Convertible Security: A security that is convertible into another security. Generally, a convertible bond or convertible preferred stock is convertible into the underlying stock of the same corporation. The rate at which the shares of the bond or preferred stock are convertible into the common is called the conversion ratio.

Derivative: Financial instruments based on the market value of an underlying asset.

Commission: A service charge assessed by a broker and his/her investment company in return for arranging the purchase or sale of a security.

Underlying Security: The security subject to being purchased or sold upon exercise of the option contract.

Underlying Security: The security subject to being purchased or sold upon exercise of the option contract.

Securities and Commodities Exchanges: Organized exchanges where securities, options and futures contracts are traded.

Securities and Commodities Exchanges: Organized exchanges where securities, options and futures contracts are traded.

Sector Index: An index that measure the performance of a narrow market segment, such as biotechnology or small capitalization stocks.

Secondary Market: A market that provides for the purchase or sale of previously sold or bought options through closing transactions.

Secondary Market: A market that provides for the purchase or sale of previously sold or bought options through closing transactions.

Derivative Security: A financial security whose value is determined in part from the value and characteristics of another security, the underlying security.