Page 158 - PRIAA Glossary

STORAGE CERTIFICATE
A document that verifies the volume of a commodity in a storage facility.
STRADDLE
An option trading strategy which involves holding a call and put simultaneously at the same strike price and expiration dates, making the strategy direction-neutral. The holder profits when the underlying asset moves more than the premium of both the option contracts.
STRANGLE
An options trading strategy which involves holding a combination of an out-of-the-money call and out-of-the- money put option on the same underlying asset with the same maturity date. The strategy is direction-neutral and the trader profits from volatile price movements of the underlying asset. Strangles are cheaper than straddles since out-of-the-money options have lower premiums as compared to near-the-money or at-the-money options.
STRATEGIC PETROLEUM RESERVE (SPR)
A crude oil storage supply kept by the government of a particular country or by private industries to be used during an emergency energy crisis. The US SPR is the largest emergency supply in the world.
STRESS TESTING
A simulation technique used on asset and liability portfolios to determine their reactions to different financial situations. Stress tests are also used to gauge how certain stressors will affect a company or industry.
STRIKE PRICE
The price at which an underlying of an option contract may be bought or sold. Also called “exercise price”.
STRIKE PRICE DIFFERENTIAL
The difference between the settlement price and the strike price at the time of option exercise.
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