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Results for letter S :
Specific risk :

Specific risk, also known as nonsystematic risk, represents the price variability of a security that is due to factors unique to that security, as opposed to that portion that is due to systematic risk, the generalised price variability of the related interest rate or equity market. As an example, a US Treasury note would have no specific risk, as it is deemed to have no risk other than movement in interest rates, while acorporate bond would have a degree of default risk as well as more generalised yield curve risk.

Statistical arbitrage :

In the mid-1980s it was discovered that certain stock prices did to an extent exhibit autocorrelations – implying that earlier price changes could be used to forecast future changes. Statistical arbitrageurs seek to exploit these patterns in their trading strategies.

Stock index arbitrage :

The technique of selling a futures contracton a stock index and buying the underlying stocks, via programme trading, or vice versa when the price of the futures contract is above or below its theoretical value. The ability to conduct such strategies depends on the efficiency of the futures and cash markets.

Stock index option :

An option, either exchange-traded orover-the-counter, on a stock index.

Stock option :

An option, either exchange-traded orover-the-counter, on an individual equity.

Stress-testing :

To perform a stress test on a derivatives position is to stimulate an extreme market event and examine its behaviour under the ‘stress’ of that event.

Structured product :

A structured product is an investment that bundles up a portfolio of securities and other derivatives to create a  single product. For example, a structured note can be a five-year bond that has an embedded equity or currency option in order to enhance its return. A structured product appeals to the investor who has a view on the market and a good idea of what his risk/reward appetite is.

Synthetic asset :

A synthetic asset is a combination of longand short positions in financial instruments, which has the samerisk/reward profile as another instrument. For example, it is possible to replicate the payout and exposure of a short futures position by going short European-stylecall options and long European puts with identical strikes and expiries. Synthetic index options can be generated either through positions in the underlying and futures contracts, or with a basket of vanilla options.