9 words to decode Reddit’s GameStop trading lingo

The events surrounding trading in the shares of the American company GameStop have provided us with one of the more intriguing news stories of recent times. The story of a bunch of small investors threatening to bring some of the giants of the financial world to their knees by taking them on at their own game was compelling enough in itself, but throw in the use of a trading app called Robinhood and bizarre terminology such as ‘diamond hands’ and ‘gamma squeezes’ and you have all the makings of a first-class thriller.

Some of the jargon used by the traders who sought to vie with Wall Street was designed to provide a layer of secrecy to proceedings conducted online, but some just employed the existing verbiage of share-trading. Just like many sports, the stock market has its own terminology that can make its workings seem impenetrable to outsiders, with animal metaphors being a particular speciality. Here are some examples that have made it into the Collins Dictionary: 

bear raid an attempt to force down the price of a security or commodity by sustained selling

bottom feeder a speculator who buys shares in companies that are performing poorly in anticipation of improved performance

butterfly the simultaneous purchase and sale of traded call options, at different exercise prices or with different expiry dates, on a stock exchange or commodity market

dead-cat bounce a temporary recovery in prices following a substantial fall as a result of speculators buying stocks they have already sold rather than as a result of a genuine reversal of the downward trend

lame duck a speculator who cannot discharge his or her liabilities

pump-and-dump the practice of buying shares, generating favourable publicity about them, especially on the internet, then selling them when the price accordingly rises

SHEEP Sky High Earnings Expectations Possibly: an acronym applied to investments that appear to offer high returns but may be unreliable

stag a speculator who applies for shares in a new issue in anticipation of a rise in price when trading commences in order to make a quick profit on resale

stale bull a dealer or speculator who holds unsold commodities after a rise in market prices but who cannot trade because there are no buyers at the new levels and because financial commitments prevent him or her from making further purchases

Written by Ian Brookes, writer and editor.

All opinions expressed on this blog are those of the individual writers, and do not necessarily reflect the opinions or policies of Collins, or its parent company, HarperCollins.