DOCSLIB.ORG

Financial Lexicon a Compendium of Financial Definitions, Acronyms, and Colloquialisms

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Financial Lexicon a Compendium of Financial Definitions, Acronyms, and Colloquialisms Financial Lexicon A compendium of financial definitions, acronyms, and colloquialisms Erik Banks Financial Lexicon A compendium of financial definitions, acronyms, and colloquialisms ERIK BANKS © Erik Banks 2005 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2005 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y.10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 1–4039–3609–9 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. 10987654321 14 13 12 11 10 09 08 07 06 05 Printed and bound in Great Britain by Anthony Rowe Ltd, Chippenham and Eastbourne Contents Acknowledgments v The author vi Summary of colloquialisms, foreign terms, and acronyms vii Introduction xv A1 B26 C50 D96 E 120 F 136 G 159 H 170 I 177 J 197 K 199 L 201 M 219 N 236 iii iv CONTENTS O 250 P 260 Q 290 R 292 S 320 T 355 U–V–W 373 X–Y–Z 391 Numeric 396 Selected references 397 Acknowledgments I would like to extend my thanks and appreciation to Andrea Hartill at Palgrave Macmillan for her enthusiasm, support, and guidance on this new project. Thanks are also due to the editing, production, and marketing teams at Palgrave for their work in producing the book. I would also like to acknowledge the contributions of a number of referees from the banking and insurance sectors who were kind enough to review select definitions in this book and provide input on scope and detail. And, as always, my deepest thanks go to Milena. EB Redding, Connecticut 2004 v The author Erik Banks spent 16 years in the financial services industry, holding senior risk management positions at several global financial institutions, includ- ing Partner and Chief Risk Officer of Bermuda reinsurer XL Capital’s derivatives subsidiary, and Managing Director of Corporate Risk Manage- ment at Merrill Lynch, where he spent 13 years managing credit risk, market risk and risk analytics/technology teams in Tokyo, Hong Kong, London and New York. He is the author of 18 books on risk management, emerging markets, governance, derivatives, alternative risk transfer, merchant banking, and electronic finance. vi Summary of colloquialisms, foreign terms, and acronyms COLLOQUIALISMS Accelerator Big uglies Busted convertible Actuals Black knight Buy minus All-in Blank check preferred Buy the book Alligator spread Blowout Cable Alphabet stock Blue chip CAMEL Ankle biter Bogey Carrot equity Asian tail Boiler room Carve-out Aunt Millie Boilerplate Chapter 11 Baby bond Bond crowd Cheap Back door Book-building Check kiting Back door listing Bookrunner Cherry pick Bad bank Bootstrapping Chewable pill Bankmail Bottom fishing Chinese Wall Bear hug Bought deal Churning Bear raid Brady bond Circle Bear spread Breaking syndicate Circuit breaker Bear trap Bricks and mortar City Code Beauty contest Broken date Clawback Bed breakfasting Bubble Clean Belly of the curve Buck Clean price Belly up Bucket shop Clone fund Bellwether Bulge bracket Coat-tailing Benchmark Bull spread Consol Big Board Bunching Contagion vii viii COLLOQUIALISMS Contrarian Flipper Kaffirs Cookie jar accounting Floater Kicker Cooking the books Following the fortunes Killer bees Cooling off period Footsie Kiwi Concert party Freddie Mac Laddering Cornering Free rider Laundering Crack spread Freeze-out League table Creeping tender Front door Legging Crown jewel defense Front running Line Crown jewels Gather in the stops Lobster trap Crush spread Geisha Local Daimyo Ghosting Locked market Daisy chain Ginnie Mae Long and wrong Dawn raid Gnome Long bond Dead cat bounce Goldbricks Long end Dead hand clause Golden handcuffs Macaroni defense Dead hand poison pill Golden handshake Main Street Death spiral Golden hello Married put Dirty float Golden parachute Matilda Dirty price Good money Midget Dirty stock Grains Mini DK [Don’t know] Granny bond Momo Dog and pony show Graveyard market Moneyness Double dipping Gray knight Morning notes Down round Gray market Names Dragon Greeks Natural Dry powder Greenmail Near money