U-V-W
Glossary of Terms Stocks/Options/Fixed Income
underlying
The security that one has the right to buy or sell according to the
terms of an option contract
Unit Investment Trust Company (UIT)
A unit investment trust (UIT) is one of three basic types of
traditional investment companies, along with mutual funds and closed-end
funds. UIT's hold portfolios of securities, which are not actively
managed or traded. These portfolios are designed to remain fixed over
the life of the investment. Investors then purchase units of a trust,
which is a proportional interest in the entire portfolio. UIT's normally
have a defined expiration date at which time all assets will be
liquidated and distributed to the existing shareholders, based on the
number of units they own at the time. One of the benefits of a UIT is
that because the portfolio is fixed, investors know exactly what is
contained in the portfolio as well as the income the trust is likely to
generate. Additionally, because the portfolio is not actively managed,
the management fee charged is usually very low.
up tick
A term used to designate a transaction made at a price
higher than the preceding transaction. Also called a plus
tick. A zero plus tick is a term used for a transaction at
the same price as the preceding trade but higher than the
preceding different price. Conversely, a down tick, or minus
tick is a term used to designate a transaction made at a
price lower than the preceding trade. A plus sign or minus
sign is displayed throughout the day. They are attached to
the last price of each stock, and can be seen on the trading
post at the floor of the New York Stock Exchange.
volatility
A measure of the fluctuation in market price of a security. A
volatile issue has frequent and large swings in price. Mathematically,
volatility is calculated as the annualized standard deviation of
returns.
volume
The number of shares or contracts traded in a security or an entire
market during a given period. Volume is normally considered on a daily
basis, with a daily average being computed for longer periods.
voting right
The common stockholders' right to vote their stock in the
affairs of a company. Preferred stock usually has the right
to vote when preferred dividends are in default for a
specified period. The right to vote may be delegated by the
stockholder to another person.
when issued
A short form of when, as and if issued. The term indicates a
conditional transaction in a security authorized for issuance but not as
yet actually issued. All "when issued" transactions are on an "if"
bases, to be settled if and when the actual security is issued and the
exchange or National Association of Securities Dealers rules the
transactions are to be settled.
writer
A person who assumes the obligation to sell (call) or buy (put) the
underlying security at an option’s exercise
