Both Market Makers (MMs) and Specialists (specs) make markets in stocks, meaning they buy and sell from their own accounts. MMs are part of the National Association of Securities Dealers market (NASD), sometimes called Over The Counter (OTC), and specs work on the New York Stock Exchange (NYSE). These people serve a similar function but
Instinet is a professional stock trading system, founded by Reuters and now owned by Nomura. Institutions use the system to trade large blocks of shares with each other without using the public stock exchanges. Commissions are slightly negotiable but generally low. Instinet also runs a crossing network of the NYSE last sale at 6pm. A
Circuit Breakers, Curbs, and Other Trading RestrictionsContents A variety of mechanisms are in place on the U.S. exchanges to restrict program trading (i.e., to cut off the computer connections) whenever the market moves up or down by more than a large number of points in a trading day. Most are triggered by moves down, although
The Chicago Board Options Exchange (CBOE) was created by the Chicago Board of Trade in 1973. The CBOE essentially defined for the first time standard, listed stock options and established fair and orderly markets in stock option trading. As of this writing, the CBOE lists options on over 1,200 widely held stocks. In addition to
The American Stock Exchange (AMEX) once listed over 700 companies and was the world’s second largest auction-marketplace. Like the NYSE (the largest auction marketplace), the AMEX used an agency auction market system which is designed to allow the public to meet the public as much as possible. In other words, a specialist helps maintain liquidity.
A Coverdell Education Savings Account (ESA), formerly known as an Education IRA, is a vehicle that assists with saving for education expenses. This article describes the provisions of the US tax code for educational IRAs as of mid 2001, including the changes made by the Economic Recovery and Tax Relief Reconciliation Act of 2001. Funds
Tax law changes made in 2001 introduced a college savings plan commonly called a “529 plan” (named after their section in the Internal Revenue Code). These plans allow people to save for college expenses. There are actually two types of 529 plans being offered by different states. One kind is a pre-paid tuition plan; the
A Long-term Equity AnticiPation Security (LEAPS) is essentially an option with a much longer term than traditional stock or index options. Like options, a stock-related LEAP may be a call or a put, meaning that the owner has the right to purchase or sell shares of the stock at a given price on or before
The following symbols are used for the expiration month and price of listed stock options. Month Call Put Jan A M Feb B N Mar C O Apr D P May E Q Jun F R Jul G S Aug H T Sep I U Oct J V Nov K W Dec L X
When a stock splits, call and put options are adjusted accordingly. In almost every case the Options Clearing Corporation (OCC) has provided rules and procedures so options investors are “made whole” when stocks split. This makes sense since the OCC wishes to maintain a relatively stable and dependable market in options, not a market in