Dwarf Greenshoe Nifty Fifty Elbow Gun jumping Noming the pipes Elephant Gunslinger Omnipresent specter Elephant hunting Haircut One man picture Embeddo Handle OPM [Other people’s EPS bootstrapping Hard landing money] Evergreen Head and shoulders Over the wall Fallen angel Heavy market Overlined Fannie Mae High street bank Pac-Man defense Fighting the tape Hit the bid Painting the tape Fill or kill Hot money Paris club Fire sale Hung deal Parking Flash price Incubator Penny jumping Flight to quality Jobber Penny stock Flip in pill Jobbing People pill Flip over pill Junk bond Phantom stock FOREIGN LANGUAGE TERMS ix Piercing the corporate Safe harbor rule Tailgating veil Samurai Take the offer Pig on pork Saturday night special Teaser Piggy-backing Scalper Teeny Pink sheets Scorched earth Texas hedge Pinning the strike defense Thin market Pip Seat Third market Pipeline Selling away Tight market Point Shadow calendar Tombstone Poison pill Shadow stock Tom-next Poison put Shark repellent Ton Poop and scoop Shoe Too big to fail Porcupine provision Shogun Torpedo stock Portfolio pumping Short against the box Toxic waste Pot Short end Triple witching hour Pre-pack Short squeeze Turkey Puffery Sinker Twisting Puke point Size Tying Pump and dump Sleeping beauty Underwater Punt Snowballing Upstairs market Pup company Softs Vanilla Quiet period Spark spread Vulture bid QT [Questioned trade] Special Vulture fund Raider Spinning War chest Rainmaker Spring loading Weak hands Red herring Square Wet barrels Red-lining Squeeze Whipsaw Repo Stack and roll Whisper numbers Reverse Stag Whisper stock Reverse head and Stapled stock Whistleblower shoulders Sticky deal White knight Reverse repo Story paper White squire Reverse tying Street name Widows and orphans Revolver Stripping the yield Winding-up Rich curve Window dressing Riding the curve Strong hands Without Rio trade Stub Yankee Roadshow Stuck deal Yard Roller coaster Supersinker Yield burning Rolling down the Sweetener Zombie curve Tag along rights Round trip Tail x ACRONYMS FOREIGN LANGUAGE TERMS Ad valorem Conseil du Pfandbriefe Ajustabonos Surveillance Pro-forma Amakudari Corpus Pro-rata Arbitrageur Daimyo Samurai Aufsichtrsrat Entrepôt Schuldschein Bancassurance Ex-gratia Shibosai Banque d’affaires Filz Shikko yakuin Bolsa Force Majeure Shogun Bordereau Geisha Shokken Borsa Gensaki Tranche Bourse Gyosei Shido Uberrimae fidei Boutique Hausbank Ultra vires Bund Keiretsu Vis major Bundesbank Laissez faire Vostro Caveat emptor Mochiai Vorstand Chaebol Nostro Zaibatsu Conseil Noyau dur Zaitech d’Administration Pari passu ACRONYMS ABS Asset-backed security B2B Business-to-business ACH Automatic clearing [exchange] house B2C Business-to-consumer ADR American Depository [exchange] Receipt BA Banker’s acceptance ADS American Depository BACS Bankers’ Automated Share Clearing Service AGM Annual general BBA British Bankers meeting Association ALM Asset-liability BIS Bank for International management Settlements APT Arbitrage Pricing BTF Block trading Theory facility ARM Adjustable rate CAPM Capital Asset Pricing mortgage Model ART Alternative risk tranfer CBO Collateralized bond ATS Alternative trading obligation system CD Certificate of deposit ACRONYMS xi CDO Collateralized debt EBITDA Earnings before obligation interest, taxes, CFD Contract for depreciation and differences amortization CFTC Commodity Futures EBRD European Bank for Trading Commission Reconstruction and CHAPS Clearinghouse Development Automated Payment ECB European Central Bank System ECN Electronic CHIPS Clearinghouse communications Interbank Payment network System ECP Euro commercial paper CIF Cost, insurance, freight ECU European currency unit CLO Collateralized loan EFP Exchange for obligation physical CMO Collateralized mort- EFT Electronic funds transfer gage obligation EMTN Euro medium term note COD Cash on delivery EMU European Monetary CP Commercial paper Union CPI Consumer Price Index EONIA Euro overnight index CPR Conditional average prepayment rate EPS Earnings per share CSA Credit support annex ERM Enterprise risk CTA Commodity Trading management Advisor ESOP Employee stock CTD Cheapest-to-deliver ownership plan D&O Directors’ and officers’ ETF Exchange-traded fund [insurance cover] EURIBOR Euro Interbank Offered DAC Deliver against cash Rate DCF Discounted cash flow FASB Financial
