Leg:
A term describing one side of a spread position. When a
trader legs into a spread, he/she establishes one side
first, hoping for a favorable price movement so the other
side can be executed at a better price. This is, of
course, a higher-risk method of establishing a spread
position. A leg can also be defined as a sustained trend
in the stock market.
Leverage:
Means of increasing return or worth without increasing
investment. Using borrowed funds to increase one's
investment return, for example buying stocks on margin.
Option contracts are leveraged as they provide the
prospect of a high return with little investment.
Liabilities:
legal obligation to honor a debt owed as well as a claim
on the assets of a company or individual excluding equity
ownership. A company's current liabilities are debts
payable within one year while its long-term liabilities
are those debts payable over a period of more than one
year.
Limit Order:
Order that sets a specific price (Limit Price) that is at
or better than the current market. It may be a Day or GTC
(Good Till Canceled) order. If no price is indicated, the
order is a market order by default.
Limited Partnership (LP):
A business or investment where limited partners provide
capital, share in profits, have limited legal liability,
and leave the management of the business to a General
Partners. REITS (real-estate investment trusts) are
popular LPs. Most LPs provide both income and
appreciation. Some are more liquid then others.
Liquidity / liquid Market:
The ease with which a security can be converted to cash in
the marketplace without substantially affecting the assets
price. An issue characterized by a large number of buyer
and sellers, high volume of trading and a narrow spread
between the bid and ask prices is said to provide high
liquidity.
Listed Option:
An exchange-approved put or call trading on a national
options exchange with standardized terms. In contrast,
over-the-counter options usually have non-standard or
negotiated terms.
Loan Value:
Maximum percentage of current market value of margin
eligible securities that a brokerage firm can lend a
margin account client. It is also the amount of money a
lender is willing to lend against collateral.
Long Position:
Term used to describe the ownership of a security,
contract or commodity granting the owner the right to
transfer ownership by sale or gift and to receive any
income paid.
Long-dated options:
See LEAPS.
Long-Term Growth:
Securities whose price appreciation is anticipated to grow
over an extended period of time (a year or more). Long-term
growth securities tend to be more stable and appreciate at a
slower, albeit steadier rate than do maximum capital gains
securities.
Lot:
A group of goods or services composing a transaction. See
also ODD
LOT; ROUND
LOT.
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