenses, or other economic properties. This cash flow can be used for many purposes. Typically, this situation constitutes the fundamental franchise of a business.
Cash Equivalent Security - Is a term which has several meanings. It often refers to high grade instruments which are very liquid and have very little time to maturity. Among these are treasury bills, commercial paper, and bankers' acceptances. In a somewhat broader sense it can include money market shares and short-term municipal paper.
Cash on Delivery or C.O.D. (COD) Transaction - Occurs when the buyer of securities pays for them when the actual delivery is made at the buyer's bank. This transaction is also known as a DVP or Delivery versus Payment. Regulation T states other conditions for DVPs.
Cash Sale or Cash Transaction - Is a transaction which calls for cash payment, delivering and settlement on the same day as the trade. This compares to a Regular Way transaction which are traded on one day and settled on a different day in accordance with industry standards or special terms.
These trades are sometimes made to receive a dividend, to be entitled to a rights offering, or to be a shareholder on a record date in order to vote.
It should be noted that the settlement process has been shrinking in order to reduce the risk associated with an open trade and its still to be made settlement.
Cash Settlement - Is the practice of making a final cash payment or adjustment for an open position. This process differs from early or traditional futures markets that required either a futures contract offset or the delivery of a physical commodity. The cash settlement process recognizes the insurability factor of risk management products. This trend towards cash settlements reduces instability due to squeezes, weather, or other disruptive variables.
Cathode - Refers to copper which is in flat bar form and is exchange tradeable.
CATS - Are Certificates of Accrual on Treasury Securities. In a generic sense, the sliced off interest payments or coupons are called strips or zeroes. At those times the discounted bond principal is referred to as the Corpus.
CBO - Is a Collateralized Bond Obligation. It is similar in structure to a CMO deal.
CBOE - Is the Chicago Board Options Exchange.
CBOT - Is the Chicago Board of Trade.
Century Bonds - Are securities with a maturity equal to 100 years.
CEO - Is the Chief Executive Officer.
CF/D or CFD - Refers to Cubic Feet per Day. It measures the rate of flow at at gas well or pipeline.
CFO - Is the Chief Financial Officer.
Cheap - Is a term used in relative value analysis. The cash flow characteristics, when analyzed against a benchmark or comparison bond, suggest an under-valued security. This implies that the former security has arbitrage potential against the comparative security.
CHECCS - Is the Clearing House Electronic Check Clearing System.
CHIPS - Is the Clearing House Interbank Payments System.
Churning - Is an excessive amount of trading of customer funds by a broker. The intent is to generate commission or brokerage fees and not client performance.
CIF - Refers to Cost, Insurance and Freight.
CINS - Is the CUSIP International Numbering System for securities traded on a global basis and which originated outside the United States or Canada.
CIO - Is the Chief Investment Officer. Sometimes, the term is used to refer to the Chief Information Officer.
Class - Is the total of all options of the same type, put or call, which have the same expiration date.
Clearing - Is the process of financial guarantee between clearing members. This activity intends to eliminate the risk of contractual or transactional default.
For example, two clients execute a trade through two different clearing member firms. The clients are solvent but at the end of the day one of the clearing members is not. This transaction through a clearinghouse would preserve the integrity of the trade.
Clearing House or Clearinghouse - Is a facility which serves as a buyer to the seller and a seller to the buyer. It effectively guarantees the performance of transactions between its member participants. Trades processed by a clearinghouse are generally assumed, though not guaranteed, to be free from financial failure.
Clearing Member - Is a person that is associated as a responsible party for activities related to the clearance of futures, options, or securities transactions.
CLO - See Collateralized Loan Obligation.
Close Out - Is the action taken by a brokerage firm when a client failed to pay for previously purchased securities. Here, the brokerage firm will sell the aforementioned securities.
