Sample Grade - In commodities, usually the lowest quality of a commodity, too low to be acceptable for delivery in satisfaction of futures contracts.

Scale Down (or Up) - To purchase or sell a scale down means to buy or sell at regular price intervals in a declining market. To buy or sell on scale up means to buy or sell at regular price intervals as the market advances.

Scalper - A speculator on the trading floor of an exchange who buys and sells rapidly, with small profits or losses, holding his positions for only a short time during a trading session. Typically, a scalper will stand ready to buy at a fraction below the last transaction price and to sell at a fraction above, thus creating market liquidity.

Scalping - The practice of trading in and out of the market on very small price fluctuations. A person who engages in this practice is known as a scalper.

Security Deposit- See Margin. Seller's Call - See Call.

Seller's Market - A condition of the market in which there is a scarcity of goods available and hence sellers obtain better conditions of sale or higher prices. Also see Buyer's Market.

Seller's Option -The right of a seller to select, within the limits prescribed by a contract, the quality of the commodity delivered and the time and place of delivery.

Selling Hedge (or Short Hedge) - Selling futures contracts to protect against possible decreased prices of commodities. Also see Hedging.

Series (of Options) - Options of the same type (i.e., either puts or calls, but not both), covering the same underlying futures contract or physical commodity, having the same strike price and expiration date.

Settlement - The act of fulfilling the delivery requirements of a futures contract.

Settlement or Settling Price - The daily price at which the clearing house clears all trades and settles all accounts between clearing members for each contract month. Settlement prices are used to determine both margin calls and invoice prices for deliveries. The term also refers to a price established by the exchange to even up positions which may not be able to be liquidated in regular trading.

Sharpe Ratio - A measurement of trading performance calculated as the average return divided by the variance of those returns; named after William P. Sharpe.

Shipping Certificate - A negotiable instrument used by several futures exchanges as the futures delivery instrument for several commodities (e.g., soybean meal, plywood, and white wheat). The shipping certificate is issued by exchange-approved facilities and represents a commitment by the facility to deliver the commodity to the holder of the certificate under the terms specified therein. Unlike an issuer of a warehouse receipt who has physical product in store, the issuer of a shipping certificate may honor its obligation from current production or through- put as well as from inventories.

Shock Absorber - A temporary restriction in the trading of stock index futures which becomes effective following a significant intraday decrease in stock index futures prices. Designed to provide an adjustment period to digest new market information, the restriction bars trading below a specified price level. Shock absorbers are generally market specific and at tighter levels than circuit breakers.

Short - (1) The selling side of an open futures contract; (2) a trader whose net position in the futures market shows an excess of open sales over open purchases. See Long.

Short Covering - See Cover.

Short Hedge- See Selling Hedge.

Short Selling - Selling a futures contract with the idea of delivering on it or offsetting it at a later date.

Short Squeeze - See Squeeze.

Short the Basis - The purchase of futures as a hedge against a commitment to sell in the cash or spot markets. See Hedging.

Small Traders - Traders who hold or control positions in futures or options that are below the reporting level specified by the exchange or the CFTC.

Soft - A description of a price which is gradually weakening. Also refers to commodities such as sugar, cocoa, and coffee.

Soften - The process of a slowly declining market price.

Sold-Out-Market - When liquidation of a weakly-held position has been completed, and offerings become scarce, the market is said to be sold out.

Specialist System - A type of trading commonly used for the exchange trading of securities in which one individual or firm acts as a market-maker in a particular security, with the obligation to see that trading in that security is fair and orderly by offsetting temporary imbalances in supply and demand by trading for his own account. Also see Board Broker System and Free Crowd System.

Speculative Bubble - A rapid, but usually short-lived, run up in prices caused by excessive buying which is unrelated to any of the basic, underlying factors affecting the supply or demand for the commodity. Speculative bubbles are usually associated with a "bandwagon" effect in which speculators rush to buy the commodity (in the case of futures, "to take positions") before the price trend ends, and an even greater rush to sell the commodity (unwind positions) when prices reverse.

