It is very difficult to communicate on the floor without learning the dialect of the trade. The more comfortable you are with the dialect the easier it will be to communicate, grasp, and analyze what actually is going on in the market. It is important to understand the dialect because the open-outcry trading system is extremely fast paced and chaotic. Here are just a few examples of the jargon that is commonly used on the trading floor.
Actuals : Commodities on hand, ready for shipment, storage and manufacture.
At-the-market : An order to buy or sell at the best price possible
at the time an order reaches the trading pit.
At-the-money : In options, when the strike price equals the price
of the underlying futures.
Bear : A market trending downward, or a person who expects prices
to go lower.
Breaking : A quick decline in price.
Bulging : A quick increase in price.
Bull : A market trending upward; on a person who expects prices to
go higher.
Buy on close : To buy at the end of the trading session at a price
within the closing range.
Buy on opening : To buy at the beginning of a trading session at a
price within the opening range.
Call : An option that gives the buyer the right to a long position
in the underlying futures at a specific price; the call writer (seller)
may be assigned a short position in the underlying futures if the
buyer exercises the call.
Hedge : A sale of futures contracts to offset the ownership or purchase
of the underlying cash commodity in order to protect it against adverse
price moves; or, conversely, a purchase of futures contracts to offset
the sale of the underlying cash commodity, again for protection against
adverse price moves.
In-the-money : In call options, when the strike price is below the
price of the underlying futures. In put options, when the strike price
is above the price of the underlying futures. In-the-money options
are the most expensive options because the premium includes in- trinsic
value.
Local : Independent trader who trades her or his own money on the
floor of the exchanges. Some locals act as brokers as well, but are
subject to certain rules that protect customer orders.
Mark-to-market : The practice of crediting or debiting a trader's
account based on the daily closing prices of the futures contracts
he is long or short.
Market order : An order for immediate execution at the best available
price.
Out-of-the-money : Option calls with strike prices above the price
of the underlying futures, and puts with strike prices below the price
of the underlying futures.
Pit : An octagonal platform on the trading floor of an exchange, consisting
of steps upon which traders and brokers stand while trading (If circular.
called a "ring").
Put : In options. the buyer of a put has the right to acquire a short
position in the underlying futures contract at the strike price until
the option expires; the seller (writer) of the put obligates himself
to take a long position in the futures at the strike price if the
buyer exercises his put.
Reference: Futures History