Traders Glossary

Explore, learn, and discover all trading-related terms here in our comprehensive glossary.

Securities and Exchange Commission (SEC)

Organization which regulates the securities markets in order to protect investors.

Security

An instrument which can be traded – eg stocks, bonds etc.

Selling Short

Selling a security which you don't actually own beforehand. You will eventually have to buy it back, hopefully at a reduced price, thus making profit.

Series (options)

Option contracts of the same class (underlying asset), same Strike price and same Expiration date.

Units of ownership in a company or organization.

Short

Selling a security which you don't actually own.

Short Call

A bearish strategy involving the short selling of call options.

Short Call Butterfly

A 3-leg direction-neutral, strategy, requiring high volatility, involving selling a low strike call, buying 2 middle strike calls with the same strike price and buying a higher strike call.

Short Call Condor

A 4-leg direction-neutral, strategy, requiring high volatility, involving selling a low strike call, buying 2 middle strike calls with different strike prices and buying a higher strike call.

Short Call Synthetic Straddle

A 2-leg direction-neutral, strategy, requiring low volatility, involving selling 2 ATM calls for every 100 shares (US stock options) bought, thereby replicating the risk profile of a Short Straddle.

Short Combo

A bearish strategy involving buying OTM puts and selling OTM calls in order to partially replicate a short stock position.

Short Guts

A low volatility strategy involving selling In the Money (ITM) Calls and ITM Puts. Low volatility is required, after the position is opened, to make this a profitable strategy.

Short Iron Butterfly

A direction neutral strategy constructed by combining a Bull Call Spread with a Bear Put Spread or by combining a narrow Long Strangle with a wider Short Strangle.

Short Put

A bullish strategy, selling put options usually OTM (with a strike price below the current stock price).

Short Put Butterfly

A 3-leg direction-neutral, strategy, requiring high volatility, involving selling a low strike put, buying 2 middle strike puts with the same strike price and selling a higher strike put.

Short Put Condor

A 4-leg direction-neutral, strategy, requiring high volatility, involving selling a low strike put, buying 2 middle strike puts with different strike prices and selling a higher strike put.

Short Put Synthetic Straddle

A 2-leg direction-neutral, strategy, requiring low volatility, involving selling 2 ATM puts for every 100 shares (US stock options) sold, thereby replicating the risk profile of a Short Straddle.

Short Selling

Selling a security which you don't actually own beforehand. You will eventually have to buy it back, hopefully at a reduced price, thus making profit.

Short Stock

Selling shares short.

Short Straddle

A low volatility direction neutral trade that involves simultaneously selling a call and put at the same strike price and with the same expiration date. Requires the underlying asset to be rangebound to make the trade profitable.