The “guerilla” is a species of the genus “scalper,” few in number, and makes a specialty of dealing in stocks and commodities: So unsavory is the reputation of this class that it has fixed the appellation of “Hell’s Kitchen” and “Robber’s Roost” upon certain localities in the New York Stock Exchange.
Still another class is composed of those who strive to enrich themselves by the fictitious rise and fall of a particular stock in which they constantly deal.
The terms “long” and “short,” when used as adjectives, have been already explained, and their signification when employed as nouns is practically the same. A “long” is a speculator who has bought heavily in anticipation of a rise. A “short” is one who has sold freely in expectation of a decline. The action of the former is called “loading.”
“Forcing quotations” is keeping up prices by any means whatever. When this is accomplished by the dissemination of fictitious news or the circulation of unfounded rumors, the operator is said to “balloon” prices.
A speculator is said to “take a flyer” when he engages in some side venture; he “flies kites” when he expands operations injudiciously; he “holds the market” when he prevents a decline in prices by buying heavily; he “milks the street” when he manipulates so skilfully that they rise or fall at his pleasure; he “unloads” when he sells the particular stock or commodity of which he is “long;” he “spills stock” when he offers large quantities with a view to lowering or “breaking” prices; if he is successful in these tactics he is said to “saddle the market.”
A “bear” is said to be “gunning” a stock when he employs all his energy and craft to “break” its price. He “covers,” or “covers his shorts,” when he buys to fulfill his contracts. He “sells out” a man by forcing prices down so that the latter is obliged to relinquish what he is “carrying,” perhaps to fail.
The nature of a “corner” has been already set forth in detail. The operator or clique organizing and managing it is said to “run” it. The day when final settlement must be made between the opposing parties engaged in such a transaction is termed “settling day.” If the “bears” are forced to settle at unusually high prices they are said to be “squeezed.” The “squeeze” which has followed many a corner has precipitated not a few wealthy men into financial ruin. This circumstance, however, is usually a matter of utter indifference to the manipulators. The success of a “corner” is sometimes prevented by what is known as a “squeal,” or revelation of the secrets of the pool or clique by one of its members. Sometimes the plans of the organizers of a “corner” are brought to naught by a “leak” in the pool, that is, by one of the members secretly selling out his holdings. Of course, a “corner” can be formed only on what is known as a “future,” or future delivery, by which is meant the sale and purchase of some stock or commodity to be delivered at some period in the future.
Yet another form of gambling very common upon the floors of stock and commercial exchanges is known as dealing in “puts,” “calls” and “straddles.” When a person buys a “put,” he pays a stipulated sum for the privilege of selling to the party to whom it is paid, a certain quantity of some particular stock or other article, within a fixed time, at a designated price. Thus A might pay to B one hundred dollars for the privilege of selling him one hundred shares of Union Pacific stock at a stipulated price, within ten days. As a matter of course, the price named is always a little below the current quotation ruling at the time the contract is made, i. e., the day upon which the “put” is bought. If, for instance, the “put” is sold at 80 cents on that day, and the market declines to 75, A might tender to B the one hundred shares, and the latter would be compelled to take them at that price. In such a case A would have gained five dollars per share, or five hundred dollars in all, provided he had “covered his shorts,” i. e., bought in the stock which he had already put, at the latter figure. As a matter of fact, neither party contemplated an actual delivery. The market having declined, A’s net gain is, of course, only four hundred dollars, he having already paid one hundred dollars to B. This appears an easy method of winning money. As a matter of fact, however, experience has shown that very few men win through the purchase of “puts” and “calls.”
A “call” is similar in its general nature to a “put,” but differs from it in that the buyer of the former has the privilege of calling or buying a certain quantity, under the same conditions. The seller of the “put” contracts to buy, and of the “call” to sell, whenever the demand is made.
A “straddle” is a combination of the “put” and the “call,” and is the option of either buying or selling. The cost of these “puts,” “calls,” and “straddles,” which are known as “privileges,” varies from one to five per cent. of the par value of the stock, or the market value of the commodity involved, and depends upon the time they have to run, the range covered, and the activity and sensitiveness of the market.