# Glossary

> Plain definitions of 47 terms used in the Spout docs, including adjustment window, assignment, auto buyback, borrower, brokerage account and call option.

Canonical: https://spout.finance/docs/glossary/

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**Adjustment window**: The 7 days over which a difference between expected and actual premium is spread, so share prices move smoothly.

**Assignment**: When a call buyer exercises, usually at expiry when the stock is above the strike, though listed calls can be exercised earlier. The shares are delivered from Spout's brokerage account at the strike, and the strike proceeds buy them back there for the pool.

**Auto buyback**: The app's name for partial liquidation. On by default.

**Borrower**: Someone who posts tokenized stocks as collateral and borrows USDC.

**Brokerage account**: Spout's US brokerage account. It holds the real shares behind collateral that has joined a pool, and it is where calls are sold, liquidation sales are made and assigned stock is bought back.

**Call option**: A contract giving the buyer the right, not the obligation, to buy 100 shares at the strike before or at expiry.

**Cash reserve**: The part of the lending pool kept as cash and Treasury bills, targeting 15%, to pay instant Senior withdrawals. It is never lent.

**Circuit breaker**: An automatic or manual pause on part of the protocol when something unusual happens.

**Claim resale**: Selling your place in the withdrawal queue to a buyer who pays you now and is paid later in your place.

**Collateral**: Tokenized stocks you post to secure a loan.

**Covered call**: A call written against shares that are already held, so the shares can be delivered if the call is exercised.

**Cycle**: One options period for an asset, weekly or every two weeks, from when calls are written to when they expire.

**Expiry**: The date an option ends.

**Haircut**: A deduction taken on an instant Senior withdrawal, from 0% to 3%, paid to the lenders who stay.

**Health factor**: Liquidation threshold divided by your LTV. Below 1, your position can be liquidated. The app shows it green at 1.80 and above, amber from 1.25 up to 1.80, and red below 1.25.

**Insurance Fund**: A reserve, funded by half of the protocol fee and by liquidation penalties, that absorbs bad debt from liquidations before lenders do. It does not cover option cycles that settle below what accrued. Targets 2% of pool value.

**Junior tranche**: The lending tranche that earns 75% of income above Senior's priority and absorbs losses first.

**Keeper**: An automated service that performs routine actions such as liquidations and cycle updates. It can only do what the program allows.

**Lender**: Someone who deposits USDC into the Senior or Junior tranche.

**Leveraged buy**: Buying more tokenized stock than your cash alone covers, by borrowing against the stock in the same transaction.

**Liquidation**: The sale of collateral to bring an unsafe loan back within limits.

**Liquidation penalty**: The deduction applied to collateral sold in a liquidation: the asset's threshold minus 50%, from 4.1% to 12.5%.

**Liquidation price**: The collateral price at which your LTV reaches the liquidation threshold.

**Liquidation threshold**: The LTV at which a position can be liquidated, from 54.1% to 62.5% depending on the asset.

**LTV (loan to value)**: Your loan divided by your collateral's value.

**Maximum LTV**: The most you can borrow, as a share of collateral value: 50%.

**Multisig**: A wallet that needs several separate approvals to act. Spout's governance is held in one.

**Oracle**: A service that publishes prices onchain. Spout uses Stork.

**Out of the money**: A call whose strike is above the current stock price.

**Pending collateral**: Collateral deposited since the last cycle began. It counts toward your borrowing limit straight away, joins the pool at the next cycle, and cannot be withdrawn until it has been through one cycle.

**Pool**: All collateral of one asset, held by the program as tokens or as receipt tokens matching shares in Spout's brokerage account, or all USDC in the lending pool, depending on context.

**Premium**: The price a buyer pays for an option. Spout collects it for writing calls.

**Protocol fee**: The share of gross premium Spout keeps: 20%, or 10% while the Insurance Fund is at target.

**Queue**: The first in, first out line for withdrawals the cash reserve does not pay instantly.

**Receipt token**: A token Spout mints into a pool when collateral tokens are redeemed for real shares, one for each token. It stays inside the vault, is reconciled against the shares held in the brokerage account, and is burned when the tokens are reissued.

**Reserve health**: The cash reserve divided by its target of 15% of the pool. The instant Senior withdrawal haircut is 0% when it is 0.75 or more.

**Senior priority**: Senior's claim to the first 7% a year of income, before Junior earns anything. Not a guarantee.

**Senior tranche**: The lending tranche that is paid first and absorbs losses last.

**Share price**: The value of one share token in USDC. It rises as yield accrues.

**Share token**: The token you receive when you lend, representing your part of a tranche.

**Strike**: The price at which a call buyer can buy the shares.

**Tokenized stock**: A token on Solana that tracks a US stock or ETF. How it is backed, and what rights it gives, are set by its issuer's terms.

**Tranche**: A slice of the lending pool with its own rules for income and losses.

**Treasury bill**: A short term US government debt instrument. Idle lending cash earns its yield.

**Utilization**: Borrowed USDC divided by total USDC in the pool. Capped at 85%.

**Volatility risk premium**: The tendency of options to be priced for more movement than usually follows. It is the source of covered call income.

**Withdrawal fee**: A 0.20% fee on the amount you withdraw from the lending pool.