Closed End Investment Company or Fund - Is an investment vehicle that issues shares in a fashion similar to other corporations. The number of shares outstanding is relatively fixed unlike open end investment funds which tend to have variable shares outstanding. Closed End shares can trade at a premium or discount to the net asset value.
Closing or to Close for Real Estate - Is the meeting which finalizes a real estate transaction. The deed is transferred from the seller to the buyer. Financial settlement is made at that time.
Closing Transaction - Refers to the sale or purchase of an option contract which offsets a previously established open position.
CMBS - Refers to Commercial Mortgage Backed Securities. These securities are verisimilar to Mortgage Backed Securities in terms of structure, flexibility, and variety of tranches or tiers. The key difference is that CMBS are collateralized by commercial properties and not residential mortgages.
CME - Is the Chicago Mercantile Exchange.
CMO - See Collateralized Mortgage Obligation.
CNS - Is the Continuous Net Settlement system. It is operated by the National Securities Clearing Corporation (NSCC) and is the largest primary clearance operation.
Coefficient of Variation - Is a statistic which is used to determine the degree of relative dispersion. It extends standard deviation analyses. By definition, standard deviations are statistical measures of absolute dispersion. Therefore, it is difficult to compare the variability of two different asset classes or assets within those classses.
It is computed by dividing the standard deviation of Asset I by the mean of Asset I. Similarly, the standard deviation of Asset II is divided by the mean of Asset II and so forth. These multiple coefficient of variation can then be compared against one another.
By using the coefficient of variation, an analyst can compare variation among relatively high and low priced securities. Similarly, the analyst can evaluate the volatility differences between commodities, currencies, stocks and bond markets.
COFI - See the Cost of Funds Index.
Coinsurance - Is a hedging or risk management term. It refers to the amount of loss that the investor is positioned to take. When a firm is 85 percent hedged, then it is said that the firm is coinsuring the remainder or 15 percent. When an individual holds 100 shares of stock priced at $80/share and is also long a put with a $75 strike price, the individual is said to be coinsuring for $500 or the difference between the market price and the exercise price.
Collar - Is the combination of a long Cap position and a short Floor position. It is sometimes called a range forward or a fence. Generally, it is structured so that the net cost of the collar is zero or close to zero. This means that the debit expense for the long cap premium is offset by the credit received for the short floor premium.
This term is also used to define the prepayment speed range for a credit instrument.
Collateral - Is the underlying security, mortgage, or asset for the purposes of securitization or borrowing and lending activities. It is pledged or held in trust.
Collateral Trust Bond - Is a security issued by a corporation and is secured by other securities. This bond compares to Mortgage Backed Securities which are secured by real property or unsecured bonds. Depending on the underlying collateral and the terms of the issue, these bonds can offer somewhat better financing rates to the issuer.
Collateralized Loan Obligation - Is similar in structure to the Collateralized Mortgage Obligation. See Collateralized Mortgage Obligation for analogous terms.
Collateralized Mortgage Obligation - Is a complex bond structure which reallocates interest and principal payment streams. These tranches, which are often designated as A to Z pieces or securities, are engineered from mortgage backed securities used as the underlying collateral. Collateralized Mortgage Obligations come in many shapes and sizes and are often viewed as unique constructions. Some of the more commonly named tranches are: Interest Only, Principal Only, Floater, Inverse Floater, Planned Amortization Class, Support, Scheduled, Sequential, Targeted Amortization Class, and Z or Accrual Bond. Often, many of these securities contain option characteristics. Related structures are Collateralized Bond Obligations and Collateralized Loan Obligations.
Collateralized Obligation - Is the generic term for a structure that carves up the initial cash flow from a similar set of assets into a new and often unique arrangement. By dividing and redistributing the cash flows, both principal and interest, the structure alters the disbursement of the underlying collateral cash flows into several securities. Some of these securities may experience greater stability whereas others may absorb more of the risky characteristics of the underlying assets. Under various circumstances, these structures can improve the credit rating of some of the deal's components. Specific categories of these structures are Collateralized Bond Obligations, Collateralized Loan Obligations, and Collateralized Mortgage Obligations.
