What is a Sellout? A sellout is a situation where investors are compelled to dispose of their assets due to non-economic factors, such as divorce, illness, or margin calls by a brokerage firm. In times of panic, investors are more interested in generating quick liquidity than optimizing the return on the security. When an investor’s…
What is a Shareholder Activist? A shareholder activist is a shareholder who uses his or her stake in a publicly-traded company to exert pressure on management to take a certain approach. Since obtaining a controlling interest through a takeover is a costly process, shareholder activists instead leverage a relatively small stake of less than 10%…
What is a Shareholder Letter? A shareholder letter is written by the executives of a company to its shareholders, providing a detailed overview of its operations and other material events that occurred during the year. The shareholder letter informs shareholders about the annual financial results for the past year, sales and earnings, changes in management,…
What is Selling Into Strength? Selling into strength is a trading strategy that involves selling long or short when the price of an investment is rising, but before a reversal occurs. Such a strategy is designed to optimize profit before a reversal occurs in the price of the security by locking in gains or taking…
What is a Selloff? A selloff is the selling of a large volume of securities within a short time, causing a corresponding decline in its price. It occurs when a large number of a company’s shareholders sell due to various factors such as profit warnings, the threat of technological disruption, or fears of increased competition…
What is Selling Away? Selling away is an inappropriate practice by an investment professional – such as a financial adviser or stockbroker – who sells or solicits a client to purchase securities not approved by the brokerage firm with which he/she is affiliated. Generally, brokerage firms keep a list of approved securities products that their…
What is a Selling Group? A selling group comprises dealers and brokers involved in marketing or selling a new security issue or secondary issue of equity or debt. The selling group buys securities in bulk directly from the issuer and then sells them to the members of the selling group at a markup on what…
What is a Seller’s Market? A seller’s market is a market where the demand for a product exceeds its supply. Generally, a seller’s market is characterized by a shortage of goods for sale, giving the seller the power to fix the price of commodities. A seller’s market is common in the real estate sector, where…
What is Seller’s Option? Seller’s option is a settlement option that allows a seller to set the timelines for the delivery of the underlying asset and determine when the final settlement will occur. Such a type of settlement option is available in forward contracts. It allows the seller some leeway in the specifications of a contract,…
What is Sell to Close? Sell to close is an options trade order and refers to closing out (selling) a long position in an options contract. Understanding Sell to Close A long options contract comes with three outcomes: 1. The options contract expires worthless. In long call options, it occurs when the underlying asset’s price…
