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Glossary
A
ADR
American Depositary Receipt. Negotiable registered certificate issued on the US market and evidencing title to non-US equity paper. ADRs are registered with the Securities and Exchange Commission (SEC) and quoted in USD. Holders of ADRs essentially enjoy the same ownership and membership rights as shareholders.
American-style option / amerikanische Option / option à l'américaine / opzione americana
Option which can be exercised at any time, including on the expiry date. Opposite: European option.
TopB
Black-Scholes model / Black-Scholes-Modell / modèle Black-Scholes / formula di Black e Scholes
Model developed by F. Black and M. Scholes in 1973 for calculating the price of European options on shares and indices.
blocked period / Sperrfrist / délai de blocage / periodo bloccato
Banking: period during which certain securities are not placed freely at the owner's disposal (e.g. securities or employee shares deposited as collateral).
break even / Break even / point mort / break even
Price at which an underlying covers the cost of an option purchase
C
call / Call / option d'achat / call
Purchase option. The buyer of a call option acquires the right, but is not obligated, to purchase a specified amount of securities, foreign exchange or precious metal at a predetermined price and within a specific period of time. Opposite: put.
Cash Exercise (Share Settlement)
An exercise of an option using cash.
cash settlement / Barausgleich / règlement en espèce / liquidazione a contanti
Performance of contractually stipulated obligations by making cash settlement as opposed to physically delivering the commodity underlying the contract. financial futures.
closing price
The price of the last transaction for a given security at the end of a given trading session. also called close.
conversion price
The price at which a given convertible security can be converted to common stock. The conversion price is specified when the security is issued. The number of shares to be received is the principal amount of the security divided by the conversion price (after the conversion price is adjusted for stock splits anddividends).
convertible bond
A corporate bond, usually a junior debenture, that can be exchanged, at the option of the holder, for a specific number of shares of the company's preferred stock or common stock. Convertibility affects the performance of the bond in certain ways. First and foremost, convertible bonds tend to have lower interest rates than non-convertibles because they also accrue value as the price of the underlying stock rises. In this way, convertible bonds offer some of the benefits of both stocks and bonds. Convertibles earn interest even when the stock is trading down or sideways, but when the stock prices rise, the value of the convertible increases. Therefore, convertibles can offer protection against a decline in stock price. Because they are sold at a premium over the price of the stock, convertibles should be expected to earn that premium back in the first three or four years after purchase. In some cases, convertibles may be callable, at which point the yield will cease.
D
delta / Delta / delta / delta
Statistical measure of the change in the price of an option when the underlying moves one unit in price.
diversification / Diversifikation / diversification / diversificazione
A strategy of spreading an investment over different assets in order to reduce the risk of earnings fluctuations.
due date; maturity date; expiration date / Fälligkeit; Verfalltag / échéance / scadenza
The date on which a debt (such as a bond) becomes payable or when an option expires. If the debtor fails to perform payment by that date, he is said to be in default.
E
EquatePlus
CEFS EU online Platform for administering and exercising equity-linked compensation plans.
European option / europäische Option / option européenne / opzione di tipo europeo
Option which can only be exercised on the last day of trading, i.e. on maturity. Opposite: American-style option.
exercise / Ausübung / exercise / esercizio
The action taken by the holder of an option contract to exercise his right to buy or sell one or more underlyings at the terms specified in the option contract.
exercise methods/Ausübungsmethoden
Same Day Sale (Cash Settlement); Cash Exercise (Share Settlement); Sell-to-cover; Stock Swap
exercise price; strike price / Ausübungspreis; Basispreis / prix de base / prezzo base
Price at which an option buyer can buy (call) or sell (put) the underlying securities, currencies, etc.
expiry / Verfall / échéance / scadenza
Date on which a debt (e.g. bond) falls due or an option lapses. Borrowers who fail to meet their obligations by the expiry date are liable to payment of default interest.
H
hedge; hedging transaction / Hedgegeschäft / opération de couverture à terme / hedging
Form of risk compensation. Countertrade or covering transaction designed to offset an existing or potential risk position by eliminating or diminishing the element of risk, in particular price, interest rate or exchange rate risks. Risk compensation is achieved by incurring a similar yet countercurrent risk to that entailed by the position to be hedged. Future transactions are classic examples of hedging instruments. Securities portfolios can be hedged with financial derivatives. financial futures, options.
I
insider
Person party to confidential information on the strength of his or her professional position. Normally used in connection with information which when made public is likely to have a significant influence on the price of securities. insider transactions.
intrinsic value
net asset value (2).
L
limit / Limite / limite / limite
1. Highest price given for the purchase or sale of securities (price limit).
2. Upper limit for the utilization of a credit (credit line).
M
Market Order
A market order is an order to buy or sell a stock at the current market price. Unless you specify otherwise, your broker will enter your order as a market order.
market value / Verkehrswert / valeur vénale / valore venale
The price for an object (such as a real estate property or a security) obtained on the open market under ordinary circumstances. The market price generally differs from the income-producing value.
maturity date
due date.