Combination - Is an option strategy consisting of multiple parts. These parts can be puts and calls which are arranged as a single position.
Commercial - Refers to a firm in the actual business of growing, mining, processing or otherwise bona fide commercial activity for a commodity market. This compares to Funds or Speculators.
Commercial Paper - Is an unsecured, short-term instrument. It has a maximum maturity of 270 days. It is issued by companies which have high credit ratings. This instrument is a cash management tool to finance short-term financial needs. It should be noted that corporate downgrades or bankruptcies can severely damage the value of these instruments.
Commingling - Is the illegal mixing or pooling of client and broker/dealer or Futures Commission Merchant (FCM) funds, securities, or positions.
Commission Run - Is a report generated by a brokerage firm which lists the commission revenue generated by each broker (AE, IE, or RR). It comes it various forms but the usual data include: customer name, customer account number, instrument traded, quantity traded, price traded, trade date, commission generated (gross, net) and sometimes cumulative. These reports can also show payout rates, payout matrices, draw amounts and other information related to revenue generation.
Commodity or Commodities - Are often viewed as the futures markets on both physical and financial items. Sometimes, commodities is used more narrowly to refer to physical goods such as, gold, silver, wheat, and pork bellies. Then financial futures would refer to stock indices, eurodollars, treasuries, currencies, and other security-type instruments.
In a more restrictive sense, commodity or commodities refer to the actuals in the spot market.
Commodity Funds - Are investment vehicles that invest in futures and options on futures. Commodities can include the tradition grains, metals, and livestock as well as stock indices, currencies, and other financials.
Commodity Month Alphabetic Symbols or Codes - Are letters which represent different delivery months for futures and options on futures contracts.
There are other symbols for monthly deliveries in different years. The above list are the most common symbols for the nearest deliveries. Sometimes color codes are used to differentiate between delivery years and months. There has been a shift in terminology over the years and across product lines.
- F - represents the January Delivery Month.
- G - represents the February Delivery Month.
- H - represents the March Delivery Month.
- J - represents the April Delivery Month.
- K - represents the May Delivery Month.
- M - represents the June Delivery Month.
- N - represents the July Delivery Month.
- Q - represents the August Delivery Month.
- U - represents the September Delivery Month.
- V - represents the October Delivery Month.
- X - represents the November Delivery Month.
- Z - represents the December Delivery Month.
Commodity Pools - Are trading vehicles which combine investment funds from several different persons and trades the sum as one account. This entity is focused on futures and options on futures trading.
Commodity Year Color Codes - Are used to distinguish different years available for trading. The following list reflects the 10 year Eurodollar strip.
It should be noted that some of these colors have been used for different years by other exchanges over time. Codes are often used in conjunction with other information to avoid errors in order transmission and execution.
- White - Year 1
- Red - Year 2
- Green - Year 3
- Blue - Year 4
- Gold - Year 5
- Purple - Year 6
- Orange - Year 7
- Pink - Year 8
- Silver - Year 9
- Copper - Year 10.
Common Stock - Is the shareholder's equity stake in a corporation. Sometimes, there are different classes of stock that may have greater or lesser voting rights than the ordinary common shares. For many years the New York Stock Exchange only permitted one class of common stock for a listed corporation.
Community Property - Refers to assets or a method of ownership. Generally, it means that each spouse owns a 50 percent interest in an account. Upon the death of one spouse, the survivor claims his or her ownership of one-half of the asset. The other half will pass in accordance to will or to law. Each state is different in its laws and interpretations. Some states that recognize this method are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
Companion - Is a bond engineered to support or uphold Planned Amortization Class (PAC) and Targeted Amortization Class securities. Also, referred to as a Support Bond.