Load more

Recommended publications
  • Derivative Markets Swaps.Pdf
    Derivative Markets: An Introduction Derivative markets: swaps 4 Derivative markets: swaps 4.1 Learning outcomes After studying this text the learner should / should be able to: 1. Define a swap. 2. Describe the different types of swaps. 3. Elucidate the motivations underlying interest rate swaps. 4. Illustrate how swaps are utilised in risk management. 5. Appreciate the variations on the main themes of swaps. 4.2 Introduction Figure 1 presentsFigure the derivatives 1: derivatives and their relationshipand relationship with the spotwith markets. spot markets forwards / futures on swaps FORWARDS SWAPS FUTURES OTHER OPTIONS (weather, credit, etc) options options on on swaps = futures swaptions money market debt equity forex commodity market market market markets bond market SPOT FINANCIAL INSTRUMENTS / MARKETS Figure 1: derivatives and relationship with spot markets Download free eBooks at bookboon.com 116 Derivative Markets: An Introduction Derivative markets: swaps Swaps emerged internationally in the early eighties, and the market has grown significantly. An attempt was made in the early eighties in some smaller to kick-start the interest rate swap market, but few money market benchmarks were available at that stage to underpin this new market. It was only in the middle nineties that the swap market emerged in some of these smaller countries, and this was made possible by the creation and development of acceptable benchmark money market rates. The latter are critical for the development of the derivative markets. We cover swaps before options because of the existence of options on swaps. This illustration shows that we find swaps in all the spot financial markets. A swap may be defined as an agreement between counterparties (usually two but there can be more 360° parties involved in some swaps) to exchange specific periodic cash flows in the future based on specified prices / interest rates.
    [Show full text]
  • The Synthetic Collateralised Debt Obligation: Analysing the Super-Senior Swap Element
    The Synthetic Collateralised Debt Obligation: analysing the Super-Senior Swap element Nicoletta Baldini * July 2003 Basic Facts In a typical cash flow securitization a SPV (Special Purpose Vehicle) transfers interest income and principal repayments from a portfolio of risky assets, the so called asset pool, to a prioritized set of tranches. The level of credit exposure of every single tranche depends upon its level of subordination: so, the junior tranche will be the first to bear the effect of a credit deterioration of the asset pool, and senior tranches the last. The asset pool can be made up by either any type of debt instrument, mainly bonds or bank loans, or Credit Default Swaps (CDS) in which the SPV sells protection1. When the asset pool is made up solely of CDS contracts we talk of ‘synthetic’ Collateralized Debt Obligations (CDOs); in the so called ‘semi-synthetic’ CDOs, instead, the asset pool is made up by both debt instruments and CDS contracts. The tranches backed by the asset pool can be funded or not, depending upon the fact that the final investor purchases a true debt instrument (note) or a mere synthetic credit exposure. Generally, when the asset pool is constituted by debt instruments, the SPV issues notes (usually divided in more tranches) which are sold to the final investor; in synthetic CDOs, instead, tranches are represented by basket CDSs with which the final investor sells protection to the SPV. In any case all the tranches can be interpreted as percentile basket credit derivatives and their degree of subordination determines the percentiles of the asset pool loss distribution concerning them It is not unusual to find both funded and unfunded tranches within the same securitisation: this is the case for synthetic CDOs (but the same could occur with semi-synthetic CDOs) in which notes are issued and the raised cash is invested in risk free bonds that serve as collateral.
