Glossary

Definition

Binding short definitions for terms used across the KB that do not carry their own entries. Where a term HAS an entry, the entry governs; this page exists so no cross-reference dangles and agents share one vocabulary. Terms are grouped, each definition self-contained.

How it works / structure

Market mechanics

• Open interest (OI): outstanding contracts not yet closed or exercised; volume is turnover, OI is inventory. Rising OI with rising volume = new positioning; volume without OI change = churn (ms-option-chain).
• Contango / backwardation: futures curve upward-sloping / downward-sloping vs spot; the roll-yield sign for a long position (ms-futures-roll).
• Basis: spot minus futures (sign conventions vary by market; the platform pins spot − front future).
• Mark-to-market: daily revaluation at settlement prices; futures cash-flow variation margin daily.
• Notional: the position’s full economic size (contracts × multiplier × price) — the platform sizes on notional, never on margin posted.
• Float: shares available for public trading (outstanding minus insider/restricted holdings).
• Halt / LULD: exchange trading pauses; limit-up/limit-down bands pause trading at percentage moves — stops do not execute through a halt.

Options vocabulary

• Pin risk: uncertainty at expiration when the underlying closes at/near a short strike — assignment is unknowable until after the close; the position may or may not convert to stock overnight (ms-expiration-exercise-assignment).
• Theta decay curve: time value’s decay path — near-the- money decay accelerates into expiry (steepest final weeks), while far OTM/ITM decay flattens; the shape is why DTE floors exist (mgmt-time-based-exit, greek-theta).
• Extrinsic / intrinsic value: intrinsic = in-the-money amount; extrinsic = premium minus intrinsic (time value + volatility value); early-assignment logic runs on extrinsic (opt-dividend-effects).
• Moneyness: strike vs spot classification (ITM/ATM/OTM); delta is the platform’s continuous moneyness coordinate.
• Leg / legging: one component of a multi-part structure; legging = executing components separately (bearing intermediate risk) vs a single spread order.
• Roll: close one contract, open a related one, one decision (mgmt-rolling; futures: ms-futures-roll).
• Credit / debit: net premium received / paid at entry.
• Assignment / exercise: the short is assigned when the long exercises; American style any time, European at expiry only (ms-expiration-exercise-assignment).

Risk & performance vocabulary

• Drawdown: peak-to-trough equity decline; max drawdown is the worst such over a window (risk-max-drawdown-budget).
• Sharpe ratio: mean excess return over its standard deviation — scale-free risk-adjusted return; fragile to non-normal distributions (a short-premium program’s Sharpe overstates until the tail arrives).
• R-multiple: P&L as a multiple of initial planned risk (entry-to-stop distance) — the platform’s per-trade outcome unit (mgmt-profit-target).
• Expectancy: mean per-trade R over a sample; positive expectancy after friction is the minimal strategy claim.
• Slippage: execution price minus decision price (ms-slippage-friction).
• Hit rate / win rate: fraction of trades positive — meaningless without payoff shape (a 90% hit rate with −10R losses is expectancy-negative).
• Skew (distribution): asymmetry of the outcome distribution; premium selling is negatively skewed (many small wins, rare large losses), trend following positively (the platform requires strategies to state their skew).

Crypto vocabulary

• Funding rate: the periodic payment between perpetual- futures longs and shorts that tethers the contract to its spot index; positive = longs pay (crypto-perpetual-futures).
• Mark price: the index-anchored price derivatives venues margin and liquidate against, distinct from last trade (crypto-perpetual-futures).
• Liquidation cascade: forced position closes pushing price into further forced closes — the endogenous amplifier in leveraged crypto markets.
• Seed phrase: the mnemonic word list from which a wallet derives all its keys; a complete portable copy of everything it controls (crypto-wallets-keys).
• Cold / hot wallet: key storage offline / online — the security-vs-convenience axis of self-custody (crypto-custody-models).
• Depeg: a stablecoin trading materially away from its reference value (crypto-stablecoins).
• Halving: bitcoin’s scheduled 50% cut to per-block issuance, every 210,000 blocks (crypto-supply-schedules).
• Confirmation: a transaction’s inclusion depth under subsequent blocks; venues credit deposits after asset- specific confirmation counts (crypto-transfer-settlement).
• On-chain: recorded on the public ledger itself, as opposed to venue-internal ledger entries (crypto-onchain-metrics).
• Reference rate: a methodology-governed aggregation of venue prices used for settlement and NAV (e.g. the CME CF rates; crypto-spot-market-structure).

Platform-specific usage

• Replay: deterministic re-execution of a strategy over recorded data — the platform’s evidence standard for any performance claim.
• Falsifier: the pre-declared observation that would prove a thesis wrong; every thesis carries one (qualitative-analysis).
• Folklore: a widely-repeated trading claim lacking a citable test — documented, labeled, never load-bearing.
• Priced expectation: what the market already implies (consensus, expected move, implied path) — the benchmark every event thesis is measured against (lens-event-catalyst).

When it applies

Vocabulary resolution for every entry; the import layer treats these definitions as binding for term normalization.

Risk profile & failure modes

• Definition drift: agents importing outside definitions for these terms create silent inconsistencies — this page governs; conflicts get resolved by editing HERE, versioned.
• Glossary bloat: terms that grow their own evidence and parameters graduate to full entries; the glossary holds definitions only.

Evidence & limits

Definitions align with SEC investor-education usage and OCC options vocabulary where those sources define the term; platform-specific terms (replay, falsifier, folklore, priced expectation) are defined by this KB and carry no external authority claim.

Falsifiable-thesis examples

Not applicable — definitions carry no claims; the one testable property is internal consistency (no entry uses a glossary term in a conflicting sense), which the validator’s cross-reference pass approximates.

Cross-references

• Governing entries where they exist: ms-option-chain, ms-futures-roll, ms-expiration-exercise-assignment, mgmt-rolling, risk-max-drawdown-budget, ms-slippage-friction
• Platform doctrine terms: qualitative-analysis (falsifier), lens-event-catalyst (priced expectation), lens-quantitative (replay discipline)