LearnGlossary
Glossary
56 terms the desk and the curriculum use, each in one or two plain sentences, each linked to the module that teaches it.
- Absorption
- Aggressive orders hit a price repeatedly and it does not move, because resting orders keep refilling. Reading the tape: ladder, footprint, delta and profile
- Adverse selection
- The risk that the trader on the other side knows more than you. It is why spreads exist. The auction and the order book
- Basis
- Futures price minus spot price. It reflects funding cost, dividends and positioning. Indian F&O: the chain, open interest, expiry and the loss studies
- Bear steepening
- Long-term yields rising faster than short-term yields. Investors demand more to hold duration. Rates, the yield curve and what bonds are saying
- Breadth
- How many stocks take part in a move. A rising index with falling breadth is a narrow, fragile advance. Screens and scans: finding stocks worth your time
- Bull steepening
- Short-term yields falling faster than long-term yields. Usually means rate cuts are being priced. Rates, the yield curve and what bonds are saying
- Capital cycle
- High returns attract investment, supply rises and returns fall. The reverse happens when capital leaves. Quality, moats and the capital cycle
- Carry trade
- Borrowing in a low-yield currency to hold a higher-yielding asset. Steady gains, sudden losses. The dollar, carry and the global financial cycle
- Credit spread
- The extra yield on corporate bonds over government bonds. A gauge of fear about defaults. Cycles, debt and manias
- Cumulative delta
- The running total of aggressive buying minus aggressive selling. Watch it against price for divergence. Reading the tape: ladder, footprint, delta and profile
- Current account deficit
- A country spending more abroad than it earns. It must be financed by foreign capital. India macro: the RBI, the rupee, crude and external balances
- Dealer gamma
- The net gamma held by option market makers. Positive gamma damps moves and negative gamma amplifies them. Dealer positioning: gamma, vanna, charm and pinning
- Delta
- How much an option's price changes for a one-point move in the underlying. Also a rough probability of finishing in the money. Pricing and the Greeks, beyond the definitions
- Depeg
- A stablecoin trading away from the value it is meant to hold. Where it breaks: stability risks and retail losses
- Discount rate
- The return investors require. It converts future cash into today's value. Valuation and what the price already expects
- Dot plot
- The chart of each Fed official's forecast for the policy rate. Rates, the yield curve and what bonds are saying
- Duration
- Sensitivity of an asset's price to interest rates. Long-dated cash flows have high duration. Rates, the yield curve and what bonds are saying
- Earnings yield
- Earnings divided by price, the inverse of the price to earnings ratio. Comparable with a bond yield. Valuation and what the price already expects
- Expected move
- The range the options market prices for a period, read from the at-the-money straddle. Volatility: implied, realised, skew and term structure
- Factor
- A measurable trait, such as value or momentum, that explains differences in returns across stocks. Factors: value, momentum, quality and low risk
- FII and DII
- Foreign and domestic institutional investors. Their daily net buying is published each evening. Who is buying: foreign, domestic and retail flows
- Financial conditions
- How easy it is to borrow and raise capital, combining rates, spreads, the dollar and equity prices. Money, the Fed and liquidity plumbing
- Free float
- Shares available for public trading. Index weights are based on it. Sessions, settlement, indices and taxes
- Gamma
- How fast delta changes as the underlying moves. It is highest near the strike close to expiry. Pricing and the Greeks, beyond the definitions
- Gamma flip
- The price level where dealer gamma changes sign. Below it moves tend to accelerate. Dealer positioning: gamma, vanna, charm and pinning
- Implementation shortfall
- The gap between the price when you decided to trade and the price you actually got. Execution: getting in and out without overpaying
- Implied volatility
- The volatility that makes a pricing model match the option's market price. The market's forecast plus a premium. Volatility: implied, realised, skew and term structure
- Kelly fraction
- The share of capital to bet that maximises long-run growth, given a known edge. Position sizing and risk of ruin
- Lead-lag
- One market's move tending to come before another's. Useful and unstable. Cross-asset: how stocks, bonds, oil, gold and currencies move together
- Liquidity
- In markets, the ability to trade size without moving the price. In macro, the amount of cash and credit available. Money, the Fed and liquidity plumbing
- Market impact
- The price move caused by your own order. It grows with roughly the square root of size. Price impact and informed flow
- Max pain
- The expiry price at which option buyers as a group would lose the most. Indian F&O: the chain, open interest, expiry and the loss studies
- Moat
- A durable barrier that protects a company's returns from competition. Quality, moats and the capital cycle
- Momentum
- The tendency of recent winners to keep outperforming for some months. Factors: value, momentum, quality and low risk
- Net asset value
- The value of a fund's or token's underlying assets per unit. Real-world assets on chain: Treasuries, funds and equities
- Net liquidity
- Fed balance sheet minus the Treasury's cash account minus reverse repo balances. Money, the Fed and liquidity plumbing
- Open interest
- The number of contracts outstanding. Rising open interest with rising price means new money is backing the move. Indian F&O: the chain, open interest, expiry and the loss studies
- Order flow imbalance
- The net pressure of buy and sell orders at the best prices. It explains most short-term price change. Price impact and informed flow
- Point of control
- The price with the most volume traded in a session. A magnet in balanced markets. Reading the tape: ladder, footprint, delta and profile
- Put-call ratio
- Put volume or open interest divided by call. An imperfect gauge of positioning. Options flow: reading what others are doing
- Real yield
- The nominal yield minus expected inflation. The true cost of money. Rates, the yield curve and what bonds are saying
- Relative strength
- A stock's performance against the index or its sector. Not the same thing as the RSI indicator. Screens and scans: finding stocks worth your time
- Repo
- A short-term loan secured by a bond. The core of the money market. Money, the Fed and liquidity plumbing
- Return on capital
- Operating profit relative to the capital invested in the business. Quality, moats and the capital cycle
- Risk of ruin
- The probability of losing enough capital that you cannot continue. Position sizing and risk of ruin
- Skew
- The difference in implied volatility between downside puts and upside calls. It prices the fear of a crash. Volatility: implied, realised, skew and term structure
- Stablecoin
- A token designed to hold a fixed value, usually one dollar, backed by reserves or by an algorithm. The plumbing: settlement, collateral, deposits and stablecoins
- Term premium
- The extra yield investors demand for holding a long bond instead of rolling short ones. Rates, the yield curve and what bonds are saying
- Theta
- The value an option loses each day from the passage of time. Pricing and the Greeks, beyond the definitions
- Tokenisation
- Recording ownership of an asset as a token on a shared ledger so that it can settle and move like software. What tokenisation is and why institutions care
- Value area
- The price range holding about seventy percent of a session's volume. Reading the tape: ladder, footprint, delta and profile
- Vega
- How much an option's price changes when implied volatility moves one point. Pricing and the Greeks, beyond the definitions
- Volatility risk premium
- Implied volatility tends to exceed the volatility that follows. Option sellers earn the gap and bear the tail. Volatility: implied, realised, skew and term structure
- VWAP
- Volume-weighted average price. The benchmark institutions use to judge their fills. Execution: getting in and out without overpaying
- Yield curve
- Government bond yields plotted by maturity. Its level and slope summarise the rate outlook. Rates, the yield curve and what bonds are saying