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Scalp

To trade for small gains. Scalping normally involves establishing and liquidating a position quickly, usually within the same day, hour or even just a few minutes.

 

Securities and Futures Association (SFA)

Reports to the SIB, its function is to authorise firms to carry out agreed investment business, to register all investment staff and ensure their fitness for the industry, to monitor firms compliance with all SFA rules, and to investigate and discipline firms who breach these rules.

 

Securities and Investments Board (SIB)

Regulatory authority deriving its powers from the UK Treasury and the Financial Services Act 1986. Responsible for overseeing and authorising SRO's, RCH's, RIE's and ways in which they undertake certain aspects of regulation. See SRO, RCH, RIE.

 

Self-Regulating Organisation (SRO)

Organisations which are authorised and supervised to an extent by the SIB, to carry out particular finance functions e.g. SFA.

 

Serial options

Options which permit trading in specified months, other than, the existing four principal quarterly delivery months, namely March, June, September, and December.

 

Settlement/closing price

The price used for daily revaluation (Mark-to-market) of open positions.

 

Spread trade

The purchase of one futures contract and the simultaneous sale of another in order to take advantage of relative price changes. Examples include buying one futures contract and selling another futures contract of the same underlying asset but different delivery month; buying a given delivery month of one futures contract and selling the same delivery month of a different, but related, futures contract (e.g. Short Sterling v. Long Gilt).

 

Standard Portfolio Analysis of Risk (SPAN)

A method of calculating initial margin by evaluating portfolio risk under a number of scenarios. LIFFE use SPAN to calculate initial margin for all contracts. Originally developed by the Chicago Mercantile Exchange (CME).

 

Stop order (or stop)

An order to buy or sell at the market when and if a specified price is reached.

 

Straddles

An option strategy involving one call and one put with the same strike and same expiry date.

 

Strangle

An option strategy involving one call and one put with different strike levels but with the same expiry date.

 

Swap

See Interest rate swap.

 

Synthetic positions

A position constructed in order that its cashflows and sometimes its risk / reward characteristics replicate those of another asset or liability. Such instruments are created either because certain users cannot buy the components separately or because an arbitrage opportunity allows the synthetic to be purchased (sold) more cheaply (expensively) than the straightforward product.