Stock Terms 1

yearly target price

1. A projected price level as stated by an investment analyst or advisor. 2. A price that, if achieved, would result in a trader recognizing the best possible outcome for his or her investment. This is the price at which the trader would like to exit his or her existing position so that he or she can realize the most reward. Click here for Investopedia FXtrader

buy

1. A recommendation to purchase a specific security. 2. To acquire an asset in exchange for currency.

sell

1. A recommendation to sell a particular security. 2. The process of liquidating an asset in exchange for money.

annual report

1. An annual publication that public corporations must provide to shareholders to describe their operations and financial conditions. The front part of the report often contains an impressive combination of graphics, photos and an accompanying narrative, all of which chronicle the company's activities over the past year. The back part of the report contains detailed financial and operational information. 2. In the case of mutual funds, an annual report is a required document that is made available to fund shareholders on a fiscal year basis. It discloses certain aspects of a fund's operations and financial condition. In contrast to corporate annual reports, mutual fund annual reports are best described as "plain vanilla" in terms of their presentation.

Bid

1. An offer made by an investor, a trader or a dealer to buy a security. The bid will stipulate both the price at which the buyer is willing to purchase the security and the quantity to be purchased. 2. The price at which a market maker is willing to buy a security. The market maker will also display an ask price, or the amount and price at which it is willing to sell.

margin call

A broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. Margin calls occur when a you account value depresses to a value calculated by the broker's particular formula.

buy to cover

A buy order made on a stock or other listed security that closes out an existing short position. A short sale involves selling shares of a company that one does not own, as the shares are borrowed and need to be repayed at some point. This order, by buying an equal number of shares as were borrowed, "covers" the sale and the shares can be returned to the original lender of them. The lender will typically be the investor's own broker/dealer but their broker may have had to borrow the shares from a third party.

Mid Cap

A company with a market capitalization between $2 and $10 billion, which is calculated by multiplying the number of a company''''s shares outstanding by its stock price. Mid cap is an abbreviation for the term "middle capitalization".

stock split

A corporate action in which a company's existing shares are divided into multiple shares. Although the number of shares outstanding increases by a specific multiple, the total dollar value of the shares remains the same compared to pre-split amounts, because no real value has been added as a result of the split.

pink sheets

A daily publication compiled by the National Quotation Bureau with bid and ask prices of over-the-counter (OTC) stocks, including the market makers who trade them. Unlike companies on a stock exchange, companies quoted on the pink sheets system do not need to meet minimum requirements or file with the SEC. Pink sheets also refers to OTC trading.

dividend/ yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. Dividend yield is calculated as follows: annual dividends per share / price per share

downgrade

A negative change in the rating of a security. This situation occurs when analysts feel that the future prospects for the security have weakened from the orginal recommendation, usually due to a material and fundamental change in the company's operations, future outlook or industry.

"bo derek stock"

A slang term used to describe a perfect stock or investment. In the 1979 hit movie "10", actress Bo Derek portrayed the "perfect woman", or "the perfect 10".

P/E ratio

A valuation ratio of a company's current share price compared to its per-share earnings. Calculated as: market value per share / earnings per share

hold

An analyst's recommendation to neither buy nor sell a security. A company with a hold recommendation generally is expected to perform with the market or at the same pace as comparable companies.

limit order

An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. Limit orders also allow an investor to limit the length of time an order can be outstanding before being canceled. Depending on the direction of the position, limit orders are sometimes referred to more specifically as a buy limit order, or a sell limit order.

stop order

An order to buy or sell a security when its price surpasses a particular point, thus ensuring a greater probability of achieving a predetermined entry or exit price, limiting the investor's loss or locking in his or her profit. Once the price surpasses the predefined entry/exit point, the stop order becomes a market order.

open/ close

OPEN 1. An unexecuted order that is still valid. 2. The start of trading on a securities exchange. CLOSE 1. The end of a trading session. The closing price is quoted in the newspaper. 2. The final procedure in a home sale in which documents are signed and recorded. This is the time when the ownership of the property is transferred.

Small Cap

Refers to stocks with a relatively small market capitalization. The definition of small cap can vary among brokerages, but generally it is a company with a market capitalization of between $300 million and $2 billion.

initial public offering

The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.

52 week high/low

The highest and lowest price at which a stock has traded in the past 12 months, or 52 weeks.

volume

The number of shares or contracts traded in a security or an entire market during a given period of time. It is simply the amount of shares that trade hands from sellers to buyers as a measure of activity. If a buyer of a stock purchases 100 shares from a seller, then the volume for that period increases by 100 shares based on that transaction.

earnings per share

The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.

Ask

The price a seller is willing to accept for a security, also known as the offer price. Along with the price, the ask quote will generally also stipulate the amount of the security willing to be sold at that price.

sell short

The selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short.

Market Capitalization

The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determining a company's size, as opposed to sales or total asset figures.

mega cap

Companies having a market capitalization greater than $200 billion.

after hours trading

Trading after regular trading hours on major exchanges.

buy on margin

paying a small percentage of a stock's price as a down payment and borrowing the rest Buying on margin is borrowing money from a broker to purchase stock. You can think of it as a loan from your brokerage. Margin trading allows you to buy more stock than you'd be able to normally.

upgrade

positive change in the rating of a security.

large cap

value of more than $10 billion