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Glossary of Investment Terms: S

Same Day Transaction
A transaction that matures on the day the transaction takes place.

Sandwich Spread
Same as a butterfly spread.

Scalping
A strategy of buying at the bid and selling at the offer as soon as possible.

SDR
Special Drawing Right. A standard basket of five major currencies in fixed amounts as defined by the IMF.

Selling rate
Rate at which a bank is willing to sell foreign currency.

Seller/Grantor
Also known as the option writer.

Serial Expiration
Options on the same underlying futures being contract which expire in more than one month.

Series
All options of the same class which share a common strike price and expiration date.

Settlement Date
The date by which an executed order must be settled by the transference of instruments or currencies and funds between buyer and seller.

Settlement Price
The official closing price for a future set by the clearing house at the end of each trading day.

Settlement Risk
Risk associated with the non settlement of the transaction by the counter party.

Short / Short Position
A shortage of assets in a particular currency. See Short Sale.

Short Contracts
Contracts with up to six months to delivery.

Short Covering
Buying to unwind a shortage of a particular currency or asset.

Short Forward Date/Rate  
The term short forward refers to period up to two months, although it is more commonly used with respect to maturities of less than one month.

Short Sale
The sale of a currency futures not owned by the seller at the time of the trade. Short sales are usually made in expectation of a decline in the price.

Short-Term Interest Rates
Normally the 90 day rate.

Sidelined
A major currency that is lightly traded due to major market interest being in another currency pair.

SIMEX
Singapore International Monetary Exchange

SITC
Standard International Trade Classification. A system for reporting trade statistics in a common manner.

SOFFEX
Swiss Options and Financial Futures Exchange, a fully automated and integrated trading and clearing system.

Soft Market
More potential sellers than buyers, which creates an environment where rapid price falls are likely.

Sovereign Immunity
Legal doctrine which means that the state cannot be sued or have its assets seized.

Sovereign Risk
(1) Risk of default on a sovereign loan
(2) Risk of appropriation of assets held in a foreign country. Split Date
See Broken Date.

Spot
(1) The most common foreign exchange transaction
(2) Spot or Spot date refers to the spot transaction value date that requires settlement within two business days, subject to value date calculation.

Spot Next
The overnight swap from the spot date to the next business day.

Spot Month
The contract month closest to delivery or settlement.

Spot Price/Rate
The price at which the currency is currently trading in the spot market.

Spot Week
A standard period of one week swap measured from the current value date of the currency spot rate.

Spread
(1)The difference between the bid and ask price of a currency.
(2) The difference between the price of two related futures contracts.
(3) For options, transactions involving two or more option series on the same underlying currency.

Square
Purchase and sales are in balance and thus the dealer has no open position.

Squawk Box
A speaker connected to a phone often used in broker trading desks.

Squeeze
Action by a central bank to reduce supply in order to increase the price of money.

Stable Market
An active market which can absorb large sale or purchases of currency without major moves.

Standard
A term referring to certain normal amounts and maturities for dealing.

Stand by Credit
An arrangement with the IMF for draw downs on a "need " basis. The term is sometimes more generally used.

Sterilisation
Central Bank activity in the domestic money market to reduce the impact on money supply of its intervention activities in the FX market.

Sterling Index
A index based on the movement of sterling against the major currency.

Sterling
British pound, otherwise known as cable.

Stocky
Market slang for Swedish Krona.

Stop Loss Order
Order given to ensure that , should a currency weaken by a certain percentage, a short position will be covered even though his involves taking a loss. Realise profit orders are less common.

Stop Out Price
U.S. term for the lowest accepted price for Treasury Bills at auction.

Straddle
The simultaneous purchase/sale of both call and put options for the same share, exercise/strike price and expiry date.

Stagflation
Recession or low growth in conjunction with high inflation rates.

Strap
A combination of two calls and one put.

Strike Price
Also called exercise price. The price at which an options holder can buy or sell the underlying instrument.

Strip
A combination of two puts and one call.

Supply Side Economics
The concept is that tax cuts will boost investment leading to an increase in the supply of goods in the economy. To be compared with demand led Keynesian economics.

Support Levels
When an exchange rate depreciates or appreciates to a level where (1) Technical analysis techniques suggest that the currency will rebound, or not go below; (2) the monetary authorities intervene to stop any further downward movement. See Resistance Point.

Swap
The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another. A swap can be a swap against a forward. In essence, swapping is somewhat similar to borrowing one currency and lending another for the same period. However, any rate of return or cost of funds is expressed in the price differential between the two sides of the transaction.

Swap as a Percentage
Swaps expressed as an annualized percentage.

Swap Price
A price as a differential between two dates of the swap.

Swaption
An option to enter into a swap contract.

SWIFT
Society for World-wide Interbank Telecommunications is Belgian based company that provides the global electronic network for settlement of most foreign exchange transactions.

Swissy
Market slang for Swiss Franc.

Synthetics
Options or futures that create a position that able to be achieved directly but is generated by a combination of options and futures in the relevant market. In foreign exchange a SAFE combines two forward contracts into a single transaction where settlement only involves the difference in values.