Computerized Buy/Sell Program

Fancy Way to Say: Program Trading Large instituions have models which determine when stocks are undervalued or overvalued. This is done continually on an intraday basis. When stocks are undervalued, they are purchased. When overvalued, the are sold. This is done with a large basket of stocks, usually the S&P500. The idea of over/undervalued is based upon the difference in value between the cash index and the futures. When stocks are below fair value they are undervalued and when they are above fair value they are overvalued.

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