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O - When the fifth letter of a NASDAQ stock symbol is an
O, the represented stock is the company’s second class of preferred
shares.
Objective - Often referring to the strategy of a mutual fund, in other
words, the fund’s category. Examples of mutual fund objectives are,
aggressive, conservative, etc.
Obligations Assimilables du Trésor (OATs) - Government bonds underlying
the principal French bond futures and options contracts.
Odd Lot - An order for less than 100 shares of stock, as opposed to a
round lot.
Odd Lot Dealer - A broker that combines a number of odd lots into round
lots and then executes them as round lots.
OEX Index - Referring to derivative products, the Quotron symbol for the
Standard and Poor’s 100 index option.
Off Balance Sheet (OBS) Instrument - A notional principal contract that
adjusts an economic unit's risk structure without appearing as an asset
or liability on a balance sheet.
Off-Balance-Sheet Financing - Financing that is not included as a
liability on the balance sheet.
Off-Board - Referring to listed equity securities, the transaction of a
security that takes place away from the exchange on which it is listed.
Off-Exchange Option Contract - Over-the-counter option designed to meet
specific investment needs.
Off-Exchange Task Force (OETF) - A group of Commodity Futures Trading
Commission officials who monitor over-the-counter derivative contracts.
Off-Floor Order - Referring to listed equity securities, the opposite of
an on-floor- order, an order that takes place off of the exchange floor,
an order that is originated by the customer with the broker; often said
to be an upstairs order.
Off-Market Coupon Swap - A swap contract in which the counterparties to
exchange an extra payment at the beginning or end of the swap tenor.
Offer - Indication of an interest in a trade; an offer to sell a
security.
Offer Price - The price at which a trader or market maker is willing to
sell an instrument.
Offer Wanted - Referring to general equities, notice that a buyer is
looking for a seller to supply a specific security.
Offering - Often used in reference to initial public offerings.
Offering Date - The date on which a new security is offered to the
public, often through an initial public offering.
Offering Memorandum - A document stating the terms of a private
placement (the sale of securities directly to a selected group of
investors.
Office of the Controller of the Currency (OCC) - The organization
responsible for regulation of the administrative and investment policies
of national banks in the United States.
Official Reserves - Gold and/or foreign currency held by government
monetary institutions.
Official Statement - Statement from the issuer of a municipal security
detailing the municipality and the security.
Official Unrequited Transfers - Term that encompasses a variety of
subsidies.
Offset - The act of eliminating a short or long position by making an
opposite transaction.
Offsetting Swap - A swap which exactly counters the market risk of a
pre- existing swap but does not terminate the previous swap.
Offshore - Term describing any account, investor, or security not based
in the US.
Offshore Finance Subsidiary - An affiliate wholly-owned by the parent
company that is incorporated overseas.
Old-Line Factoring - The situation where one party in a factoring
agreement provides insurance, collection, and financing for accounts
receivable.
Omnibus Account - An account in which the transactions of two or more
parties are combined. The account carries the name of one of the
parties, rather than both.
On A Clean Up - Referring to general equities, participating in a trade
where the only stock left available (not taken in previous transactions)
is the "clean up" (left over) amount.
On Balance - Referring to listed equity securities, the amount of a
security remaining, (the balance amount) after the pairing off of other
market buy and sell orders.
On Board - Referring to general equities, long; holding a long position.
On The Money - Referring to general equities, at the same price as the
previous sale.
On The Print - Referring to general equities, participation in a block
trade after the fact. The customer joins in on a trade that has already
taken place, as if they had been part of it all along.
On The Run - The most recent government bond for a specific maturity
range.
On The Take - Referring to general equities, a situation when a price is
moving upward because of the fact that there is an increased level of
buyers taking offerings; the opposite of "come in".
On The Tape - Referring to general equities, a trade that is printed on
the ticker tape; on the news services.
On-Floor Order - Referring to listed equity securities, the opposite of
an upstairs order; an order that is initiated by a member of an
exchange, for his/her own account, on the floor. Also the opposite of an
off-floor order.
