Topics Covered in Basics Of Trading: Definition of securities Types of risk Primary market Initial Public Offering Red Herring Organized Stock Exchanges New York Stock Exchange American Depositary Receipts (ADR) Requirements of initial listing on the NYSE Requirements of delisting on the NYSE The members firms on the NYSE The operation of the NYSE Crossing Sessions Super Designated Order Turnaround Circuit Breakers The rules 80A and 80B American Stock Exchange - AMEX Regional exchanges (Boston, Chicago, Pacific, Philadelphia and Cincinnati) OTC Market National Association of Securities Dealers Automated Quotation System - NASDAQ Small Orders Execution System Clearing and Insurance The National Securities Clearing Corporation Depository Trust Company The Securities Investor Protection Act of 1970 The Securities Investor Protection Corporation, SIPC Common Stock Dividends Capital Growth Common Stock Symbols Dow Jones Industrial Components and their Web Sites Fixed Income Securities Commercial Paper Certificates of Deposit (CD) Bankers' Acceptance Eurodollar CDs (Euro CDs) Repurchase Agreement U.S. Government securities Treasury Bills Treasury Notes Treasury Bonds Federal Agencies Securities Federal and Local Government Securities Corporate Bonds Municipal bonds Standard and Poor's, Ratings Foreign Bonds Eurobonds Preferred Stock (PS) Cumulative preferred Adjustable Rate preferred (ARPS) Convertible preferred Callable preferred (CPS) Standardized Listed Options CALL and PUT Underlying Asset Strike price Multiplier Cost of an Option Option Symbols Expiration Month Codes Strike Price Codes The Premium of an Option The Intrinsic Value Time value In-the-money Options At-the-money Options Out-of-the-money Options Delta Gamma Theta Vega Volatility Rho The advantages of options as compared to Common Stocks The disadvantages of options as compared with Common Stocks Option strategies Purchase of "naked" long options Naked Call Write Covered Call Write Protective Put Straddle Strangle Straddle Combination Selling Spreads Bull and Bear Vertical Spreads Calendar Spreads Diagonal Spreads Binomial Cox-Ross-Rubinstein Model Black-Scholes Model Call and Put Ratio Spreads Call Backspread Put Backspread Securities with Option-like Features Warrants Rights Cum Rights Ex-Rights Convertible Securities Futures Speculators and Hedgers Long Position Short Position Clearinghouse Initial Margin or Performance Bond Leverage Marking-To-The- Market Maintenance margin Market Call Variation margin The Commodity Futures Trading Commission (CFTC) Futures Arbitrage Fair value Premium Discount Cost-of-carry Buy Program Sell Program Market Indices Price weighting Dow Jones Industrial Average Dow Jones Transportation Average Dow Jones Utilities Average Value weighting Standard & Poor's 500 NASDAQ Composite NYSE Composite The Russell 2000 and 1000 Wilshire 5000 index Equal (arithmetic) and Geometric Weighting Value Line Composite Arithmetic Index Value Line Composite Geometric Index Types of brokerage accounts Cash account Settlement period Settlement day Margin Account Debit Balance Initial margin The Maintenance Margin Margin Call Restricted account Overmargined Special memorandum account (SMA) Margin requirements for short stock sales and naked options writing Types of Orders Round and odd lots Practical Purchase and sale of securities Quotations Time Limit specifications of orders Day order Good-till-Canceled (GTC) Fill-or-Kill (FOK) Buy Market Sell Market Buy Limit Sell Limit Buy Stop Sell Stop Buy Stop Limit Sell Stop Limit Psychology behind market orders Copyright © 1998 Myriad Design © 1998 Nataly

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