Glossary

Asset

An asset represents value of possession that can be converted into cash. May be a stock, currency, commodity or index.

 

Binary Digital Option

An option that offers a fixed return that is prearranged that the investor receives immediately upon expiry

 

Binary Option

A term that refers to a specific type of financial trading method that offers a fixed rate of return that is predetermined before the investment is made.

 

Call

Trading on an asset using Call/Put method with the belief that the value of the asset will be higher that the rate

 

Current Price

A price reported in “real time” without delay

 

Double up

Allows traders to increase the exact same option, produce a identical option which will eventually produce multiple profits.

 

Exotic Options

A type of option that was traded on select markets but has been introduced to the public like binary options

 

Expiry Level

The value of an asset before the time of expiry

 

Expiry Rate

The expiry rate is the value of the traded asset at the expiry time, this rate determines whether the trade ended in the money or out of the money.

 

Expiry Time

The time and date when an option or trade expires

 

Fundamental analysis

Fundamental analysis uses past and present data, with the goal of making financial forecasts.

 

High

A trade in which the traders predicts that the chosen asset will expire at a price that is higher than the rate price.

 

In the Money

An asset in which moves in the direction predicted by trader during a specific trade.

 

Investment Amount

Also known as “the stake”, this is the sum of money invested in on a trade

 

Long Call

The maximum loss possibility that equals to the premium cost

Low A trade in which the trader predicts that the underlying asset will expire at a price that is lower than the rate price.

 

Market Price

A price that represents the current value of an underlying asset

 

Fixed Option

Fixed Option is a type of a binary option trading method in which the trader stays in the money if the traded asset reaches its predefined price before the expiry time.

 

Return

The return is the amount of the original investment that the trader will receive if the investment is profitable.

 

Out of the Money

A term used to describe trades that had an unprofitable result

 

Payout

Payouts funds that are reciceved when the trade was profitable, the payouts is a predetermined amount or percentage on the trade

 

Put

Trading an asset using the CALL OR PUT method with the belief that its value on the expiry will be lower than that the rate placed

 

Signals

Binary options signals are trading recommendations provided to customers with a certain initial investment amount placed unto their account

 

Stock

A partial ownership of a company or enterprise

 

Technical analysis

Uses past data in order to predict future trends in the price of an asset, technical analysis considers all aspects of an asset price are built into its

market price. As a result, certain trends can be assumed in order to determine which direction an asset will take.

 

Time of Expiration (Expiry)

The time and date when an trade concludes

 

Underlying Asset

Binary options allows traders to trade with a variety of assets such as currencies, indices, stocks, and commodities.

 

Small Cap Stocks

Small capitalisation stocks are relatively small stocks with market capitalisations of below $100 million. The definition can vary between brokerages

and can change from time to time. It is in the field of Small Cap Stocks where large growth potential can often be found, as institutional investors often

do not research them and mutual funds often have restrictions prohibiting them from establishing meaningful positions in Small Caps.

 

Private Equity

Private equities are equity securities of companies that have not “gone public” (in other words, companies that have not listed their stock on a public

exchange). Private Equity can also be private placements of listed companies.

Listed companies often gain access to the private equity market in order to raise assets for the development of new products or technologies, to

increase their working capital, engage in acquisitions or maximise their capital structure.

Private Equity investments can offer potentially higher returns than the normal stock or bond investments. They provide the experienced investor with

the possibility of diversification because they have a relatively weak comparison to the traditional markets and are therefore not dependent on market

trends. However, the capital invested should normally be viewed on a long term basis, usually 1-5 years or beyond.

 

Micro Cap Stocks

Micro cap refers to a stock with a market capitalisation of below $50 million, although definitions vary. This sector represents very high risk as the

stocks are usually in the earliest stages of development but as a result may offer tremendous long term potential through participating in these types of

fledgling investments.

 

Mid Cap Stocks

Mid caps are normally stocks with market capitalisations of between $2 billion to $10 billion, although definitions may vary.

 

Large Cap Stocks

Large caps are stocks with market capitalisations of between $10 billion and $200 billion, although definitions vary. These are amongst the largest of

stocks trading on the markets and can offer excellent dividend income. However, when considering growth on capital, as these are the behemoths of

the stock markets it is worth remembering the maxim that “elephants don’t gallop”.

