CABINET OR "CAB" TRADE: This is defined as an option trade which is equal to one dollar. Cabinet trades only occur with far out-of-the-money options. 

CALENDAR SPREAD (TIME SPREAD): An options or futures spread established by simultaneously entering a long and short position on the same underlying asset but with different delivery months. It's an option position composed of either only calls or only puts offset by the purchase or sale of an option with the same strike price. The options are on the same stock and have the same strike price. 

CALL OPTION: This gives the buyer of the call the right, but not the obligation, to buy the underlying stock at the option's strike price. The seller of the call is obligated to deliver the underlying stock at the option's strike price when the buyer exercises his right.

CALLED AWAY: This is defined as the elimination of a contract due to the obligation of delivery. This occurs if an option is exercised

CANCELED ORDER: An order to purchase or sell a security that is canceled before it has been executed on an exchange.

CAPITAL GAIN OR CAPITAL LOSS: These are the earnings from when a security is held by a mutual fund and price rises above its purchase price and the security is sold. If the security continues to be held, the gain is then considered unrealized. A capital loss would be when the opposite takes place. 

CARRY/CARRYING CHARGE: The cost associated with holding a financial instrument or storing a physical commodity over a distinct period of time. The interest cost is known as the carry.

CASH ACCOUNT: This is a basic account where you deposit cash to buy stocks, bonds, mutual funds, etc.

CASH MARKET: This is the market for a cash commodity or actual, as opposed to the market for its futures contract. At these locations, you can purchase the actual physical commodity rather than just the futures contract.

CHICAGO BOARD OF TRADE (CBOT): The CBOT is a commodity exchange established in 1848 that trades in both agricultural and financial contracts. The CBOT first traded only agricultural commodities such as wheat, corn and soybeans. Now, the CBOT offers options and futures contracts. 

CHICAGO BOARD OPTIONS EXCHANGE (CBOE): This exchange focuses on options contracts for individual equities, indexes and interest rates. The CBOE is the world's largest options market. It captures a majority of the options traded.

CHICAGO MERCANTILE EXCHANGE (CME): This is the world's second-largest exchange for futures and options on futures and the largest in the U.S. where products such as butter, eggs, and poultry were traded. The CME trades futures on stock indices, foreign currencies, livestock, and Eurodollars. 

CLEAR/CLEARING: This is defined as the process in which an organization acts as a mediator and presumes the role of a buyer and seller. Clearing is essential for the matching of all buy and sell orders in the market.

CLEARING BROKER-DEALER: This is a member of an exchange that functions as a link between an investor and a clearing corporation. A clearing broker helps to ensure the trade is settled appropriately and successfully.

CLEARING HOUSE: An agency or separate corporation of a futures exchange responsible for settling trading accounts, clearing trades, gathering and maintaining margin, regulating delivery and reporting trading data.

CLOSE (C), THE: This is the end of a trading session for that day.

CLOSING PRICE: Defined as the final price at which a security is traded on that day. 

CLOSING TRANSACTION: This happens when someone takes the opposite position of the current position thereby getting out of a position in a particular stock or security.

COMBO: When an option position is composed of calls and puts of the same asset, with the same expiration, and most often the same strike price. In a combo the amount of call options is equivalent to the amount of put options.

COMMINGLING: Simply put as mixed funds, commingling is the mixing of customer securities with firm securities for a bank loan.

COMMISSION: The fee charged by a broker to a customer when a trade is executed either long or short of that certain security.

Completing or satisfying an order for a security or commodity. It is the basic act in transacting stocks, bonds or any other type of security. FILL OR KILL (FOK):

CONFIRMATION STATEMENT: This is the written acknowledgment by a broker signifying that a trade has been completed. This includes particulars such as the price, commission, fees and settlement terms of the trade.

CONSOLIDATED TAPE: An electronic system that continuously reports data on the sales volume and price of exchange traded securities. The consolidated tape is split into two different reporting systems. One reports on the New York Stock Exchange, and also trading prices and volume from other exchanges of stocks that are listed on the New York Stock Exchange. The other tape produces reports on the American Stock Exchange, and on the trading volume and prices of AMEX-listed stock in other exchanges and the over-the-counter market. 

CONTINGENCY ORDER: This is an order that is executed only when evident conditions of the security being traded, have been completed. Possible conditions may include the price of another security or the completion of another order. Brokerages do not have to accept contingency orders, but some do.

CONTRACT MONTH: This is the month in which a future or option contract expires and during which delivery may take place according to the terms of the contract. 

CONTRACT SIZE: The number of shares of stock that an options contract or underlying futures contract would deliver if exercised. Contract sizes are generally 100 shares, unless the contract size has been adjusted.

CONTRACT: This is defined as the unit of trade for a financial or commodity future.

CONVERSION: This is the procedure of converting an exchangeable security, such as a bond or preferred stock, into common stock. 

CORRECTION: A reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index. A correction is most often used to describe a decline after a period of rising prices. A correction is often considered beneficial for the long term health of the market, in that the prices had risen too quickly and the drop put them back to more realistic levels.

COST BASIS: The purchase price paid for a security, plus any commissions and fees. The cost basis is used to determine capital gains and capital losses for tax purposes. 

COVER: To repurchase a previously sold contract, also known as a short cover. 

COVERED WRITE OR COVERED CALL OR PUT/COVERED CALL OR PUT WRITING (SELLING): An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset in an attempt to generate increased income from the asset. This is an attempt to take advantage of a neutral or declining stock. If the option expires unexercised, the writer keeps the premium. If the holder exercises the option, the stock must be delivered, but, because the writer already owns the stock, risk is limited. This is the opposite of an uncovered call, when the writer sells a call for a stock that he/she does not already own, a dangerous strategy with unlimited risk. This is an attempt to take advantage of a neutral or declining stock. 

CREDIT SPREAD: A spread option position in which the price of the option sold is greater than the price of the option bought. 

CURRENT MARKET VALUE (CMV): This is the present worth of a portfolio of securities, at latest market prices. 

CUSTOMER: This can be a person, company, or other entity which buys goods and services produced by another person, company, or other entity.

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