Haircut
| (1) In determining whether assets meet capital requirements, a percentage reduction in the stated value of assets. (2) In computing the worth of assets deposited as collateral or margin, a reduction from market value.
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Hardening
| (1) Describes a price which is gradually stabilizing; (2) a term indicating a slowly advancing market.
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Heavy
| A market in which prices are demonstrating either an inability to advance or a slight tendency to decline.
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Hedge
| An investment position or combination of positions that reduces the volatility of your portfolio value. One can take an offsetting position in a related security. Instruments used are varied and include forwards, futures, options, and combinations of all of them.
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Hedge Ratio
| Ratio of the value of futures contracts purchased or sold to the value of the cash commodity being hedged, a computation necessary to minimize basis risk.
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Hedging
| The initiation of a position in a futures market that is intended as a temporary substitute for the sale or purchase of the actual commodity. The sale of futures contracts in anticipation of future sales of cash commodities as a protection against possible price declines, or the purchase of futures contracts in anticipation of future purchases of cash commodities as a protection against the possibility of increasing costs.
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HH Savings Bonds
| A savings bond that pays semiannual coupon interest, unlike EE savings bonds.
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High/Low
| Usually the highest traded price and the lowest traded price for the underlying instrument for the current trading day.
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Hog-Corn Ratio
| See Feed Ratio.
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Holder
| See Buyer.
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House Maintenance Call
| Demand to the customer for additional funds from the brokerage firm because the equity in the customer’s margin account has fallen below the minimum amount allowed by the firm.
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House Requirement
| The minimum amount of equity brokerage firms require margin clients to maintain in the account.
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HUD
| Department of Housing and Urban Development.
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Hybrid-Instruments
| Financial instruments that possess, in varying combinations, characteristics of forward contracts, futures contracts, option contracts, debt instruments, bank depository interests, and other interests. Certain hybrid instruments are exempt from CFTC regulation.
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Hypothecation
| A brokerage firm’s pledging of margin securities at a bank to secure the funds necessary to carry an account’s debit balance.
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