Settlement Date: The date on which a contract is scheduled for delivery and payment. Spot settlement in the bullion market is two days after the bargain has been struck.
Self-Regulatory Organization (SRO): Exchanges that enforce financial and sales practice requirements for their members. The members of such exchanges are governed by the rules and regulations set by the exchange.
Security: Generally, a transferable instrument representing an ownership interest in a corporation (equity security or stock) or the debt of a corporation, municipality, or sovereign. Other forms of debt such as mortgages can be converted into securities. Certain derivatives on securities (e.g., options on equity securities) are also considered securities for the purposes of the securities laws. Security futures products are considered to be both securities and futures products.
Settlement price: The price established by the clearing corporation from the closing range of prices (like average of last n trades in x seconds). The settlement price is used to determine the next day's allowable trading range, and to settle all accounts between clearing members for each contract month. Margin calls and invoice prices for deliveries are determined from the settlement prices. In addition to this, settlement prices are used to determine account values and determine margins for open positions.
Short Covering: The closure of short positions.
Short Sale: The sale of an asset for future delivery without possession of the asset sold.
Speculative Long: A trader who has bought a forward or futures contract in the expectation of closing it out at a higher price.
Speculative Short: A trader who has sold a forward or future contract in the expectation of buying it back at a lower price.
Spot Market: A market in which delivery and payment must be made within a pre-specified number of days, usually two days, of the transaction date.
Spot Price: The price for physical delivery of bullion bars, usually 100-ounce bars of gold or platinum and 1,000-ounce bars of silver.
Spread: The difference between the bid (or the price a buyer is prepared to pay) and the asking (or the price at which a seller offers to sell) of a security/derivative contract or trading unit.
SPAN® (Standard Portfolio Analysis of Risk®): As developed by the Chicago Mercantile Exchange, the industry standard for calculating performance bond requirements (margins) on the basis of overall portfolio risk. SPAN calculates risk for all enterprise levels on derivative and nonderivative instruments at numerous exchanges and clearing organizations worldwide.
Speculator: In commodity futures, an individual who does not hedge, but who trades with the objective of achieving profits through the successful anticipation of price movements.
Spot Month: The futures contract that matures and becomes deliverable during the present month.
Strike Price (Exercise Price): The price, specified in the option contract, at which the underlying futures contract, security, or commodity will move from seller to buyer.
Stop Loss Order: An order that will close out a loss-making position when the price reaches a specific level. The stop loss order activates in the market once the price is the market reaches/breaches the trigger price set in the order.
Synthetic Futures: A position created by combining call and put options. A synthetic long futures position is created by combining a long call option and a short put option for the same expiration date and the same strike price. A synthetic short futures contract is created by combining a long put and a short call with the same expiration date and the same strike price.
Tender: To give notice to the clearing corporation of the intention to initiate delivery of the physical asset/commodity in satisfaction of a short futures contract.
Theta: The measure of the change in an option's premium given a change in the option's time until expiration. Equal to the change in the option's premium divided by the change in time to expiration.
Time Decay: The tendency of an option to decline in value as the expiration date approaches, especially if the price of the underlying instrument is exhibiting low volatility. See Time Value.
Time Value: That portion of an option's premium that exceeds the intrinsic value. The time value of an option reflects the probability that the option will move into-the-money. Therefore, the longer the time remaining until expiration of the option, the greater its time value.
Troy Ounce: The standard weight in which gold is most often quoted in the international market. One troy ounce is equivalent to 31.1035 grams or 480 grains. One troy ounce equals 1.09711 avoirdupois ounces. Its name derives from the old French city of Troyes, where during medieval times thisunit of weight was used at an annual trading fair.