Investing Glossary: S
Securities and Exchange Commission; SEC: A federal agency whose mission is to protect investors from fraud or other unlawful market activities.
Securities Investor Protection Corporation; SIPC: A nonprofit corporation created by Congress in 1970 to protect investors in the United States. SIPC insures the assets in investor accounts (up to certain maximum amounts) at registered brokerage firms in the event of bankruptcy of those firms.
sell stop order: An instruction to a broker to sell a stock at the market price after the security has touched the specified stop price. A sell stop is always placed below the present market price and is usually designed to protect a profit or limit a loss.
sentiment: The general feeling among investors as to which direction the stock market is heading. If the sentiment is that prices are going up, it is said to be bullish; if the sentiment is toward a downward movement, it is bearish. Investors base sentiment on market activity and movements in the prices of securities.
short; short position: A situation that occurs when you have sold something you do not own. In commodities, if you enter into a contract to sell a commodity which you don’t own with a promise to deliver it at a set price on a future date, then you are short that commodity. In stocks, you are short a stock if you have sold it and borrowed the shares from a broker to deliver to the purchaser, with an obligation to replace the borrowed shares at a future date. Being short means that you’re bearish, or negative on the market, and that your goal is to make money when the price of the security or commodity that you choose to short falls in price.
Simplified Employee Pension; SEP: A retirement plan available to small employers and self-employed individuals in which both the employer and employee can contribute to an IRA.
Single Premium Immediate Annuity; SPIA: An annuity contract that you purchase from an insurance company with a single upfront payment. An SPIA usually starts making regular monthly payments to you immediately.
straddle: You create a straddle when you simultaneously buy a put and a call on the same stock at the same strike price and with the same expiration date.
strangle: You build a strangle when you buy a put and a call on the same stock with the same expiration date but at strike prices that are equally out of the money. A strangle costs less than a straddle because both options are out of the money, but you only make a profit if the price of the underlying stock moves dramatically.
strike price: The price at which the stock or commodity underlying an option can be purchased (call option) or sold (put option) pursuant to the terms of the contract.
swap: An exchange of streams of payments over time according to specified terms. The most common type is an interest rate swap, in which one party agrees to pay a fixed interest rate on a notional principal amount in return for receiving an adjustable rate from another party.