Uncovered Options Trading System
Haircut is the value of assets for purposes of capital, segregation, or margin requirements, a percentage reduction from the stated value (e.g., book value or market value) to account for possible declines in value that may occur before assets can be liquidated.
Hand Held Terminal is a small computer terminal used by floor brokers or floor traders on an exchange to record trade information and transmit that information to the clearing organization.
Hardening describes a price which is gradually stabilizing; or this term may indicate a slowly advancing market.
In technical analysis, Head and Shoulders are used to to describe a chart formation that resembles a human head and shoulders and is generally considered to be predictive of a price reversal. A head and shoulders top (which is considered predictive of a price decline) consists of a high price, a decline to a support level, a rally to a higher price than the previous high price, a second decline to the support level, and a weaker rally to about the level of the first high price. The reverse (upside-down) formation is called a head and shoulders bottom (which is considered predictive of a price rally).
Heavy market is a market in which prices are demonstrating either an inability to advance or a slight tendency to decline.
Hedge Exemption is an exemption from speculative position limits for bona fide hedgers and certain other persons who meet the requirements of exchange and Commodity Futures Trading Commission (CFTC) rules.
Hedge Fund is a private investment fund or pool that trades and invests in various assets such as securities, commodities, currency, and derivatives on behalf of its clients, typically wealthy individuals. Some commodity pool operators operate hedge funds.
Hedge Ratio is the ratio of the value of futures contracts purchased or sold to the value of the cash commodity being hedged, a computation necessary to minimize basis risk.
Hedging is the practice of taking a position in a futures market opposite to a position held in the cash market to minimize the risk of financial loss from an adverse price change; or a purchase or sale of futures as a temporary substitute for a cash transaction that will occur later. . A long hedge involves buying futures contracts to protect against possible increasing prices of commodities. A short hedge involves selling futures contracts to protect against possible declining prices of commodities.
Henry Hub is a natural gas pipeline hub in Louisiana that serves as the delivery point for New York Mercantile Exchange natural gas futures contracts and often serves as a benchmark for wholesale natural gas prices across the U.S.
High is the highest price of the day for a particular futures or options on futures contract.
Historical Volatility (also called Standard Deviation) is a statistical measure of the volatility of a futures contract, security, or other instrument over a specified number of past trading days.
Horizontal Spread (also called Time Spread or Calendar Spread) is an options trading strategy that involvs the simultaneous purchase and sale of options of the same class and strike prices but different expiration dates. See Diagonal Spread, Vertical Spread.
Hybrid Instruments are the financial instruments that possess, in varying combinations, characteristics of forward contracts, futures contracts, option contracts, debt instruments, bank depository interests, and other interests. Certain hybrid instruments are exempt from Commodity Futures Trading Commission (CFTC) regulation.
Implied Repo Rate is the rate of return that can be obtained from selling a debt instrument futures contract and simultaneously buying a bond or note deliverable against that futures contract with borrowed funds. The bond or note with the highest implied repo rate is cheapest to deliver.
Naked options trading is very risky - many people lose money trading them. It is recommended contacting your broker or investment professional to find out about trading risk and margin requirements before getting involved into trading uncovered options.