Secondary market

The secondary market is the part of the financial market in which already issued securities are traded. Stock exchanges are the most important secondary markets.


Securities are the financial instruments tradable on the capital market (stock exchange) which serve the purposes of investing in or raising capital. Securities include shares, bonds, covered bonds (Pfandbriefe) and investment fund units.


Settlement is the fulfilment, booking and completion of a financial transaction. It is carried out by clearing houses or central securities depositories. Settlement can be in the form of cash (cash settlement) or physical delivery of the underlying (physical settlement).

Settlement price

The settlement price is determined each day by the clearing house. It is calculated using the range of prices traded during the closing two minutes of the trading day and is therefore not necessarily equal to the closing price. The settlement price is used to calculate daily profits and losses of open futures positions.


Investors are said to go short when they sell a position they do not own (short-selling). They make the sale in the expectation that they will be able to repurchase the open position (“covering”) at a lower price. (antonym: long)

Short call

A short call involves selling a call. The seller simultaneously undertakes to deliver the underlying to the buyer according to terms specified in advance in exercising his option.

Short position

Investors are said to have a short position when they sell stocks they do not own with the intention of buying them back for a cheaper price at a later date.  It can also refer to a market participant (optionholder) who has sold an option or future contract. A short position also describes a strategy in which an investor bets on falling prices using put warrants or put knock-out products.

Short put

In a short put a seller sells a put option. The seller simultaneously undertakes to buy the underlying from the buyer according to terms specified in advance in exercising his option.

Short selling

Sale of securities of which the seller does not actually have possession is referred to as short selling. In short selling, the sellers take a bearish stance and speculate on being able to later re-acquire the securities sold but at a cheaper price. The difference between the sale price and the purchase price is the profit on the short sale. As the short seller must deliver the asset sold within two to three business days, he is normally obliged to obtain the securities by means of securities lending or a repurchase agreement. He pledges collateral of either  securities or cash to the counterparty.

Spot price

The spot price (or cash price) is the price determined on the spot market. The spot price is also known as the cash price or average price of a security in floor trading at Deutsche Börse for securities that are not traded continuously due to low liquidity.


Spread generally describes the difference between two prices, often the bid and ask price of a security or asset in trading. It is also used to describe the difference between the issue price and current price of a security.

Stop-buy order

Buy order that is automatically executed as soon as the price reaches or rises beyond the stop-buy limit. This strategy is of interest to investors who want to participate in rising prices.

Stop-loss order

Sell order that is automatically executed as soon as the price falls below an established lower limit (stoploss limit). This protects already earned profits.


The strike, exercise price or reference price is the price at which a warrant buyer may buy (call) or sell (put) the underlying. The investor may acquire or sell the underlying either at the end of the term (European option) or at any point during the term (American option).
In the case of knock-out products, the strike is often equal to the knock-out threshold, which, if breached, renders the knock-out product worthless. For reverse convertibles, the strike is the threshold that determines whether repayment should be made in cash at the face value or by delivering shares.


Subscription means committing to acquiring a certain quantity of newly issued securities such as shares or bonds. This is done through a written declaration on the subscription form. The subscription agent, usually a bank, is charged with accepting subscriptions for new securities. The details of the subscription terms and conditions and the subscription period are specified in the offering.

Subscription period

A subscription period is a period within which investors can submit purchase orders for a new issue. The period is also known as the book building phase. The issuer does not publish the issue price or the terms of allotment until after the end of the subscription period.


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