AIMA

The Alternative Investment Management Association

Alternative Investment Management Association

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Glossary

AIMA's Glossary has been developed for all those with an interest in the alternative investment industry - from the beginner to the advanced practitioner.

You will find a considerable overlap of content with the traditional fund management industry - the instruments used, the service providers employed, etc.  However, the hedge fund industry is individual in the way in which it uses these resources.

For reasons of law and accuracy, this is not a wiki.  It is a work-in-progress, however, and we invite you to submit new items for inclusion below (including the proposed definition).

  • We express our sincere thanks to Stanley Marchon, Vincent Kuhn, Nicolas Watin-Augouard, Stephen Foster and Sunil Gopalan for the creation of this resource. 
  • Special thanks are also extended to Anne Taulbut and Jennifer Nye of Katten Muchin Rosenman Cornish for the extensive legal review.
   
day trader

A trader, often a person with exchange trading privileges, who takes positions and then offsets them during the same trading session prior to the close of trading.

deal arbitrage

Long/short equity securities of companies involved in corporate transactions.

dealer

An individual or firm that acts as a market marker in an instrument such as a security or foreign currency.

dealing day

The specific day on which investors can subscribe for or redeem their holding in a product, as detailed in the relevant product prospectus. For alternative investment products, the dealing day is usually weekly, monthly or quarterly.

debt

See Junior debt, Mezzanine debt, Secured debt, Senior debt, Subordinated debt.

default

Failure to perform on a contract, such as failure to meet a margin call, or to make or take delivery.

delta

(δ) The sensitivity of an option price to moves in the price of the underlying asset.

delta neutral

Refers to a position involving options that is designed to have an overall delta of zero.

deposit

The initial outlay required by a broker of a client to open a futures position, returnable upon liquidation of that position.

derivative

A financial instrument, traded on or off an exchange, the price of which is directly dependent upon (i.e. "derived from") the value of one or more underlying securities, indices, debt instruments, commodities, other derivative instruments, or any agreed upon pricing index or arrangement (e.g., the movement over time of the Consumer Price Index or freight rates). Derivatives involve the trading of rights or obligations based on the underlying product, but do not directly transfer property. They are used to hedge risk or to exchange a floating rate of return for fixed rate of return. Derivatives include futures, options, and swaps. For example, futures contracts are derivatives of the physical contract and options on futures are derivatives of futures contracts.

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