N
net asset value
1. Nettoinventarwert / valeur d'inventaire nette / valore d'inventario
netto
Value of an investment fund unit corresponding to the market value of the fund on a set reference date, minus liabilities and divided by the number of units outstanding.
2. Substanzwert / valeur intrinsèque / valore intrinseco
2.1. In the case of company valuations, the net asset value refers to the intrinsic (market) value of the company's fixed and current assets. The capitalised income value, in contrast, is derived from capitalising the gross or net income of the invested capital.
2.2. Difference between the price of the underlying and an option's strike (exercise) price. Amount by which a put or call option is in-the-money.
2.3. Real estate: value of land and buildings.
O
option / Option / option / opzione
Contract granting the right, but not entailing the obligation, to buy or sell property or assets during a specified period at an agreed price.
1. In the case of a share or bond issue, the right of an underwriting bank to increase its original allotment or quota of shares, participation certificates or bonds.
2. In the case of a warrant issue, the right conferred by the warrant (certificate) to purchase securities, precious metals (e.g. gold) or other assets.
3. Short for option contract between a bank and a customer which gives the buyer the right to buy (call option) or sell (put option) a specified number of securities, currency units or commodities at an agreed exercise (strike) price on the exercise day.
4. In contrast to the non-tradable options defined under 3, traded options (as the name implies) are actively traded on exchanges specializing in options and financial futures.
P
par value / Nennwert; Nominalwert / valeur nominale / valore nominale
The value of the security as printed on its face. Thus also called face value or nominal value. Ordinarily not identical with the market value. Swiss law prescribes a minimum par value of CHF 0.01 per share, whereas in the United States and Canada shares may be issued without par value.
performance
1. Changes in the price of a security.
2. Change in an index covering part or all of a market. Swiss Performance Index.
3. Changes in the income generated by a Portfolio.
4. Effects produced by the investment policy applied by an investment adviser or a fund management company measured against the investment targets.
put / Put / option de vente / put
Put option, i.e. which gives the buyer the right, but not the obligation, to sell a specified number of securities, a specified amount of foreign currency or a specified quantity of precious metal for a stipulated period of time at a specific price. Opposite: call.
R
restricted stock
Stock which is acquired though an employee stock option plan or other private means and which may not be transferred. Restricted stock may be forfeited if any of the SEC rules related to it are broken.
risk / Risiko / risque / rischio
Exposure to damage or financial loss, e.g. a fall in the price of a security, or insolvency on the part of a creditor (high risk = high probability and/or high loss potential). Financial market theory measures the risk exposure of an investment in terms of the degree of earnings fluctuation (variance, standard deviation). Risk and return are in direct mutual correlation: the higher the risk exposure, the more substantial the long-term return on an investment. The main risk categories are: country, transfer, settlement, price and interest rate risk, and credit risk. Risks are hedged with provisions charged to the profit and loss account. Hedging products available from banks include forward and repurchase transactions, options, financial futures. In an effort to reduce settlement risks the main forex houses have set up joint continuous clearing systems. That element of general market risk which can be neither reduced nor eliminated is also referred to as systematic risk.
risk spread / Risikoverteilung / répartition des risques / ripartizione dei rischi
Distributing the risks of losses or reductions in income by spreading the capital investments or the loans granted to third parties among a number of investment objects or borrowers. The aim is to minimize risk exposure by scattering investments (or loans) widely among different countries, regions, currencies, industries and individual companies. diversification.
S
share / Aktie / action / azione
A form of security representing a portion of the nominal capital of a company entitling the owner to a proportion of distributed profits and of the residual value if the company goes into liquidation. Shares further entitle the holder to vote at General Meetings and elect directors (equity paper).
shareholder value
Corporate value kept as high as sustainably possible in the shareholders' interests. stakeholder value.
Stock Appreciation Right - SAR
A right, granted to an employee, to receive a bonus equal to the appreciation in the value of the company's stock for a predetermined number of shares over a specified period.
stock swap
1. An acquisition in which the acquiring company uses its own stock to pay for the acquired company.
2. A method of exercising stock options where shares that the holder already owns are used to buy new shares at the exercise price.
Stock warrant / Aktienwarrant / Warrant sur actions / Warrant su azioni
1. Security issued on an underlying stock.
2. Option issued together with another class of security by a stock corporation (e.g. bond with warrants).
T
time value / Zeitwert / valeur temporelle / valore temporale
The amount by which an option exceeds its intrinsic value.
timing
In securities trading, the selection of exactly the right moment to buy or sell.
traded options
Options traded on an exchange. SOFFEX, option.
U
underlying / Basiswert / action de base; action sous-jacente / azione base
Security, i.e. an equity or a bond, underlying an option or futures contract. financial futures.
V
Vesting Date
At this date, and beyond, an option can be Exercised, or sold. Before this date, the option cannot be exercised.
W
warrant
Warehouse or pledge receipt. In some countries these have the characteristics of securities. Securities underwriting: short for subscription warrant.
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