    [Show full text]
  • Tracking and Trading Volatility 155
    ffirs.qxd 9/12/06 2:37 PM Page i The Index Trading Course Workbook www.rasabourse.com ffirs.qxd 9/12/06 2:37 PM Page ii Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Aus- tralia, and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding. The Wiley Trading series features books by traders who have survived the market’s ever changing temperament and have prospered—some by reinventing systems, others by getting back to basics. Whether a novice trader, professional, or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future. For a list of available titles, visit our web site at www.WileyFinance.com. www.rasabourse.com ffirs.qxd 9/12/06 2:37 PM Page iii The Index Trading Course Workbook Step-by-Step Exercises and Tests to Help You Master The Index Trading Course GEORGE A. FONTANILLS TOM GENTILE John Wiley & Sons, Inc. www.rasabourse.com ffirs.qxd 9/12/06 2:37 PM Page iv Copyright © 2006 by George A. Fontanills, Tom Gentile, and Richard Cawood. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com.
    [Show full text]
  • Debt Equity M&A
    CAPITALIZE ON OUR CONNECTIONS. Cambridge Wilkinson is a leading global investment Debt bank with a focus on middle market companies. Equity SPEED – When you need additional capital, or an M&A opportunity arises, every day counts. An optimized capital structure can help reduce risk and create significant value. Otherwise opportunities could pass you by, your cost of capital may not be competitive, M&A or you may lack sufficient liquidity to weather periods of volatility. You need our nimble approach and speed to market to complete an acquisition, refinance, expand your product line, or capitalize for growth. CONNECTIONS – Completing transactions quickly requires a highly targeted cambridgewilkinson.com approach, knowing who to go to, and who is the best fit. We have a network build over 1-646-582-9423 decades of successful transactions which includes bank and alternative lenders, credit funds, large family offices, institutional investors, private equity, offshore relationships, and strategic and financial buyers and sellers. With deep transaction experience and deep All securities assignments are completed sector expertise, we have established relationships throughout many industries. through Avalon Securities, Ltd. a FINRA and SEC registered broker-dealer. CONFIDENCE – You get senior-level attention and the confidence that comes from a proven track record of optimizing transactions and capital structures, delivering on promises and looking out for our clients’ best interests. Our leadership team brings diverse perspectives gained from a wide range of experience in investment banking, corporate finance, and family office as well as building and owning specialty finance companies. Drawing from decades of relentless pursuit of total client satisfaction, we provide an unwavering commitment to our clients, assuring them they have the highest level of attention, focus and expert services available.
    [Show full text]
  • Understanding the Z-Spread Moorad Choudhry*
    Learning Curve September 2005 Understanding the Z-Spread Moorad Choudhry* © YieldCurve.com 2005 A key measure of relative value of a corporate bond is its swap spread. This is the basis point spread over the interest-rate swap curve, and is a measure of the credit risk of the bond. In its simplest form, the swap spread can be measured as the difference between the yield-to-maturity of the bond and the interest rate given by a straight-line interpolation of the swap curve. In practice traders use the asset-swap spread and the Z- spread as the main measures of relative value. The government bond spread is also considered. We consider the two main spread measures in this paper. Asset-swap spread An asset swap is a package that combines an interest-rate swap with a cash bond, the effect of the combined package being to transform the interest-rate basis of the bond. Typically, a fixed-rate bond will be combined with an interest-rate swap in which the bond holder pays fixed coupon and received floating coupon. The floating-coupon will be a spread over Libor (see Choudhry et al 2001). This spread is the asset-swap spread and is a function of the credit risk of the bond over and above interbank credit risk.1 Asset swaps may be transacted at par or at the bond’s market price, usually par. This means that the asset swap value is made up of the difference between the bond’s market price and par, as well as the difference between the bond coupon and the swap fixed rate.