Comparative Advantage - Refers to the relative advantage between trading parties. It explains why transactions occur even in the absence of absolute advantage. The basis for trade, specialization, and swap transactions.
Compliance - Is the area or the process which has responsibility for firm and employee adherence to the rules and regulations which govern the broker/dealer business. This includes but is not limited to The Powers and Authorities for the firm's position taking and trading limits, guidelines indicated in the employee compliance handbook, registrations, continuing education, sales literature, and employee trading activities. Generally, compliance functions are partitioned between registrations and other rules and guidelines. Non-selling employees are usually in compliance to avoid conflicts-of-interest. However, there are exemptions for very small organizations.
Complex Order - Is an order which has multiple requirements. It can contain contingencies, stops, stop limits, time instructions and other elements.
Compliance Registered Options Principal - Is the designated supervisor within a firm who is responsible for the firm and its employees to abide by the rules and regulations governing options. In particular, this person has oversight on sales literature and advertising. Advertising must also be submitted to outside regulatory bodies. Generally, the Compliance Registered Options Principal may not also be the Senior Registered Options Principal. However, an exception is provided for firms do not exceed a certain threshold in terms of revenue. This person is Securities Series 4 licensed.
Compound Option - Is an option which is related to another option. A sequence on options such as a call on a subsequent call.
Composite Delta - Is the weighted average of the deltas associated with each underlying price scan point. It is used by SPANŽ and other systems to simplify portfolio evaluations. SPANŽ uses its Composite Delta as the best quick estimate of what the contract's delta will be after the lookahead time has passed. It is included with the risk arrays transmitted in the SPANŽ Risk Parameter File.
Comps or Comparables - Refer to pricing or evaluation benchmarking efforts. In real estate the term is used to determine comparable properties for evaluation or assessment purposes.
In the securities markets, the term has similar implications for pricing bonds, stocks, and derivatives.
For credit instruments, it refers to isolating the key pricing characteristics. Among these, are issuer, type of collateral or issue, maturity, maturity to first option date, average life, duration, option adjusted duration and so forth.
In the case of a simple corporate bond, it would benchmark to a comparable life treasury and adjust for credit rating and other pertinent risk factors by a spread. This spread would be added to the prevailing treasury and indicate what a fair yield would be for the corporate.
For equity type securities, the process would involve finding similar companies in the same industry with similar economic profiles and outlooks. Among the considerations would be utility stock or internet stock, growth prospects, cashflow, EPS, value per hit, and other determinative factors.
Effectively, the process is pricing, marking-to-market, or evaluating by analogy.
Conditional Analysis - Is the expectational methodology which is probability-based, event-driven, and operates within a market environment which has dominant and secondary aspects.
Conditional Order - See Contingent Order.
Condominium - Refers to a form of real estate ownership. Here, the owner holds title to a specific unit or dwelling while also holding an interest the property's common areas.
Condor - Is an option spread strategy which is akin to a butterfly. Here, there are four different strike prices (instead of three for the butterfly) for the same instrument and for the same date. Condors can be constructed with either calls or puts. They can be either long or short. A long condor entails the purchase of a low strike call, the sale of 2 different intermediate strike calls, and the purchase of a relatively higher strike call.
Confirm - Is a ratification of an order. Usually it is in written form, however verbal confirms must be subsequently validated by a written record of the transaction. See confirmation.
Confirmation - All executed orders require a written record or report which indicates an executed order or transaction. Depending on regulatory organization, confirms typically must be sent by the next business day of a transaction.
Congestion - Refers to trading activity which occurs between to visible boundaries. Often this area is tight or relatively narrow in terms of amplitude.
Constant Maturity - Is a devise which fixes maturities or time to expiration for a bonds or derivatives. This fixation of time period enables one to compare and analyze assets or instruments in terms of all other things variable except for time.
Constant Maturity Treasuries (CMT) - Are securities tied to an index which represents what the rate of interest would be for a constant maturity treasury issue such as 3, 6, or 12 months. Other time periods can be specified. These type of securities and indices are frequently used for adjustable rate securities.
