Scalper
A speculator on the trading floor of an exchange who buys and sells rapidly, with small profits or losses, holding his positions for only a short time during a trading session. Typically, a scalper will stand ready to buy at a fraction below the last transaction price and to sell at a fraction above, thus creating market liquidity.

Secondary Funds
Partnership-style funds formed for the purpose of acquiring limited partnership interests, as a secondary purchase, from an original investor who no longer wants to own the limited partnership interest. These funds are typically purchased at a discount from their estimated value in recognition that the purchaser is acquiring a relatively illiquid investment. Secondary Funds are often considered to be in the Special Situations category.

Sector Funds
Sector funds invest in specific industries or segments of the economy. They tend to be equity long/short managers that develop a view of the industry and use fundamental analysis to identify opportunities within that industry.

Selling Hedge (or Short Hedge)
Selling futures contracts to protect against possible declining prices of commodities that will be sold in the future. At the time the cash commodities are sold, the open futures position is closed by purchasing an equal number and type of futures contracts as those that were initially sold. See Hedging.

Series
All option contracts of the same class that also have the same expiration date and strike price.

Settlement Price
The last price paid for a commodity on any trading day. The exchange clearinghouse determines a firm's net gains or losses, margin requirements, and the next day's price limits, based on each futures and options contract settlement price. If there is a closing range of prices, the settlement price is determined by averaging those prices. Also referred to as settle or closing price.

Sharpe Ratio
Used to measure how much profit an investor received per unit of risk. The higher the ratio, the safer (less risky) the strategy.

Sharpe Ratio = (Net Return - Risk Free Rate of Return)/Risk
Where Risk = Standard Deviation of the Return
A ratio greater than or equal to one indicates that the return is greater than or proportional to the risk the investor incurred to earn that return. A Sharpe Ratio greater than 1.0 is generally considered very good, while a ratio greater than 2.0 is considered excellent.

Shipping Certificate
A negotiable instrument used by several futures exchanges as the futures delivery instrument for several commodities (e.g. soybean meal, plywood and white wheat). The shipping certificate is issued by exchange-approved facilities and represents a commitment by the facility to deliver the commodity to the holder of the certificate under the terms specified herein. Unlike an issuer of a warehouse receipt who has physical product in store, the issuer of a shipping certificate may honour its obligation from current production or through-put as well as from inventories.

Shock Absorber
A temporary restriction in the trading of stock index futures which becomes effective following a significant intraday decrease in stock index futures prices. Designed to provide an adjustment period to digest new market information, the restriction bars trading below a specified price level. Shock Absorbers are generally market specific and at tighter levels than circuit breakers.

Short Exposure
The percentage of a fund's assets that are invested in short positions. For example, a manager may be 60% long and 100% short, giving him a market exposure of 40% net short.

Short Investing
An investment strategy where the manager sells securities short in anticipation of being able to rebuy them at a future date at a lower price due to the manager's assessment of the market.

Short Position
A short position occurs when an individual investor sells a security they do not own.

Short Selling
Is the selling of a security that the seller does not own.

Skewness
The skewness is the third moment about the mean divided by the cube of the standard deviation. It characterizes the degree of asymmetry of a distribution around its mean. The skewness is nondimensional. It is a pure number that characterizes only the shape of the distribution. A positive value of skewness signifies a distribution with an asymmetric tail extending out towards more positive x; a negative value signifies a distribution whose tail extends out towards more negative x.

Soft Commodities
Commodities such as coffee, cocoa, sugar and may include oilseeds, cotton, grains and orange juice. Metals, livestock and financial futures are generally not included in this category.

Sortino Ratio
The Sortino Ratio was developed to distinguish between good volatility and bad volatility. It is similar to the Sharpe Ratio, except it uses downside deviation for the denominator, whereas Sharpe uses standard deviation. Downside deviation only considers returns that fall below a determined threshold, rather than the mean. It would be expected that a fund managed within tight risk limits would have a smaller downside deviation than the typical upward standard deviation. This smaller divisor means a relatively higher Sortino when compared to the Sharpe. If the Sortino is lower than the Sharpe, then the fund might be riskier than the Sharpe Ratio alone implies.

Sold-Out-Market
When liquidation of a weakly-held position has been completed, and offerings become scarce, the market is said to be sold-out.

Special Situations
Invests in event-driven situations such as mergers, hostile takeovers, reorganizations, or leveraged buyouts. May involve simultaneous purchase of stock in companies being acquired, and the sale of stock in its acquirer, hoping to profit from the spread between the current market price and the ultimate purchase price of the company. May also utilize derivatives to leverage returns and to hedge out interest rate and/or risk. Results generally not dependent on direction of market.

Spread (or Straddle)
The purchase of one futures delivery month against the sale of another futures delivery month of the same commodity; the purchase of one delivery month of one commodity against the sale of that same delivery month of a different commodity; or the purchase of one commodity in one market against the sale of the commodity in an another market, to take advantage of a profit from a change in price relationships. The term spread is also used to refer to the difference between the price of a futures month and the price of another month of the same commodity. A spread can also apply to options.