    [Show full text]
  • An Asset Manager's Guide to Swap Trading in the New Regulatory World
    CLIENT MEMORANDUM An Asset Manager’s Guide to Swap Trading in the New Regulatory World March 11, 2013 As a result of the Dodd-Frank Act, the over-the-counter derivatives markets Contents have become subject to significant new regulatory oversight. As the Swaps, Security-Based markets respond to these new regulations, the menu of derivatives Swaps, Mixed Swaps and Excluded Instruments ................. 2 instruments available to asset managers, and the costs associated with those instruments, will change significantly. As the first new swap rules Key Market Participants .............. 4 have come into effect in the past several months, market participants have Cross-Border Application of started to identify risks and costs, as well as new opportunities, arising from the U.S. Swap Regulatory this new regulatory landscape. Regime ......................................... 7 Swap Reporting ........................... 8 This memorandum is designed to provide asset managers with background information on key aspects of the swap regulatory regime that may impact Swap Clearing ............................ 12 their derivatives trading activities. The memorandum focuses largely on the Swap Trading ............................. 15 regulations of the CFTC that apply to swaps, rather than on the rules of the Uncleared Swap Margin ............ 16 SEC that will govern security-based swaps, as virtually none of the SEC’s security-based swap rules have been adopted. Swap Dealer Business Conduct and Swap This memorandum first provides background information on the types of Documentation Rules ................ 19 derivatives that are subject to the CFTC’s swap regulatory regime, on new Position Limits and Large classifications of market participants created by the regime, and on the Trader Reporting ....................... 22 current approach to the cross-border application of swap requirements.
    [Show full text]
  • Implied Volatility Modeling
    Implied Volatility Modeling Sarves Verma, Gunhan Mehmet Ertosun, Wei Wang, Benjamin Ambruster, Kay Giesecke I Introduction Although Black-Scholes formula is very popular among market practitioners, when applied to call and put options, it often reduces to a means of quoting options in terms of another parameter, the implied volatility. Further, the function σ BS TK ),(: ⎯⎯→ σ BS TK ),( t t ………………………………(1) is called the implied volatility surface. Two significant features of the surface is worth mentioning”: a) the non-flat profile of the surface which is often called the ‘smile’or the ‘skew’ suggests that the Black-Scholes formula is inefficient to price options b) the level of implied volatilities changes with time thus deforming it continuously. Since, the black- scholes model fails to model volatility, modeling implied volatility has become an active area of research. At present, volatility is modeled in primarily four different ways which are : a) The stochastic volatility model which assumes a stochastic nature of volatility [1]. The problem with this approach often lies in finding the market price of volatility risk which can’t be observed in the market. b) The deterministic volatility function (DVF) which assumes that volatility is a function of time alone and is completely deterministic [2,3]. This fails because as mentioned before the implied volatility surface changes with time continuously and is unpredictable at a given point of time. Ergo, the lattice model [2] & the Dupire approach [3] often fail[4] c) a factor based approach which assumes that implied volatility can be constructed by forming basis vectors. Further, one can use implied volatility as a mean reverting Ornstein-Ulhenbeck process for estimating implied volatility[5].