 

Venture Capital

Usually a source of money for start up companies. This is typically raised by venture capital firms who invest in private companies that need capital to

develop and market their products. A venture capital funding arrangement will often entail relinquishing some level of ownership and control of the

business by the current owners. So normally, investors look for more than a mere capital investment.

 

Middle-Market Private Firms

This type of Private Equity financing provides growth capital for medium-sized companies. These companies usually have an established market

position, a good market capitalisation and usually generate sales of several million US Dollars. They are profitable or about to be profitable. Here,

Private Equity capital is used to finance either additional expansion or acquisitions, or to allow an adjustment in ownership structure. This is one of

bhmarkets main operational activities and a vital market for bhmarkets’ clients.

 

Distressed Firms

This provides the investor with a stake in a company that is experiencing financial difficulties, in return for a capital injection. The objective is a planned

turnaround or the liquidation of undervalued parts of the assets. Investors usually follow a take-over strategy and seek some kind of control. They

might have an entrepreneurial interest or just the intention to liquidate parts of the company. This type of investment is normally only undertaken by the

more experienced investor.

 

Market Capitalisation

The total value of a company’s issued shares, excluding any that have been repurchased by the company. Simply put, this is a comparative measure

of the company’s size obtained by multiplying the share price by the number of shares in issue.

 

Volatility

Volatility describes the scale of movement in the price of a stock. The greater the volatility

(fluctuation), the more risky the investment. Normally, volatility depends on the size of the stock:

The smaller the company’s capitalization, the easier the price of the stock can be influenced, i.e. the bigger is the volatility. Small Caps, in other words,

are usually considered more volatile investments

than large caps.

 

Liquidity

Supply and demand determines the liquidity of the stock. In the Small Caps limited market, one can be much larger than the other resulting in fast

rising or falling prices or even the impossibility to sell the stock. Liquidity in simple words refers to how easily a share can be bought and sold on the

market in relation to the influence on its price. A share is liquid when there are enough shares in circulation to allow large transactions to be made

without a substantial change in the price (see volatility). The shares of a Small Cap company might not be liquid or freely tradable, there may be a

limited market in the company’s shares on a daily basis, there may be no shares available to buy and sometimes shares cannot be sold because a
buyer cannot be found. In addition, there may sometimes be a restriction in selling (see Restriction) or an obligation to hold on to the stock for a

predefined period of time. Information on the stock, may also be limited, which is where bhmarkets expertise is instrumental in providing the

much needed information.

 

Long Only

Long only refers to an investment strategy which concentrates only on buying assets and holding them to make profits. A long only fund therefore does not use any derivatives, gearing or short selling tactics in an effort to enhance gains. Leverage generally refers to increases in market exposure achieved by direct or indirect borrowing. It therefore increases performance risk and volatility. bhmarkets exclusively recommends a long only strategy and strongly advises against any increases of risks for small cap investments.

 

Leverage

The extent to which an investor or a company is using borrowed money. For companies, leverage is measured by the debt-to-equity ratio, which is

calculated by dividing the long-term debt by shareholders’ equity. The more long-term debt there is, the greater the financial leverage and the greater

the risk of the company failing. For investors, the term means the practice of investing with borrowed money to increase potential profit.

 

Derivatives

The most common usage relates to the use of pre-defined contracts relating to the right to buy or sell an underlying security rather than to the security

itself i.e. they are “derived” from the security rather than being the security itself.

 

Short Selling

The sale of a stock which the seller does not own. This is a speculative practice done in the belief that the price of a stock is going to fall and the seller will then be able to cover the sale by buying the stock back at a lower price. Any profit would be the difference between the initial selling price and the subsequent purchase price. It is illegal for a seller not to declare a short sale at the time of
placing the order.

 

Benchmark

A standard against which a specific strategy is measured.
Example: A long only blue chip investor can compare his performance with the Dow Jones index and see whether his choice was better than the performance of the 30 biggest US stocks.
Evaluating the performance history of stock is often problematic owing to the difficulty in setting an
appropriate benchmark. This is important for risk appraisal when evaluating the assessment of manager / advisor skill.

 

L.S.E

The London Stock Exchange is a public limited company and is the primary stock exchange in the U.K. and the largest in Europe. The LSE is the most

international of all stock exchanges with companies from more than 50 countries being listed. Through its two primary markets – the Main Market and