Speculative Limit - See Position Limit.

Speculative Position Limit- See Position Limit.

Speculator - In commodity futures, an individual who does not hedge, but who trades with the objective of achieving profits through the successful anticipation of price movements.

Split Close - Term that refers to price differences in transactions at the close of any market session.

Spot - Market of immediate delivery of the product and immediate payment. Also refers to a maturing delivery month of a futures contract.

Spot Commodity - (1) The actual commodity as distinguished from futures contract; (2) sometimes used to refer to cash commodities available for immediate delivery. Also see Actuals or Cash Commodity.

Spot Month - See Current Delivery Month.

Spot Price - The price at which a physical commodity for immediate delivery is selling at a given time and place. See Cash Price.

Spread (or Straddle) - The purchase of one futures delivery month against the sale of another futures delivery month of the same commodity; the purchase of one delivery month of one commodity against the sale of that same delivery month of a different commodity; or the purchase of one commodity in one market against the sale of that commodity in another market, to take advantage of and profit from a change in price relationships. See also Arbitrage, Switch. The term spread is also used to refer to the difference between the price of one futures month and the price of another month of the same commodity. A spread can also apply to options.

Squeeze - A market situation in which the lack of supplies tends to force shorts to cover their positions by offset at higher prices.

SRO- See Designated Self-Regulatory Organization.

Standby Commitment - A put option in Ginnie Mae trading which gives the holder the right, but not the obligation, to make delivery.

Stop-Close-Only Order - A stop order which can only be executed, if possible, during the closing period of the market. See also Market-on-Close Order.

Stop Limit Order - A stop limit order is an order that goes into force as soon as there is a trade at the specified price. The order, however, can only be filled at the stop limit price or better.

Stop Order - This is an order that becomes a market order when a particular price level is reached. A sell stop is placed below the market; a buy stop is placed above the market. Sometimes referred to as Stop Loss Order.

Straddle - See Spread.

Strangle - An option position consisting of the purchase or sale of put and call options having the same expiration but different strike prices.

Street Book - A daily record kept by futures commission merchants and clearing members showing details of each futures transaction, including date, price, quantity, market, commodity, future, and the person for whom the trade was made.

Striking Price (Exercise or Contract Price) - The price, specified in the option contract, at which the underlying futures contract or commodity will move from seller to buyer.

STRIPS- Separate Trading of Registered Interest and Principal Securities. A book-entry system operated by the Federal Reserve permitting separate trading and ownership of the principal and coupon portions of selected Treasury securities. It allows the creation of zero coupon Treasury securities from designated whole bonds.

Strong Hands - When used in connection with delivery of commodities on futures contracts, the term usually means that the party receiving the delivery notice probably will take delivery and retain ownership of the commodity, when used in connection with futures positions, the term usually means positions held by trade interests or well-financed speculators.

Support - In technical analysis, a price area where new buying is likely to come in and stem any decline. Also see Resistance.

Swap - In general, the exchange of one asset or liability for a similar asset or liability for the purpose of lengthening or shortening maturities, or raising or lowering coupon rates, to maximize revenue or minimize financing costs. In securities, this may entail selling one issue and buying another. In foreign currency, it may entail buying a currency on the spot market and simultaneously selling it forward. Swaps may also involve exchanging income flows, for example, exchanging the fixed rate coupon stream of a bond for a variable rate payment stream, or vice versa, while not swapping the principal component of the bond.

Swaption - An option to enter into a swap - i.e., the right, but not the obligation, to enter into a specified type of swap at a specified future date.

Switch - Offsetting a position in one delivery month of a commodity and simultaneous initiation of a similar position in another delivery month of the same commodity, a tactic referred to as "rolling forward." Also see Arbitrage.

Synthetic Futures - A position created by combining call and put options. A synthetic long futures position is created by combining a long call option and a short put option for the same expiration date and the same strike price. A synthetic short futures is created by combining a long put and a short call with the same expiration date and the same strike price.

Systematic Risk - Market risk due to price fluctuations which cannot be eliminated by diversification.