Contango - Is the normal or carrying charge structure for a commodity market. It lists progressively higher prices for the more distant delivery months. This progression in prices reflects implicitly cumulatively higher storage and financing costs.
Contingent Order - Is an order with at least one contingency attached. Contingencies can be specific times or events.
Convenience Yield - Is the assumed or expected benefit of holding a long position in a physical commodity. Othen this holding is to satisfy existing near-term delivery commitments or to maintain uninterrupted manufacturing processes. It highlights the marginal value of an inventory relative to the anticipated usage.
High convenience yields tend to occur in inverted or backwardation markets. In these situations, the costs of being without the physical commodity are greater than the premium paid to hold the commodity. A positive convenience yield is greater than the sum of the financing plus other storage carrying costs.
Convergence - Is the behavior of a cash commodity or the underlying security instrument and the derivative moving towards one another.
Conversion - Is the action of transforming a security into another security. A convertible bond, when exercised, will convert into the stipulated number of common shares.
Conversion Clause - Refers to a mortgage loan provision. It defines and allows an Adjustable Rate Mortgage (ARM) to be converted into a Fixed Rate Mortgage.
Conversion Factor - For the credit futures markets, it is the number that relates different coupons and acceptable deliverable maturities for delivery against the contract standard of an 8 percent coupon and the stipulated acceptable time remaining to maturity specifications.
For the security markets, it is the contractual number that indicates how many shares a convertible security can be exercised into at any point in time.
Conversion Ratio - Is the number of common shares that a convertible bond or other security can be exchanged upon exercise.
Convertible - Is a security which can be exercised into another security. Examples of convertibles are bonds, preferred stocks, warrants, and some swap agreements.
Convertibles are related to options because they have specified spans for exercise, conversion price levels which approximate strike prices, and there are inherent premium structures. These premiums are related to volatility considerations.
Convertible Bond - Is a credit instrument which is convertible into equity. Usually, this conversion is done at the discretion and exercise of the bond holder and not the corporation. However, there may be forced conversions due to stipulated events such as takeovers or call options in favor of the issuer. Generally, convertible bonds are coupons paying but there are zero coupon convertible bonds as well. These bonds tend to have lower-than-market rates of interest in exchange for a potential equity stake for the bondholder.
Convertible Preferred - Is a preferred stock which is convertible into common stock.
Convertible Securities Hedge Funds - Generally look to purchase the bonds or preferred securities and sell common shares against these long positions. The intent is to hedge interest or dividend paying securities with low or no dividend common shares. In the event of a default the bonds and other securities have priority to the common shares. Also, the bonds or preferred stocks usually generate positive cash flows whereas the short positions are generally not responsible for dividend payments. Therefore the fund should have a positive cash flow and protected by relative seniority position in corporate securities. These funds also use warrants and options as portfolio instruments.
Convexity - Is the second derivative of the price/yield curve for a bond.
Cooperative or Co-op - Refers to a form of real estate ownership. Here, the property is owned by shareholders. Each shareholder owns proprietary rights to a specific unit or dwelling while also owning an interest in the entire property. In many places, loans for such properties are effectively personal loans securitized by the shares of ownership. This is different from the usual real estate mortgage loan which is directly secured by the underlying real property.
The term can also refer to a business arrangement whereby parties of similar interest combine their activities. One example of this would be a farmers cooperative to market grain or produce; operate and own storage facilities; or operate and own equipment.
Corner - Refers to a market condition whereby an individual or group of individuals have gained control of a commodity or market.
Corporate Bonds - Are obligations issued by corporations. They are frequently categorized as follows:
There are other categories and subcategories, such as, financials - bank and nonbank, foreign, Canadian, Yankee and the list goes on.