    [Show full text]
  • Sales Representatives Manual 2020
    Sales Representatives Manual Volume 4 2020 Volume 4 Table of Contents Chapter 1 Overview of Derivatives Transactions ………… 1 Chapter 2 Products of Derivatives Transactions ……………99 Derivatives Transactions and Chapter 3 Articles of Association and ……………… 165 Various Rules of the Association Exercise (Class-1 Examination) ……………………………………… 173 Chapter 1 Overview of Derivatives Transactions Introduction ∙∙∙∙∙∙∙∙ 3 Section 1. Fundamentals of Derivatives Transactions ∙∙∙∙∙∙∙∙ 10 1.1 What Are Derivatives Transactions? ∙∙∙∙∙∙∙∙ 10 Section 2. Futures Transactions ∙∙∙∙∙∙∙∙ 10 2.1 What Are Futures Transactions? ∙∙∙∙∙∙∙∙ 10 2.2 Futures Price Formation ∙∙∙∙∙∙∙∙ 14 2.3 How to Use Futures Transactions ∙∙∙∙∙∙∙∙ 17 Section 3. Forward Transactions ∙∙∙∙∙∙∙∙ 24 3.1 What Are Forward Transactions? ∙∙∙∙∙∙∙∙ 24 Section 4. Option Transactions ∙∙∙∙∙∙∙∙ 25 4.1 What Are Options Transactions? ∙∙∙∙∙∙∙∙ 25 4.2 Options’ Price Formation ∙∙∙∙∙∙∙∙ 32 4.3 Characteristics of Options Premiums ∙∙∙∙∙∙∙∙ 36 4.4 Sensitivity of Premiums to the Respective Factors ∙∙∙∙∙∙∙∙ 38 4.5 How to Use Options ∙∙∙∙∙∙∙∙ 46 4.6 Option Pricing Theory ∙∙∙∙∙∙∙∙ 57 Section 5. Swap Transactions ∙∙∙∙∙∙∙∙ 63 5.1 What Are Swap Transactions? ∙∙∙∙∙∙∙∙ 63 Section 6. Risks in Derivatives Transactions ∙∙∙∙∙∙∙∙ 72 Conclusion ∙∙∙∙∙∙∙∙ 82 Introduction Introduction 1. History of Derivatives Transactions Chapter 1 The term “derivatives” is used for financial instruments that “derive” from financial assets, meaning those that have securities such as shares or bonds as their underlying assets or financial transactions that use a reference indicator such as interest rates or exchange rates. Today the term “derivative” is used widely throughout society and not just on the financial markets. Although there has been criticism that they amplify financial risks and have a harmful impact on the Chapter 2 economy, derivatives are an indispensable requirement in supporting finance in the present age, and have become accepted as the leading edge of financial innovation.
    [Show full text]
  • Final Report
    FINAL REPORT Road Map to Green Funding of LCBA Bankable Proposals for SMEs Non Key Expert Gustavo Pimentel, Managing Director [email protected] | +55 (21) 2247-1136 SITAWI Finance for Good 04 February 2017 Index 1. Introduction ........................................................................................................ 2 2. Overview of Financial Instruments Related to Green Funding ............................ 3 2.1 General Context ............................................................................................... 3 2.2 European Context ............................................................................................ 5 2.3 Brazilian Context .............................................................................................. 8 2.4 Types of Bankable Transactions ...................................................................... 8 2.5 Types of Funding ............................................................................................. 9 2.6 Matrix of Funding Possibilities per Type of Transaction ................................. 10 3. Green Funding Instruments and Conditions ..................................................... 24 3.1 Brazilian Institutions ....................................................................................... 24 3.2 International Institutions ................................................................................. 29 4. Road Map Template ......................................................................................... 12 5. Conclusions
    [Show full text]
  • Not for Reproduction Not for Reproduction
    Structured Products Europe Awards 2011 to 10% for GuardInvest against 39% for a direct Euro Stoxx 50 investment. “The problem is so many people took volatility as a hedging vehicle over There was also €67.21 million invested in the Theam Harewood Euro time that the price of volatility has gone up, and everybody has suffered Long Dividends Funds by professional investors. Spying the relationship losses of 20%, 30%, 40% on the cost of carry,” says Pacini. “When volatility between dividends and inflation – that finds companies traditionally spiked, people sold quickly, preventing volatility from going up on a paying them in line with inflation – and given that dividends are mark-to-market basis.” House of the year negatively correlated with bonds, the bank’s fund recorded an The bank’s expertise in implied volatility combined with its skills in annualised return of 18.98% by August 31, 2011, against the 1.92% on structured products has allowed it to mix its core long forward variance offer from a more volatile investment in the Euro Stoxx 50. position with a short forward volatility position. The resulting product is BNP Paribas The fund systematically invests in dividend swaps of differing net long volatility and convexity, which protects investors from tail maturities on the European benchmark; the swaps are renewed on their events. The use of variance is a hedge against downside risks and respective maturities. There is an override that reduces exposure to the optimises investment and tail-risk protection. > BNP Paribas was prepared for the worst and liabilities, while providing an attractive yield.
