FUT

FREQUENTLY USED TERMS

  1. 50 DMA: benchmark indicator used by pro traders and investors that shows the average closing price over the past 50 sessions.
  2. 200 DMA: benchmark indicator used by pro traders and investors that shows the average closing price over the past 200 session.
  3. Bear market: indexes down ≥ 20% off recent high.
  4. Correction: indexes down ≥10 and <20% off recent high.
  5. Death cross: 50 DMA crosses down 200 DMA, typically occurs 5-7 months after the absolute peak, confirms the down trend.
  6. Delta: directional risk; change in an options’ price given a $1 move in the stock price.  
  7. Distribution: professional/institutional selling, loss of ≥0.2% in one of the major indexes on volume higher than on the previous session. 
  8. Doji: powerful reversal candlestick where the opening close prices are the same (or just a few ticks apart); only has significance in trending markets [example].
  9. Institutional investors (eg hedge funds, mutual funds, investment banks, insurance companies): accounts for lion's share of each day's market activity; since they have the most supply and demand we trade on the side of institutional investors.
  10. Long delta position: bullish, either short put or long call.
  11. Marijuana stocks (high IV): CRON, NEPT, NBEV, TLRY, XXII, ZYNE
  12. Option premium = (intrinsic value) + (time value) + (volatility)
  13. Short delta position: bearish, either short calls or long puts.
  14. Theta: rate of decay of an options contract, positive for sellers and negative for buyers.
  15. VXX (VIX short-term futures): implied volatility of SPY.