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Early Exercise:

A feature of American-style options that allows the owner to exercise an option at any time prior to its expiration date.

Earnings Per Share:

A company's profit allocated to each share of common stock after paying taxes, preferred shareholders and bondholders.

Earnings Report:

A corporate financial statement that reports and nets out all earnings and expenses to a profit or loss. It is therefore sometimes referred to as the profit and loss (P&L) statement.

Effective Tax Rate:

The tax rate paid by a taxpayer. This is computed by dividing taxes paid for a given year by taxable income for that year.

Electronic Commerce:

Business that is transacted via the Internet, sometimes referred to as "e-commerce".

Endorsement:

A signature on the back of a stock certificate, check or other negotiable instrument of the person whose name appears on the face of the same. It makes the document negotiable.

Equity:

1.)Represents stockholders' ownership interests in a corporation.

2.) Difference between the securities owned and the margin loans owed in a margin account. It is the amount the investor would keep after all positions have been closed and all margin loans paid off.

Equity Option:

An option on shares of an individual common stock.

Equivalent Strategy:

Investment strategy that has the same risk-reward profile as another investment strategy. E.g.: Long May 60-65 call vertical spread is equivalent to a short May 60-65 put vertical spread. See also SYNTHETIC POSITIONS.

Eurobonds:

A long-term loan issued in a currency other than that of the country or market in which it is issued. Interest is paid without the deduction of tax.

European-style Option:

An option that can be exercised only during a specified time (typically one to five days) prior to its expiration. Generally European-style options expire the third Friday of every month. See also AMERICAN-STYLE OPTION.

Excess Equity:

Equity in a margin account above that which is required by Regulation T.

Exchange:

Any exchange or group of persons that provides a central location where securities can be bought and sold. An exchange does not have to be a physical place as demonstrated by a network of securities dealers connected by a computer link called NASDAQ (National Association of Securities Dealers Automated Quotation System). 'Listed' stocks are traded or 'listed' on a particular exchange such as the NYSE (New York Stock Exchange) and are characterized by three letter stock symbols while OTC stocks are traded through the NASDAQ system and are usually characterized by four letter stock symbols.

Ex-dividend Date:

On the ex-dividend date, the previous day's closing price is reduced by the amount of the dividend to be paid (rounded up to the nearest eighth) because purchasers of the stock on the ex-dividend date will not receive the dividend payment. This date is sometimes referred to simply as the "ex-date," and can apply to other situations; for example, splits and distributions. If you purchase a stock on the ex-date for a split or distribution, you are not entitled to the split stock or that distribution. However, the opening price for the stock will have been reduced by an appropriate amount, as on the ex-dividend date.

Execution:

The actual completion of a buy or sell order on the exchange floor.

Exercise price:

See STRIKE PRICE.

Exercise:

To invoke the rights granted to the owner of an option contract. In the case of a call, the option owner buys the underlying stock. In the case of a put, the option owner sells the underlying stock.

Exit Fee:

A service charge that equals a percent of a share's NAV, which the investor pays when selling mutual fund shares. Sometimes the exit fee is a flat dollar charge.

Expiration Cycle:

Cycle of expiration dates used in short-term options trading. Traditionally, there are three cycles:

Cycle Available Expiration Months

January January / April / July / October

February February / May / August / November

March March / June / September / December

Expiration Date:

The date on which an option and the right to exercise it cease to exist. Options expire the Saturday following the third Friday of every month.

Expiration Month:

The month during which the expiration date occurs.

Expiration Time:

The time of day by which all exercise notices must be received on the expiration date. Check with your Account Executive regarding your brokerage firm's deadline for submitting exercise notices on expiration Friday.