Uncovered Options Trading System

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Options Glossary - Most Used Terms


Index

A compilation of the prices of several common entities (stocks) into a single number. An index is a group of stocks which can be traded as one portfolio, such as the S&P 500. Broad-based indexes cover a wide range of industries and companies and narrow-based indexes cover stocks in one industry or economic sector.

See Also:

All Ordinaries Index: The major index of Australian stocks. This index represents 280 of the most active listed companies or the majority of the equity capitalization (excluding foreign companies) listed on the Australia Stock Exchange (ASX).

Broad-Based: Generally referring to an index, it indicates that the index is composed of a sufficient number of stocks or of stocks in a variety of industry groups.

Broad-Based Index: An index designed to reflect the movement of the market as a whole. (For example, the S&P 100, the S&P 500, and the AMEX Major Market Index).

Wilshire 5000 Equity Index: A market index of approximately 6,500 U.S. based equities traded on the American Stock Exchange, the New York Stock Exchange and the NASDAQ stock market.

Sector Index: An index that measure the performance of a narrow market segment, such as biotechnology or small capitalization stocks.

Sector Index: An index that measure the performance of a narrow market segment, such as biotechnology or small capitalization stocks.

Sector Index: An index that measure the performance of a narrow market segment, such as biotechnology or small capitalization stocks.

Pit: A specific location on the trading floor of an exchange designated for the trading of a specific option class or stock.

Index Option: An option whose underlying entity is an index. Most index options are cash-based. Index options allow investors to trade in a specific industry group or market without having to buy all the stocks individually.

Consumer Price Index - CPI: A measure of price changes in consumer goods and services. This index is used to identify periods of economic inflation or deflation.

Capitalization-Weighted Index: A stock index which is computed by adding the capitalization (float times price) of each individual stock in the index, and then dividing by the divisor. The stocks with the largest market values have the heaviest weighting in the index.

CAC 40 Index: A broad-based index of 40 common stocks on the Paris Bourse.

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