Call Option
A call option gives its buyer the right, but not the obligation, to buy a set quantity of the underlying asset at the strike price on or before expiration, in return for a premium.
Investment & trading encyclopedia
Understand investment products, market mechanics, indicators and research terminology. Each entry includes an explanation, example, cautions and related learning.
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Candlestick
A candlestick is a chart symbol that summarizes one period's opening, highest, lowest and closing prices. Its rectangular body spans the open to the close, and thin lines called wicks extend to the period's high and low.
Carry Trade
A carry trade borrows or sells a low-interest-rate currency to hold a higher-interest-rate one, aiming to earn the interest-rate difference. It is exposed to exchange-rate moves that can erase or exceed that difference.
Commodity
A commodity is a raw material or primary product, such as crude oil, copper, wheat or gold, that is largely interchangeable with other units of the same grade. Buyers care mainly about grade, quantity, location and delivery date rather than the producer.
Contango
Contango describes a futures market in which contracts for later delivery are priced above nearer-dated contracts and the spot price. The futures curve then slopes upward as maturity lengthens.
Correlation
Correlation is a statistic between −1 and +1 that measures how closely two return series move together in a straight-line sense. A value of +1 means they move in perfect step, 0 means no linear relationship, and −1 means they move in exactly opposite directions.
Coupon
A coupon is the periodic interest payment a bond issuer makes to bondholders, normally stated as an annual percentage of face value called the coupon rate.
Credit Spread
A credit spread is the extra yield a bond pays over a comparable-maturity benchmark, such as a government bond, to compensate investors for credit, liquidity and other risks. It is usually quoted in basis points, where 100 basis points equal one percentage point.
Crypto Custody
Crypto custody is how the private keys that control crypto assets are stored and protected. Whoever controls the keys controls the assets, so custody is handled either by the owner (self-custody) or by a third party such as an exchange or specialist custodian.
Currency Pair
A currency pair quotes the price of one currency, the base, in units of another, the quote currency. In EUR/USD the euro is the base and the US dollar is the quote, so a price of 1.2500 means 1 euro costs 1.2500 US dollars.