Box Spread

Option arbitrage in which a profitable position is established with no risk. One spread is established with call options. The other spread is established using put options.

Carry Trade

Profiting on interest rate differentials. For instance, borrowing money at a relatively low short-term rate and lending it out a higher long-term rates. 

Bounce

This occurs when a stock hits support in the form of an old high, a moving average, a trend line, or a combination of these, and moves up sharply. It is like dropping a ball onto a concrete sidewalk-the sidewalk is hard support and the ball bounces sharply. Not all support is strong enough for a bounce-we look for old tops (highs on the way up), breakout points (they act as resistance until the breakout-if the breakout is on good volume, it should act as support and give you a bounce). If money flow is good and the market is not tanking, we usually see a bounce off of this solid support.

Cash

A special term attached to an equity order that requires the trade to be settled either the same day or the following business day for cash.

Breakout Tests

We often write about stocks that test their breakout prices. Stocks breaking to new highs or out of consolidations often come back to test the breakout point before continuing with the breakout. This is most likely due to certain investors taking profits. If the breakout is a strong one, buyers come back in at some point before the stock falls below the breakout. This starts the stock back up on the next leg. This test can happen the next day, or it can happen after a week of upward movement. That is why we advise those in on the breakout move to watch for a test. If the stock has had a good move, you don?t want to lose profit on a big test-you can always get back in when the stock moves back up. For a small test soon after the break, you can ride it down, but you have to be careful the stock does not fall back within its previous trading range. Good breakout volume is a sign that this is less likely to happen. There are two plays on the breakout test: when the stock turns back up on good volume, or when the stock tops its breakout high. The former is riskier in that the breakout high can act as resistance, but we will play this move if the other indicators are good-volume, money flow, relative strength. The safer play is the break over the recent breakout high as this shows there is no resistance. If the volume is still good, the stock will most likely continue its breakout.

Changes in Stock List

Any modification to the list of tradable issues of an exchange. These modifications include: new listings, supplemental security listings, substitutional listings, deletions, name changes, and stock symbol changes.

Box Spread

Option arbitrage in which a profitable position is established with no risk. One spread is established with call options. The other spread is established using put options.

Contrarian

Similar to value investor. Looks for stocks with prices beaten down out of proportion to fundamentals.