One Man Picture - The picture when both the bid and offered prices come
from the same source.
One-Factor Arbitrage Pricing Theory - Segment of the Arbitrage Pricing
Theory asserting that the expected return of a risky asset is a linear
function of a single factor rather than multiple factors.
One-Way Market - A market that is moving in one direction or the other.
OPEC - Acronym for the Organization of Petroleum Exporting Countries.
Open - Referring to general equities, the opposite of clean; to have
either buy or sell interest at the specified price level and side of a
preceding trade; also the start of a trading day or the first trade of a
security at the start of a trading day.
Open Account - An account that does not involve a formal debt contact.
Open Book - Situation where a bank’s liabilities have an average
maturity that is less than that of its assets. Also called an unmatched
book.
Open Contract - A contract that has been bought/sold without the
completion of the transaction, meaning completion by the next
sale/purchase or by the actual delivery of the commodity or financial
instrument.
Open Depending On The Floor - Referring to listed equity securities,
having room for a buyer or sell contingent on the results of a trade
being executed on the floor.
Open Interest - The total number of unexercised contracts (neither
executed nor expired) for a particular option or futures contract.
Open On The Print - Referring to general equities, phrase used to
describe a block trade that has been completed and printed on the
consolidated tape, but that leaves the block trader with stock available
for new customers who are on the opposite side of the market from the
first customers.
Open Order - Referring to general equities, another term for a "Good
‘Til Cancelled" order; an order that is good until it is either executed
or cancelled.
Open Position - A position whose value will change with a change in
prices.
Open Repo - A repurchase agreement with no defined term.
Open Up - Referring to general equities, to give more details about
one’s interest in a transaction.
Open-End Fund - Referring to general equities, the opposite of a closed-
end fund; a mutual fund that creates new shares on demand, that
continues to accept new investments or withdrawals after its initial
formation. Most mutual funds are open-end funds.
Open-End Mortgage - The opposite of a closed-end mortgage, a mortgage
that allows for additional debt to be issued against it.
Open-Market Operation - The purchase and/or sale of government
securities by authorities in order to increase or decrease the domestic
money supply.
Open-Market Purchase Operation - The act of repurchasing stock in market
transactions in order to compete with other investors.
Open-Outcry - The method of trading that involves calling out the
details of an order for other traders to hear.
Opening - The beginning of the trading session at an exchange.
Opening Price - The price at which the first transactions, bids, or
offers were made.
Opening Purchase - A transaction in which the purchaser’s intention is
to create or increase a long position in a given series of options.
Opening Sale - A transaction in which the seller’s intention is to
create or increase a short position in a given series of options.
Opening Transaction - Referring to derivative products, a transaction
that creates a position; also the first transaction of the day for that
particular stock.
Operating Cash Flow - Cash generated from operations less capital
spending and working capital; earnings before depreciation less taxes.
Operating Cycle - The period of time between the acquisition of raw
materials and the receipt of cash as a result of those acquisitions.
Operating Exposure - The degree to which exchange rate changes affect a
firm’s future operating cash flows.
Operating Lease - A short-term lease where the period of contract is
less than the expected life of the leased equipment and the lessor pays
all maintenance costs.
Operating Leverage - Fixed operating costs.
Operating Profit Margin - The measure of operating profit compared to
net sales.
Operating Risk - Another term for business risk. Risk that is created by
operating leverage.
Operationally Efficient Market - Market in which investors can obtain
transaction services that reflect the true costs of those services.
Opinion Shopping - The practice whereby a corporation attempts to obtain
reporting objectives by utilizing questionable accounting principles
with the help of an agreeable auditor. Opinion shopping is prohibited by
the SEC.
Opportunity Cost Of Capital - The expected return that if forfeited by
investing in a project rather than in financial securities.
Opportunity Costs - The difference in the return of an investment that
was made versus that of a desired investment.
Opportunity Set - The pairing of the possible expected return and the
standard deviation of all portfolios.
Optimal Contract - Agreement that balances agency costs (contracting,
monitoring, and misbehavior) against one another in order to minimize
the total cost.
