Trading Vocab and Abbreviations Flashcards
3p data
Third-party data; alternative data sources that track intra-quarterly data points from credit cards, emails, etc.
AH
After Hours
alpha
returns exceeding the benchmark
ARG
Accelerating Revenue Growth
Backwardation
commodities term:
When spot prices are sitting above forward pricing, indicating currently tight markets
B/O or BO
Break-Out
BTPS
Italian Treasury Bonds of any duration
Cable
forex slang for the GBP/USD currency pair, originating from 19th century when exchange rate was transmitted across the Atlantic via underwater cable.
CL or /CL
crude oil
Contango
Opposite of backwardation (re: commodities):
When the futures prices of a commodity are higher than the spot price, typically due to expectations of rising prices in the future.
Current Ratio
current assets / current liabilities
Benjamin Graham wanted the current ratio to e at least 2.0.
The higher the current ratio, the better able a company is to pay its short-term obligations.
Distribution Day(s)
Happens when there’s a significant decline in the Nasdaq or S&P 500 on higher volume than was seen in the previous session.
IBD defines a “significant decline” as a drop of more than 0.2%, with no rounding up. Four or five distribution days over several weeks nearly always signal that stocks have topped and are heading for a downturn. IBD’s research has determined that investors shouldn’t count distribution days after 25 trading days have passed.At that point, those days of liquidation have become irrelevant.
A distribution day also falls out of an index’s count after the index climbs 5% above that distribution day’s close. IBD has developed this rule on the premise that when an index rallies and extends itself from a distribution day, it’s showing the strength to overcome high-volume selling. Some drops in higher volume don’t carry as much weight. Distribution days in this camp include those that come after a holiday, leading to an easy volume comparison.
Plus, watch for those sessions on Wall Street where turnover is boosted by heavy options-expiration trading.Options-expiration days fall on the third Friday of every month. If that Friday is a holiday, expirations move to Thursday.
EOD
End of Day
ER
Earnings Report
GC or /GC
Gold
HG or /HG
Copper / copper futures
HOD or nHOD
High of Day or new High of Day
Interest Coverage Ratio
EBIT/Total Interest Incurred
This is a financial metric used to determine how easily a company can pay interest on its outstanding debt. It’s calculated by dividing a company’s earnings before interest and taxes (EBIT) by its total interest incurred. A higher ratio means it should be easier for the company to pay its debt interest.
dispersion
The difference between the volatility of individual assets (like single stocks) and the volatility of a broader index (like the SPX). High dispersion means individual stocks are moving around a lot more than the overall market.
vol spread
The difference between the implied volatility of the SPX index and the average implied volatility of its components. A 30 vol spread means the implied volatility of single stocks is 30 percentage points higher than the implied volatility of the SPX.
the dispersion trade
A strategy that bets on high dispersion. Traders typically sell (go short) volatility on the SPX index and buy (go long) volatility on individual stocks. They profit if the high dispersion continues.
