Trading Strategy

Adverse selection is a situation when either seller or a buyer has a piece of information that the other party doesn’t have. The information in this case usually refers to the quality of the product in question.

Outside broker can refer to several things:

1. Broker who deals outside of the major exchange and deals with major securities.

2. A broker who deals with securities which aren’t traded in the exchange where he works.

Caveat is a term that loosely translates from Latin as ‘let them beware’. It is mostly used in real estate in two forms - caveat emptor and caveat venditor which means ‘let the buyer beware’ and ’let the seller beware’ respectively.

Mark-to-management is valuation, assigned to the assets or securities of the company by the management of the said company. It is a practice widely used in the times of financial crisis, when market price-assignments is threatening to the securities as it can wipe millions of dollars if left alone.

Naked position is the position of long or short security that is sheltered from the market risks. Is means that the risk of the profit or failure is much greater than that of the hedged security.

Overwriting is one of the most intricate transactions in the market as it involves selling or buying options which are thought to be overpriced and, as a result the transaction is not believed to be possible to exercise. The practice is used to collect premium securities.