Corporate Charter - Is a document which lists the objectives, powers, and authorities of a corporation. It indicates what the corporation can and cannot do. Some corporations have relatively narrow charters whereas other basically state that they may engage in any legal business activity. Some charters preclude speculative or outside investment activities. It is necessary to obtain a copy of a corporate charter before opening a securities, futures, or derivatives account. This is to determine whether the corporation is empowered to conduct such activities, with whom, and by whom. Corporate Charters are sometimes referred to as Articles of Incorporation.
Corporate Resolution - Is a document which empowers and lists which individuals and departments can trade, invest, speculate, or hedge on the behalf of the corporation. Resolutions are passed on a case-by-case basis unlike the Corporate Charter. This document is authorized by the Board of Directors.
Corpus - Refers to the final or underlying principal amount which has been stripped, discounted and sold as a zero coupon bond.
This compares to the interest only pieces which are often called strips. Some people also count the discounted principal portions as strips.
It is from the Latin which means body.
Correlation - Is the statistical relationship between two variables. It indicates how they move together and not necessarily casual relationship.
Correspondent - Is a financial institution which performs activities or services for another financial institution. Sometimes, this arrangement occurs because of a lack of physical presence in a particular geographic area. Other times it may be due to an outsourcing or need for specialized services such as clearance and physical transfers of securities.
Cost of Funds Index - Is a benchmark used for resetting the coupon rate on an adjustable rate mortgage. Frequently, this is based on the cost of the 11th District Federal Home Loan Bank funds. This district includes Arizona, California and Nevada.
Coupon - Is the contractual rate of interest on a credit instrument.
Covenants - Are formal conditions or clauses which are written into credit agreements. Often the document which contains these covenants and terms is called the indenture. >
Covered Warrant - Is a derivative contract written against the underlying stock position. However, these warrants are not issued by the corporation of the underlying security but they are offered by investment underwriters. There are also put and call warrants written against indices, baskets, and other securities.
Covered Write - Is the sale of an option against a position in the underlying instrument. Often this is the sale of a call against a long position in the stock. It could also be the sale of a put against a short position in the stock. Here, if the put is exercised, a long stock position is assigned to the seller of the option. Then this newly acquired long position is offset by the previously held short position. The covered write can also apply to warrant and other option positions.
CPA - Is a Certified Public Account.
CPV - See Current Principal Value.
CR, Cr, or cr - Refers to a credit or the process of crediting an account.
Crack Spread - Is the purchase of crude oil against the sale of the refined products. In futures trading, it is the simultaneous purchase of crude oil futures versus the sale of heating oil and gasoline futures. The spread differentials reflect the potential refining margins or profitability. The spread computes the cost of the raw commodity input, crude oil, and its refined products, gasoline and heating oil. Compare to Reverse Crack Spread.
Credit Crunch - Occurs when credit availability is so restricted that normal economic or financial activity is adversely impacted. It is a more extreme case of credit rationing which has tightened.
Credit Rating Services - Refers to companies that rate public, private or consumer credit ratings. The primary credit rating companies for sovereign or country and corporate ratings are: Duff and Phelps Credit Rating Company, Moodys, andStandard and Poors. For consumer scoring a major company is Fair, Isaac.
Credit Rationing - Occurs when the terms a borrowing relationship become more restrictive. For example, higher margin requirements for security transactions indicates tighter credit requirements.
Sometimes, credit rationing may occur in some industries and not in others to promote or discourage specific types of activities.
Credit rationing can occur when interest rates have been trending either up or down. In the latter, defaults often prompt new and higher margin requirements. Thus, credit availability is more limited and interest rates can move higher in the near-term as cash demands increase.
Credit Risk - Is the risk related to counterparty failure. It is a key concern for Over-the-Counter transactions. This compares to listed trades passing through a clearinghouse.
Credit Spread - Is an option position whereby the end result is a credit. For example, the investor who places a vertical bear call spread receives a credit. Similarly, the trader who places a vertical bull put spread receives a premium credit.
