Glossary

Arbitrage

An arbitrage is a trading strategy that involves buying and selling similar assets in different markets to take advantage of the price difference. It involves buying an asset in one market at a lower price and simultaneously selling it in another market at a higher price.

Bear Call Spread

A Bear Call Spread, also known as a Short Call Spread or Call Credit Spread, is an options strategy that profits when the underlying asset's price declines or remains below the short call's strike price.

Bull Calendar Spread

A bull calendar spread is an options trading strategy that involves buying and selling call options with the same strike price but different expiration dates, where the longer-dated option is purchased, and the shorter-dated option is sold.

Delta Neutral

Delta neutral is a portfolio or trading strategy where the overall delta of the position is zero, meaning the portfolio's value does not change with small movements in the underlying asset's price.

Momentum Trading

Momentum trading is a trading strategy that involves buying stocks that have seen a surge in their prices recently. The core idea is to "buy high and sell higher".

Option Buying

Option buying is a trading strategy where an investor pays a premium to purchase call or put options, giving them the right but not the obligation to buy or sell an underlying asset at a predetermined price before a certain date specified by the exchange.

Option Writing

Option writing, also known as option selling, is the process of selling a call or put option, where the writer (seller) must fulfil the terms of the contract if the buyer exercises the option.

Price Action Trading

A price action trading strategy is where traders use recent price movements to plan their entries and exits. Price action trading involves technical analysis and recent price movements.

Pullback Trading

Pullback trading is a strategy where traders enter a trade after the price temporarily moves against the main trend (a "pullback") and then shows signs of continuing in the original direction.

Speculation

Speculation in finance refers to the act of holding a stock or other financial instrument with the motive of making a profit in the short term from price fluctuations in the security.

Statistical Arbitrage

Statistical Arbitrage is a quantitative trading strategy that uses mathematical models and statistical techniques to identify and exploit short-term price inefficiencies in related assets listed on different exchanges.

Trading

Trading refers to the act of buying and selling financial instruments such as stocks, bonds, commodities, currencies, and derivatives in financial markets. The goal of trading is to profit from price movements by capitalising on short-term or long-term trends.