Spreadlock
An option to enter into a currency or interest rate swap. One party may agree to provide a swap over a defined period ( usually less than 6 months ) at an agreed-upon spread over a reference rate comparable to the maturity of the anticipated swap.

Stages

First Stage
Financing provided to companies that have expended their initial capital and require funds, often to initiate commercial manufacturing and sales.

Second Stage
Working capital for the initial expansion of a company that is producing and shipping and has growing accounts receivable and inventories. Although the company has clearly made progress, it may not yet be showing a profit.

Third Stage
Funds provided for the major growth of a company whose sales volume is increasing and that is beginning to break even or turn profitable. These funds are typically for plant expansion, marketing and working capital development of an improved product.

Follow-on/Later Stage
A subsequent investment made by an investor who has made a previous investment in the company - generally a later stage investment in comparison to the initial investment.

Standard Deviation
The most widely accepted measurement of volatility (risk). Specifically, it measures the degree to which returns have been spread out around their historical mean or average. It is the square root of the variance ( average squared difference between the actual return and the average return ). Standard deviation does not distinguish between positive and negative volatility. In other words, it interprets any movement above or below the historical mean - as undesirable. Upside volatility is "good risk".

Statistical Arbitrage
A strategy that attempts to profit from deviations in the price of securities from historical relationships or patterns that are quantified by statistical methods. This strategy is based on the premise that historical price relationships or patterns among correlated assets are likely to hold in the future.

Steer/Corn Ratio
The relationship of cattle prices to feeding costs. It is measured by dividing the price of cattle ($/hundredweight) by the price of corn ($/bushel). When corn prices are high relative to cattle prices, fewer units of corn equal the dollar value of 100 pounds of cattle. Conversely, when corn prices are low in relation to cattle prices, more units of corn are required to equal the value of 100 pounds of beef. See Feed Ratio.

Sterling Ratio
A return / risk ratio in which return is defined as the Compound Annualized Rate of Return over the last 3 years, and risk is defined as the Average Yearly Maximum Drawdown over the last 3 years less an arbitrary 10 %. To calculate the average yearly drawdown, the latest 3 years is divided into 3 separate 12-month periods and the maximum drawdown is calculated for each. These 3 drawdowns are averaged to produce Average Yearly Maximum Drawdown for the 3 year period.

Stop-Close-Only Order
A stop order which can only be executed, if possible, during the closing period of the market.

Strangle
An option position consisting of the purchase or sale of put and call options having the same expiration but different strike prices.

Strangle
The simultaneous sale or purchase of both a call and a put with the same expiration month and different strike prices.

Strike Price
The stated price per share for which underlying stock may be purchased (in the case of a call option) or sold (in the case of a put option) by an option holder.

Strong Hands
When used in connection with delivery of commodities on futures contracts, the term usually means that the party receiving the delivery notice probably will take delivery and retain ownership of the commodity; when used in connection with futures positions, the term usually means positions held by trade interests or well-financed speculators.

Swap
In general, the exchange of one asset or liability for a similar asset or liability for the purpose of lengthening or shortening maturities, or raising or lowering coupon rates, to maximize revenue or minimize financing costs. In securities, this may entail selling one issue and buying another in foreign currency, it may entail buying a currency on the spot market and simultaneously selling it forward. Swaps may also involve exchanging income flows; for example, exchanging the fixed rate coupon stream of a bond for a variable rate payment stream, or vice versa, while not swapping the principal component of the bond.

Swaption
An option to enter into a swap - - i.e., the right, but not the obligation, to enter into a specified type of swap at a specified future date.

Switch
Offsetting a position in one delivery month of a commodity and simultaneous initiation of a similar position in another delivery month of the same commodity, a tactic referred to as "rolling forward".

Systematic Risk
Also called market risk, systematic risk is an unanticipated event that effects almost all assets in some part, because the effect is economy -wide.

Statistical Arbitrage
Statistical arbitrage strategies are long/short stock portfolios that are determined based on quantitative models for selecting specific stocks and measuring market exposure. Based on these models, high ranking securities are purchased and low ranking securities are sold short in relative quantities designed to result in an aggregate portfolio that is neutral to broad equity market movements. Often, these models rely upon fundamental balance sheet and income statement data such as: earnings yield; dividend yield; revisions in earnings forecasts; relationship between market capitalization, revenues and net asset values; earnings forecasts; and price histories. Other approaches utilize factor analysis to measure risk factors and relative attractiveness.

Subordinated Debt
High yield junior debt financing, which may be secured or unsecured. Normally the investor purchases a debenture; if secured the debenture will be subordinated to all senior debt within the issuer. If unsecured, the debenture will be subordinated not only to the senior debt but potentially all trade liabilities as well. The lender typically receives a commitment fee for arranging the transaction, a relatively high coupon and an equity kicker. The term of subordinated debt ranges from 5 to 10 years, but always longer than the senior debt to ensure that the subordinated lender cannot be repaid before the senior lender.

Systematic Trading
These strategies take a directional view in markets based on computer models. The strategies reflect an emphasis on market trends and behavioral psychology.