    [Show full text]
  • A Fundamental Introduction to Japanese Candlestick Charting
    © Copyright 2018 TheoTrade, LLC. All Rights Reserved 1 TRADE LIKE THE FLOUNDER An overview to Matt’s trading style, methods, thoughts, and insights © Copyright 2018 TheoTrade, LLC. All Rights Reserved 2 Acronyms and Shorthand Cheat Sheet • PnL – Profit and Loss (P. and L. → P n L) • IV – implied volatility • IRA – Individual Retirement Account • Vol – Volatility (typically, IMPLIED volatility) • DTE – Days to Expiration • Roll – move an option from one strike and/or expiration to a different strike and/or expiration • ATM/ITM/OTM/DITM – At the Money, In the Money, Out of the Money, DEEP in the Money • Legging – trading a piece of a spread by itself instead of the whole spread • Skew – the difference between supply/demand (or IV) at different strikes or expirations • Front month – the shorter-dated contract of a multiple-expiration spread • Back month – the longer-dated contract of a multiple-expiration spread • Opex – Option expiration © Copyright 2018 TheoTrade, LLC. All Rights Reserved 3 PART 1 – WHAT KIND OF TRADER AM I? Vehicle, products, time frames, structures, targets, etc. © Copyright 2018 TheoTrade, LLC. All Rights Reserved 4 What do I prefer to trade? Ask most people that question, they will tell you what PRODUCTS they like to trade (GOOG, AAPL, VIX, etc.) but before you settle on a product, learn WHAT you’re trading. Things you can trade: Direction (up or down) Volatility (IV vs. HV) Correlation/Relative Strength/Beta (Pairs Trading) Mispricing/Difference in pricing (Pure arbitrage) Order Flow (HFT) M&A/Special Situations (Merger Arb) Almost ALL retail traders trade direction. I primarily trade volatility.
    [Show full text]
  • A Glossary of Securities and Financial Terms
    A Glossary of Securities and Financial Terms （English to Traditional Chinese） 9-times Restriction Rule 九倍限制規則 24-spread rule 24 個價位規則 1 A AAAC see Academic and Accreditation Advisory Committee【SFC】 ABS see asset-backed securities ACCA see Association of Chartered Certified Accountants, The ACG see Asia-Pacific Central Securities Depository Group ACIHK see ACI-The Financial Markets of Hong Kong ADB see Asian Development Bank ADR see American depositary receipt AFTA see ASEAN Free Trade Area AGM see annual general meeting AIB see Audit Investigation Board AIM see Alternative Investment Market【UK】 AIMR see Association for Investment Management and Research AMCHAM see American Chamber of Commerce AMEX see American Stock Exchange AMS see Automatic Order Matching and Execution System AMS/2 see Automatic Order Matching and Execution System / Second Generation AMS/3 see Automatic Order Matching and Execution System / Third Generation ANNA see Association of National Numbering Agencies AOI see All Ordinaries Index AOSEF see Asian and Oceanian Stock Exchanges Federation APEC see Asia Pacific Economic Cooperation API see Application Programming Interface APRC see Asia Pacific Regional Committee of IOSCO ARM see adjustable rate mortgage ASAC see Asian Securities' Analysts Council ASC see Accounting Society of China 2 ASEAN see Association of South-East Asian Nations ASIC see Australian Securities and Investments Commission AST system see automated screen trading system ASX see Australian Stock Exchange ATI see Account Transfer Instruction ABF Hong
    [Show full text]