Spread

A spread is like a straddle, a double privilege, a put and a call combined. If the stock goes below the price named in the put end (or part), plus the cost of the spread, the holder of the spread profits; so, also if the stock goes above the price named in the call end (or part), plus the cost of the call, the holder of the call profits.

Illustration

A spread on 100 shares may be bought on which the stock may be called (called for) at 102 1/2, or put (delivered) at 97 1/2. Say, 2 1/2% ($250) is paid for the spread. Then the stock must go above 105 or below 95 before there is a profit in the spread.

If a dividend becomes due on a stock during the pendency of a spread on it the dividend goes to the holder of the spread if he elects to receive and pay for the stock, but it goes to the seller of the spread if the stock is put (delivered) to him. A dividend always goes with the stock.

Stock Power

The name given to the irrevocable power of attorney used in assigning or transferring title to a certificate of stock.

Stop Order

When an order is given to a broker for the purchase of a stock, for instance, at 100 with instructions to "stop it" at 98, it means that the stock is to be sold if it declines to 98. On the other hand, if a stock is sold short at 100 with instructions to "stop it" at 102, it is to be bought back if it advances to 102. A stop order is employed principally to limit loss in speculation; in such a case it is specifically designated as a stop-loss order.

Straddle

A straddle is like a spread, a double privilege, a put and a call combined, but only one price is named in it. The stock may be called (called for) or put (delivered) at this price. The stock must go up or down more than the amount paid for the straddle before there is a profit in it. Illustration: A stock is selling at 100 and a straddle on 100 shares is bought at this price, for which 5% ($500) is paid. The stock, therefore, must go above 105 or below 95 before there is a profit to the purchaser of a straddle.

If a dividend becomes due on a stock during the pendency of a straddle on it, the dividend goes to the holder of the straddle if he elects to receive and pay for the stock, but it goes to the seller of the straddle if the stock is put (delivered) to him.

Syndicate

As a financial term syndicate means several bankers or capitalists who join together to carry out or to insure the carrying out of some plan or scheme which involves a large amount of money.

The commonest form of syndicate is an underwriting syndicate. For instance, the capital stock of a company (or a certain amount of it) is to be offered for public subscription at, say, 100 (par). An underwriting syndicate is organized and it underwrites the entire issue at 90. It, in effect, buys the whole issue at 90. The stock taken (subscribed for) by the public practically is sold for account of the syndicate, for it receives the difference of 10% between the price at which the stock is sold to the public (100) and the price at which it is underwritten by the underwriting syndicate (90). The syndicate is obliged to take the stock not sold to (subscribed for by) the public, but it has to pay only 90 for it as against 100 which the public has to pay. If all the stock is taken by the public (as is often the case) the underwriting syndicate has not to take and pay for any stock, but simply receives and divides among its members (in proportion to their shares in the syndicate) the amount represented by the difference of 10% between the price of the stock to the public and the price to the underwriting syndicate. If some of the stock is not taken by the public it may be apportioned among the members of the syndicate, but usually it is sold (in the open market or otherwise) for the syndicate.

Time Loan

Wall Street designation for money borrowed for a specified period, usually not less than 30 days nor more than six months, the repayment of which is secured by the deposit of collateral (stocks and bonds) with the lender.

Ton Mile Cost

A railroad term, meaning the average cost per mile of carrying each ton of freight.

Ton Miles

A railroad term; the whole number of miles the whole number of tons was hauled. The result attained by adding together the number of miles each ton was hauled and then dividing by the number of tons shows the average number of miles each ton was hauled (transported). Ton mileage means the same as ton miles.