Options Trading Glossary

Description: Options Glossary, Hammering the Market, Hedge,Hedge Ratio,Hedged Position

Hammering the Market

The intense selling of stocks by speculators who think the market is about to drop because they think prices are inflated.

Hedge

A conservative strategy used to limit investment loss by effecting a transaction which offsets an existing position. Hedging is taking a position through options or futures opposite to the current position they hold in the market.

Hedge Ratio

The mathematical quantity that is equal to the delta of an option. It is useful in that a theoretically neutral hedge can be established by taking offsetting positions in the underlying stock and its call options. 

Hedged Position

A position established with the specific intent of protecting an existing position. For example, an owner of common stock may buy a put option to hedge against a possible stock price decline.

High (hi)

The highest price that was paid for a stock during a certain period.

High and Low

Refers to the high and low transactions prices that occur each trading day.

High Flyer

A speculative high-priced stock that moves up and down sharply over a short period of time.

High-tech Stock

Refers to the stock of companies involved in high-technology industries, such as computers, biotechnology, robotics, electronics, and semiconductors.

Historic Volatility

A measure of actual stock price changes over a specific period of time; usually calculated by taking a stand`ard deviation of price changes over a time period.

Holder

The purchaser of an option.

Horizontal Spread

Spreads between options with the same exercise price but different expiration dates. Also known as calendar or time spreads.

Illiquid Market

Market which has no volume that subsequently creates a lot of slippage due to lack of trading volume.

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