U | V | W | X | Y | Z

This glossary focuses on phrases and terminology commonly used in the world of alternative investments. It is not meant to be an all-encompassing investment dictionary, but rather a tool to enhance understanding of alternative investments.

- U -

Unrealized Gain/Loss
The theoretical gain or loss on Open Positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains' Losses become Profits/Losses when position is closed.

Uptick
A new price quote at a price higher than the preceding quote.

Uptick Rule
In the U.S., a regulation whereby a security may not be sold short unless the last trade prior to the
short sale was at a price lower than the price at which the short sale is executed.

US Prime Rate
The interest rate at which US banks will lend to their prime corporate customers.

- V - Back to Top

Valuation
Placing a value or worth on an asset. For alternative asset class investment portfolios, valuation can be determined by the last market-traded price.

Value Date
The date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally two business days forward. Also known as maturity date.

VAMI
Value Added Monthly Index reflects the growth of $ 1,000 over time. The index is equal to $ 1,000 at inception. Subsequent month-end values are calculated by multiplying the previous month's VAMI index by 1 plus the current month rate of return.

Variable Limit
A price system that allows for larger than normal allowable price movements under certain conditions. In periods of extreme volatility, some exchanges permit trading at price levels that exceed regular daily price limits.

Variation Margin
During periods of great market volatility or in the case of high-risk accounts, additional margin deposited by a clearing member firm to an exchange clearinghouse.

Vertical Spread
Buying and selling puts or calls of the same expiration month but different strike prices.

Venture Capital
Venture Capital is the process by which investors fund early stage, more risk oriented business endeavors. A venture capital funding arrangement will typically entail relinquishing some level of ownership and control of the business. Offsetting the high risk the investor takes is the promise of high return on the investment.

The investment is usually in the form of stock or an instrument which can be converted into stock at some future date. As the business matures, an initial public offering may take place, or the business merged or sold, or other sources of capital found. Any of these would occur with the intention of buying out the venture capitalists. While typically expect a 20-50% annual return on their investment at the time they are brought out.

Vesting Schedule
The vesting schedule refers to the period of time from fund start-up date that partners of the general partnership are eligible to receive their share of the carried interest.

Vintage Year
The year of first drawdown of capital for investment purposes, which generally coincides with the first year of a partnership's term. Partnerships of the same vintage year are often monitored as a group, in order to assess which partnerships have been most and least effective in capitalizing on economic and market conditions over a common timeframe.

Volatility
A measure of risk for a given investment, and typically calculated as the standard deviation of returns.

Volatility Arbitrage
This strategy is designed to take advantage of mispricing between derivatives and their theoretical values by purchasing an undervalued option, whether directly or synthetically, and hedging the position with the underlying security.

- W - Back to Top

Warehouse Receipt
Document guaranteeing the existence and availability of a given quantity and quality of a commodity in storage; commonly used as the instrument of transfer of ownership in both cash and futures transactions.

Warrant
A special kind of option given by the company to holders of a particular security giving them the right to subscribe for future issues, either of the same or of some other security.

Weak Hands
When used in connection with delivery of commodities on futures contracts, the term usually means that the party probably does not intend to retain ownership of the commodity; when used in connection with futures position, the term usually means positions held by small speculators.

Whipsaw
Slang for a condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.

Wild Card Option
Refers to a provision of any physical delivery Treasury Bond or Note futures contract which permits shorts to wait until as late as 8:00 p.m. on any notice day to announce their intention to deliver at invoice prices that are fixed at 2:00 p.m., the close of futures trading, on that day.

Winding Down
The process of liquidating all remaining investment holdings in the partnership at the end of the term or the effective date of dissolution.

- Y - Back to Top

Yard
Slang for a billion.