Stock Market Glossary-C

Call Option:
An agreement which gives the owner the right but not the obligation to buy a particular security by a specified date
at a predetermined price.

Calendar spread:
The simultaneous purchase and sale of futures contracts for different delivery months of the same financial instrument.
Also called an intracommodity spread, a horizontal spread or a time spread.

CAPM:
Capital Assets Pricing Model. The equilibrium expected return on an asset depends on the riskless interest rate, the
expected return on the market and the asset’s beta (B) value.

Capitalization:
The value of a company as measured by the market price of its common shares, multiplied by the total number of shares
that have been issued

Circuit breaker:
A trading halt when the price movement exceeds some present limit

Convergence:
The movement to equality of the spot and futures prices as the delivery date approaches.

Close Out:
The process whereby the exchange settles the obligation due to a broker and his clients in the event of default by the
counterparty broker.

Contract Note:
The official and legal document issued by a stock broker to his clients evidencing buy/sale of securities at the stated price
and time of the day.

Consolidation:
A technical analysis term meaning a stock price is in trading range, not moving significantly up or down.