P1:a/b P2:c/d QC:e/f T1:g
gloss JWBK182-McDowell April 25, 2008 16:35 Printer: Yet to come
182 GLOSSARYbuy To purchase an asset.
buyers market A market in which the supply exceeds the demand, creating lower
prices.
call An options contract with the right to buy a specific number of shares of a
stock at a specified price (the strike price) on or before a specific expiration date,
regardless of the underlying stock’s current market price. A call option writer sells
the right to a buyer.
candlesticks A type of bar chart developed by the Japanese, in which the price
range between the open and the close is either a white rectangle (if the close is
higher) or a black rectangle (if the close is lower).
capital The money you need to trade or invest. This should be risk capital, mean-
ing that you can afford to lose this money.
cash per share The amount of cash divided by the total number of common stock
shares outstanding for a given stock. A corporation with high cash per share ratio
is said to be cash rich and may be considered low risk or undervalued.
central bank The institution in each country responsible for setting monetary pol-
icy, print money, managing reserves, and controlling inflation. In the United States,
the central bank is the Federal Reserve System, also known as the Fed.
channeling market This is also known as a bracketed, consolidating, sideways or
non-trending market. Seebracketed market.
chart A graph that depicts the price movement of a given market. The most com-
mon type of chart is the bar chart, which denotes each interval’s open, high, low,
and close for a given market with a single price bar.
chart analysis The study of price charts in an effort to find patterns that in the past
preceded price advances or declines. The basic concept is that the development of
similar patterns in a current market can signal a probable market move in the same
direction. Practitioners of chart analysis are often referred to astechnical analysis
traders or investors.
Chicago Board of Trade (CBOT) Established in 1848, the CBOT is a leading ex-
change for futures and options on futures. More than 3,600 CBOT members trade 50
different futures and options products at the exchange through open auction and/or
electronically. CME Group is a combined entity formed by the 2007 merger of the
Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT).
Chicago Board Options Exchange (CBOE) Founded in 1973, the CBOE is an
exchange that focuses on options contracts for individual equities, indexes and
interest rates. The CBOE is the world’s largest options market. It captures a ma-
jority of the options traded. It is also a market leader in developing new financial
products and technological innovation, particularly with electronic trading.
Chicago Mercantile Exchange (CME) Founded in 1898 as the Chicago Butter and
Egg Board, this is an American financial exchange based in Chicago. Originally the