Glossary terms beginning with S

Scalper

A floor trader who profits from the spread between the bid and the offer as well as from short-term price fluctuations.

SEC (Securities and Exchange Commission)

The federal agency charged with protecting investors and maintaining the integrity of the securities markets.

Secondary market

A market that provides liquidity for previously listed securities.

Securities

Assets such as shares of stock, bonds, or any kind of financial asset that can be traded.

Securities Investor Protection Corporation (SIPC)

The SIPC maintains a special reserve fund authorized by Congress to help investors with assets in the hands of bankrupt and otherwise financially troubled brokerage firms. SIPC either acts as trustee or works with an independent court-appointed trustee in a fraud case to recover funds. The statute that created SIPC rules provides that customers of a failed brokerage firm receive all non-negotiable securities that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash.

Security Futures

See Single Stock Futures.

Sell To Close

An order entered to close a long position. Generally used in futures/options investing to distinguish between establishing vs. closing a position. Consequently, a "buy to open" order is always used to open a long position.

Sell To Open

An order entered to establish a new short position. Generally used in futures/options investing to distinguish between establishing vs. closing a position. Consequently, a "buy to close" order is always used to close a short position.

SEP IRA

Simplified Employee Pension Plan IRA. A retirement plan for self-employed people or owners of small companies which allows them to defer taxes on investments intended for retirement.

Straddle

An option position in which a call and a put with the same strike price and expiration are both bought (long straddle) or sold (short straddle). A long straddle has unlimited profit potential given a large move up or down. A short straddle has limited profit (if the stock remains stable) and unlimited risk (if the stock moves significantly in either direction.

Strangle

An option spread strategy involving a long put and a long call or a short put and a short call with different strikes but the same expiration. The most common strangles involve out-of-the-money options.

Synthetic Positions

Also known as an equivalent position. By using a combination of options or options and stock, traders can create positions that have the same risk/reward characteristics of option only or stock only positions. The following summarizes the most common synthetic positions.

Synthetic long stock

A short put option and a long call option with the same strike and expiration.

Synthetic short stock

A long put option and a short call option with the same strike and expiration.

Synthetic long call

A long put and a long position in the underlying stock.

Synthetic short call

A short put and a short position in the underlying stock.

Synthetic long put

A long call and a short position in the underlying stock.

Synthetic short put

A short call and a long position in the underlying stock.

Stop Limit Order

An order to buy or sell a certain quantity of a certain security at a specified price or better, but only after a specified price has been reached. Essentially a combination of a stop order and a limit order.

Stop Close Only

A stop order that can be executed, if possible, only during the closing period of the market.

Sell Limit order

An order to a broker to sell a specified quantity of a security at or above a specified price (called the limit price).

S1

First Support Level

SD

Sell Day – Exit longs by selling into strength. A down open signals a sell on the first rally

Scale Order

Used in the context of general equities. Order to buy (sell) a security which specifies the total amount to be bought (sold) and the amount to be bought (sold) at successively decreasing (increasing) price intervals; often done in order to average the price.

Short Squeeze

A situation in which a lack of supply and excess demand in a traded stock forces the price upward.

Slippage

The difference between estimated transaction costs and the amount actually paid.

Sup

Abbreviation for Support Level

Single-Stock Futures (SSF)

SSF are an agreement between two parties that commits one party to buy a stock and one party to sell a stock at a given price and on a specified date. They are similar to existing futures contracts for gold, crude oil, bonds, and stock indices. Unlike actual stock, there is no ownership or voting rights contained in a SSF. (See also Universal Stock Futures)

Spread Trade

The simultaneous buying and selling of two related markets in the expectation that a profit will be made when the position is offset. Examples include: buying one futures contract and selling another futures contract of the same commodity but different delivery month; buying and selling the same delivery month of the same commodity on different futures exchanges; buying a given delivery month of one futures market and selling the same delivery month of a different, but related, futures market.

Stock Index

An indicator used to measure and report value changes in a selected group of stocks. How a particular stock index tracks the market depends on its composition the sampling of stocks, the weighting of individual stocks, and the method of averaging used to establish an index.

Stock Index Futures

Futures contracts on a stock index, such as the Standard & Poor's 500 or the Dow Jones Industrial Average. Stock index futures contracts are a derivative of the underlying index, and are cash-settled.

Systemic Risk

Market risk due to price fluctuations which cannot be eliminated by diversification.

Segregated Account

A special account used to hold and segregate customer’s assets from those of the broker and/or clearing firm.

Sell

To convey ownership of a security or other asset for money or value.

Selling Hedge

Selling futures contracts to protect against possible decreased prices of the underlying cash market which will be sold in the future.

Settlement Price

(1) The closing price, or a price within the range of closing prices, which is used as the official price in determining net gains or losses at the close of each trading session. (2) Payment of any amount of money under a contract.

Short covering

Trades that reverse, or close out, short-sale positions.

Short Hedge

Selling futures to protect against possible decreasing prices of an underlying cash market. See also Hedging.

Short

One who has sold a cash commodity, a commodity futures contract or other financial instrument; a long, in contrast, is one who has bought a cash commodity or futures contract.

Speculator

One who attempts to anticipate price changes and make profits through the sale and/or purchase of financial instrument. A speculator with a forecast of advancing prices hopes to profit by buying futures contracts and then liquidating at a higher price. A speculator with a forecast of declining prices hopes to profit by selling then buying at a lower price in the future.

SPG

Price moves below PB and wide spread reversal occurs with (1) a close above the previous two closes, (2) the close is above PB, (3) the close is above the open and mid-range for the day and (4) the daily range is greater than prior day’s range.

Spot

Market for the immediate delivery of the product and immediate payment. May also refer to the nearest delivery month of a futures contract.

Spread (or Straddle)

(1) The purchase of one futures or forward delivery month against the sale of another futures or forward delivery month of the same commodity. The purchase of one delivery month of one futures or forward against the sale of the same delivery month of a different futures or forward. The purchase of one future or forward in one market against the sale of that future or forward in another market, to take advantage of and profit from the distortions from the normal price relationships that sometimes occur. (2) In a quotation, the difference between the bid and the ask prices of a market (3)The difference between two or more prices.

SS

Short sale day. Watch for highs first with resistance at prior day’s high. If the price moves excessively above the previous day’s high, short trades should be scalps only that are covered on the first pullback. On a flat to down open, short the first rally up to the previous day’s high. The market should not make new highs in the afternoon.

Stop Loss

A risk management technique used to close out a losing position at a given point. A stop loss order is placed at the given point.

Stop Order

An order that becomes a market order when a particular price level is reached. A sell stop is placed below the market, a buy stop is placed above the market. Sometimes referred to as a stop loss order.

Strike price

A specified price at which an investor can buy or sell an option's underlying financial instrument. The exchange rate, interest rate, or market price that is guaranteed by an option transaction.

Support

A price level at which a declining market has stopped falling. Once this level is reached, the market trades sideways for a period of time or rebounds. It is the opposite of a resistance price range.

S

Sell day. Exit longs by selling into strength. A dow open signals a sell on the first rally.