Financial Terms and Definitions » E

Exotic Options

ashivapu — Thu, 18 Feb 2010 17:07:35 +0000

A category of options which includes complicated components and complex payoffs.

Its payoff or other key values often depend on outside factors which vary over time, such as exchange rate. Because of their complexity, exotic options are often traded over the counter rather than through an exchange.

Asian-style options are one type of exotic options. opposite of plain vanilla option.

Expiration Cycle

ashivapu — Sat, 24 Oct 2009 05:39:13 +0000

A sequence of dates on which the options of a particular security expire. Most options are placed in one of 3 cycles: the January cycle (January, April, July, October), the February cycle (February, May, August, November), or the March cycle (March, June, September, December). Also called option cycle. Related posts:Exotic Options Options Call Option Related posts:

Escrow

ashivapu — Sat, 03 Oct 2009 22:20:17 +0000

A third party that holds fund between a transaction of two parties. The funds are held until appropriate actions and/or obligations have been met, which were set by the involving parties. Related posts:Mutual Fund Global Fund Total return swap Related posts:

Earnings Per Share (EPS)

ashivapu — Sat, 03 Oct 2009 21:53:43 +0000

Earnings per share (ES) is the portion of a company’s profit allocated to each outstanding share of common stock. Earnings per share is a good indicator of a company’s profitability.

Earnings per share is generally considered to be the single most important variable in determining a share’s price.

EPS = (Net Income – Dividend on Preferred Stock)/Average Outstanding Shares

Emini

ashivapu — Sat, 03 Oct 2009 19:53:34 +0000

An electronically traded futures contract on the Chicago Mercantile Exchange that represents a portion of the normal futures contracts. Emini contracts allow for greater affordability for individual investors and around-the-clock trading.

The Wild Investor: Day-Trading Emini Index Futures — A Futures Trading Mentor Shares Key Trading Concepts.

Economies of Scale

ashivapu — Fri, 02 Oct 2009 23:41:47 +0000

The increase in efficiency as the number of goods being produced increases, usually by a reduction in cost per unit. Related posts:Expansion GDP Vendor Financing Related posts:

Expansion

ashivapu — Fri, 02 Oct 2009 21:57:30 +0000

An increase in the level of economic activity, and of the goods and services available in the market place. Referred to as a boom time in the economy. The opposite of recession. Related posts:Deflation Inflation Recession Related posts:

Equity

ashivapu — Fri, 02 Oct 2009 21:36:05 +0000

1. Ownership interest in a corporation in the form of common stock or preferred stock. 2. Total assets minus total liabilities. 3. In real estate, it is the difference between what a property is worth and what the owner owes against that property. Related posts:Common Stock Preferred Stock Debt/Equity Ratio Related posts:

Earnings

ashivapu — Fri, 02 Oct 2009 21:05:52 +0000

Revenues minus cost of sales, operating expenses, and taxes, over a given period of time. Earnings are the reason corporations exist, and are often the single most important determinant of a stock’s price.

Earnings are crucial to investors because they give an indication of the company’s expected future dividends and its potential for growth and capital appreciation. That does not necessarily mean that low or negative earnings always indicate a bad stock; for example, many young companies report negative earnings as they attempt to grow quickly enough to capture a new market, at which point they’ll be even more profitable than they otherwise might have been.

A write-down can tend to manipulate real company earnings.

Exchange-Traded Fund (ETF)

ashivapu — Fri, 02 Oct 2009 04:22:00 +0000

A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.

Also see leveraged ETF.

Speak Stocks: What Is An Exchange-Traded Fund (ETF)