Crop - Is the yield or harvest of a planting or other agricultural or animal husbandry activity.
CROP - See Compliance Registered Options Principal.
Crop Year - Is a time span which does not necessarily correspond to a calendar year. A crop year commences with the beginning of the harvest and continues until the start of the next harvest. Each crop has its own specifications.
Cross Hedge - Is the use of a futures or other derivative contract as a risk management tool where the specifications of the underlying and the derivative do not match. However, there should be a reasonable economic rationale for doing this action.
Cross Trade - Is a transaction that is not exposed to the public by outcry or usual trading practices. This type of matching trade is permissible provided it is done in accordance with the rules and regulations of the particular exchange and other regulatory organizations. The letter X can indicate this type of transaction on a ticker tape. It may be also used on a ticket or blotter. See the related Ex-Pit and Exchange for Physicals.
Crossed Market - Occurs when a broker/dealer's bid is greater than the lowest or best offer made by another. This condition can also occur when a broker/dealer's offer is lower than another's bid. Sometimes, this can occur because of slow updates in a broker/dealer's range of marketing making activities. However, when a crossed market occurs because of intention behavior, then this activity is prohibited by the NASD.
Crush Spread - Is the purchase of soybeans against the sale of the processed products. In futures trading, it is the simultaneous purchase of soybean futures versus the sale of soybean oil and soybean meal futures. The spread differentials reflect the potential processing margins or profitability. Here, the spread implies that the cost of the raw commodity input, soybeans, is cheap to its processed products. Compare to Reverse Crush Spread.
CSCE - Is the Coffee, Sugar & Cocoa Exchange.
CSE - Is the Chicago Stock Exchange.
CTO - Is the Chief Technology Officer.
Cum - Is derived from Latin and refers to "with," "attached," or "included." This compares to Ex-.
Cumulative Preferred - Is a security which maintains priority in the receipt of dividends relative to common shares. It also maintains the right to collect or recover any dividends that were not paid due to temporary cash shortages.
Curb - Is another name for the American Stock Exchange. The term originated when the early membership literally did transactions on the street curb.
Currencies and Major Foreign Market Hedge Funds - Invest in securities and derivatives which go across borders. These funds try to capitalize on interest rate differentials between currencies, varying investment climates for different countries, relative volatilities in equity or credit markets, and variations of the other hedge fund themes.
Current Assets - Refer to properties or items which are expected to be paid or sold within a year. The specific list is broad but can be categorized as cash, cash equivalents, securitized liquid investments, accounts receivable, inventories, and securities maturing within a year.
Current Liabilities - Refer to obligations due and payable within a year.
Current Principal Factor - Is the statistic which is multiplied against the initial principal amount to indicate the current outstanding principal amount.
Current Principal Value - Is the adjusted outstanding amount of mortgage indebtedness. It is computed by multiplying the initial principal amount by the Current Principal Factor. This factor reflects any accretions in part due to negative amortization, any ordinary principal payments and accelerated principal payments. The greater the divergence between the ordinary expectation for principal and current principal amount is a reflection of the prepayment events.
Current Ratio - Refers to the amount of an entity's current assets divided by the amount of current liabilities.
CUSIP - Is commonly understood to be the alphanumeric coding system for securities. It can refer to the identification of a specific security. The term is based on the work of the Committee on Uniform Securities Identification Procedures.
Cusp- Is a term which indicates the at-the-money level or current coupon issuance rate for securities. It tends to be used more frequently in the mortgage backed securities business. Also, it is used in options to indicate highly sensitive derivative statistics.
CXL - Refers to Cancel or Cancellation.
Cyclic or Cyclical Analysis - Is the study of recurring, preferably periodic, movements in prices or other time series.
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Copyright © 1998-2003 Barkley International Inc. All Rights Reserved. - Page created Tuesday, May 19, 1998 by Oasis Management®. Last Modified on Friday, February 22, 2019.