Uncovered Options Trading System
Macro Fund is a hedge fund that specializes in strategies designed to profit from expected macroeconomic events.
Maintenance Margin stands for setting minimum amount (per outstanding futures contract) that a customer must maintain in his margin account to retain the futures position.
Manipulation is a planned operation, transaction, or practice that causes or maintains an artificial price. Specific types include corners and squeezes as well as unusually large purchases or sales of a commodity or security in a short period of time in order to distort prices, and putting out false information in order to distort prices.
Many-to-Many refers to a trading platform in which multiple participants have the ability to execute or trade commodities, derivatives, or other instruments by accepting bids and offers made by multiple other participants. In contrast to one-to-many platforms, many-to-many platforms are considered trading facilities under the Commodity Exchange Act. Traditional exchanges are many-to-many platforms.
Margin is an amount of money deposited by both buyers and sellers of futures contracts and by sellers of options contracts to ensure performance of the terms of the contract (the making or taking delivery of the commodity or the cancellation of the position by a subsequent offsetting trade). Margin in commodities is not a down payment or partial payment on a purchase, as in securities, but rather a performance bond. There are two main types of Margin: initial margin and maintenance margin. Initial margin is the amount of margin required by the broker when a futures position is opened. Maintenance margin is an amount that must be maintained on deposit at all times. In situation when the equity in a customer's account drops to or below the level of maintenance margin because of adverse price movement, the broker must issue a margin call to restore the customer's equity to the initial level. Exchanges specify levels of initial margin and maintenance margin for each futures contract, but futures commission merchants may require their customers to post margin at higher levels than those specified by the exchange. Futures margin is determined by the SPAN margining system, which takes into account all positions in a customer's portfolio.
Margin Call is a call from a clearinghouse to a clearing member, or from a broker or firm to a customer, to bring margin deposits up to a required minimum level.
Mark-to-Market stands for debiting or crediting on a daily basis a margin account based on the close of that day's trading session. In this way, buyers and sellers are protected against the possibility of contract default. Mark-to-Market is apart of the daily cash flow system used by U.S. futures exchanges to maintain a minimum level of margin equity for a given futures or option contract position by calculating the gain or loss in each contract position resulting from changes in the price of the futures or option contracts at the end of each trading session. These amounts are added or subtracted to each account balance.
Market Maker is a professional securities dealer or person with trading privileges on an exchange who has an obligation to buy when there is an excess of sell orders and to sell when there is an excess of buy orders. By maintaining an offering price sufficiently higher than their buying price, these firms are compensated for the risk involved in allowing their inventory of securities to act as a buffer against temporary order imbalances. In the futures industry, this term is sometimes loosely used to refer to a floor trader or local who, in speculating for his own account, provides a market for commercial users of the market. Occasionally a futures exchange will compensate a person with exchange trading privileges to take on the obligations of a market maker to enhance liquidity in a newly listed or lightly traded futures contract.
Market Order is an order to buy or sell a futures or options contract at whatever price (in opposite to Limit order where price is specified) is obtainable when the order reaches the trading floor.
Market-if-Touched (MIT) Order is an order that becomes a market order when a particular price is reached. A sell MIT is placed above the market; a buy MIT is placed below the market. Also referred to as a board order. Compare to Stop Order.
Market-on-Close Order is an order to buy or sell at the end of the trading session at a price within the closing range of prices. See Stop-Close-Only Order.
Market-on-Opening Order is an order to buy or sell at the beginning of the trading session at a price within the opening range of prices.
Maturity is a period within which a futures contract can be settled by delivery of the actual commodity.
Member Rate is charged by Commission for the execution of an order for a person who is a member of or has trading privileges at the exchange.
Mini (e-Mini) refers to a futures contract that has a smaller contract size than an otherwise identical futures contract.
Minimum Price Contract is a hybrid commercial forward contract for agricultural products that includes a provision guaranteeing the person making delivery a minimum price for the product. For agricultural commodities, these contracts became much more common with the introduction of exchange-traded options on futures contracts, which permit buyers to hedge the price risks associated with such contracts.
Minimum Price Fluctuation (Minimum Tick) is the smallest increment of price movement possible in trading a given contract.
MOB Spread is a spread between the municipal bond futures contract and the Treasury bond contract.
In technical analysis, Momentum is the relative change in price over a specific time interval. Often equated with speed or velocity and considered in terms of relative strength.
Money Market is the market for short-term debt instruments.
Naked Option (also referred to as an uncovered option, naked call, or naked put) is the sale of a call or put option without holding an equal and opposite position in the underlying instrument.
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.