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Glossary of Options And Futures Related Terms: L-M




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This article is from the Investing Articles: Stocks and Options series.

Glossary of Options And Futures Related Terms: L-M

LEAPS

Long-Term Equity Anticipation Securities are long-term stock or index options. LEAPS are available in two types, calls and puts. They have expiration dates up to three years in the future.

Limit Order

An order given to a broker by a customer that specifies a price; the order can be executed only if the market reaches or betters that price.

Liquidation

Any transaction that offsets or closes out a long or short futures or options position.

Long Hedge (futures)

The purchase of a futures contract in anticipation of an actual purchase in the cash market. Used by processors or exporters as protection against and advance in the cash price

Long Position

An investors position where the number of contracts bought exceeds the number of contracts sold. He is a net holder.

Maintenance Performance Bond (Previously referred to a Maintenance Margin)

A sum, usually smaller than, but part of, the initial performance bond, which must be maintained on deposit in the customer's account at all times. If a customer's equity in any futures position drops to, or under, the maintenance performance bond level, a "performance bond call" is issued for the amount of money required to restore the customer's equity in the account to the initial margin level.

Margin Requirement For Options

 

The amount an uncovered (naked) option writer is required to deposit and maintain to cover a position. The margin requirement is calculated daily.

Mark-To-Market

The daily adjustment of margin accounts to reflect profits and losses.

Market Order

An order for immediate execution given to a broker to buy or sell at the best obtainable price.

Maximum Price Fluctuation (futures)

The maximum amount the contract price can change, up or down, during one trading session, as stipulated by Exchange rules.

Minimum Price Fluctuation

Smallest increment of price movement possible in trading a given contract, more commonly referred to as a "tick."

 

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