Optimal Portfolio - Portfolio that is set up with the objective of
maximizing the investor’s preferences with respect to risk and returns.
Optimal Redemption Provision - A stipulation of a bond indenture that
controls the issuer’s ability to call the bond for redemption before its
scheduled maturity date.
Optimization Approach To Indexing - An indexing strategy that seeks to
optimize a given objective.
Option - A derivative security that gives the buyer (holder) the right
to either buy/sell an asset at a specified price on or before a given
date, or not. Options are issued by investors as opposed to companies
and their value is derived from the worth of an underlying security.
Option Elasticity - The increase, expressed as a percentage, in an
option’s value given a 1% change in the value of the underlying
security; a measure of an option’s "elasticity".
Option Not To Deliver - A hedge placed in addition to, and in tandem to
the forward sale.
Option Premium - Term meaning the option price.
Option Price - Term meaning the option premium; price paid for an
options contract for the right to buy or sell a security in the future
at a specified price.
Option Seller - Person that grants a right to trade a security at a
stated price in the future; an option writer.
Option Series - A grouping of options contracts associated with a
particular underlying security.
Option-Adjusted Internal Rate of Return - An estimate of the internal
rate of return adjusted to indicate the anticipated impact of an
embedded option on the investment's cash flows.
Option-Adjusted Net Present Value - A calculation of the net present
value of a financial instrument adjusted to reflect the value of an
embedded option.
Option-Adjusted Spread - The cost of the implied call fixed in a
mortgage backed security expressed as additional basis-yield spread;
also the spread over the issuer’s spot rate curve.
Option-Adjusted Yield - The expected yield to maturity of a bond or note
after adjustment for the possible impact of an embedded option (call
provision).
Option-dated Forward - A forward foreign exchange contract with an
option to select the exchange date.
Optional Redemption Provision - A provision in some collateralized
mortgage obligations that the issuer can call some or all tranches to
refinance them at more favorable rates.
Optioned Stock - The underlying stock which is the subject of a stock
option contract.
Options Clearing Corporation - Institution charged with the task of
issuing and guaranteeing all listed option contracts.
Options Contract - An agreement that gives the buyer the right to either
buy/sell an asset at a specified price on or before a given date, or
not.
Options Contract Multiple - A constant multiplied by the cash index
value in order to calculate the dollar value of the stock index
underlying the option.
Options Disclosure Document (ODD) - Legal document distributed to
prospective users of the risks involved in United States exchange-
traded securities options.
Options Exchange - An exchange authorized to trade listed options.
Options On Physicals - Interest rate options written on fixed income
securities rather than on interest rate futures contracts.
Options Prices Reporting Authority - Abbreviated at OPRA, an agency
charged with the setting of the expiration dates, strike prices, and
ticker symbols for listed stock options. OPRA also reports prices.
Or Better - Referring to general equities, a term found on the order
ticket of a limit order directing the trader to buy or sell securities
at a price better than the limit price if such a price can be obtained.
Order - Direction given to a broker to buy or sell a security or
commodity.
Order Driven Market - An auction market where bids, offers and prices
are determined primarily by the size and number of orders arriving at a
central marketplace.
Order Flow - The customer purchase and sale orders coming to a dealer.
Ordinary Shares - Often refers to international equities, shares of
non-US companies that are traded in their home market and that can not
be delivered in the US.
Organization of Petroleum Exporting Countries - Abbreviated as OPEC, an
association, or cartel, of oil producing nations.
Organized Exchange - A marketplace for the purchase and selling of
securities.
Original Face Value - The principal amount of a mortgage on its issue
date.
Original Issue Discount Debt - A debt that is initially offered at a
price below par (face value).
Original Margin - The margin needed to cover a new position.
Original Maturity - The maturity at issue.
Origination - The act of making mortgage loans.
Other Capital - A residual category that groups all of the capital
transactions that have not been included in other categories.
Other Current Assets - The value of non-cash assets including accounts
receivable, etc. that are due within 12 months.
Other Long Term Liabilities - The value of obligations that do not
require interest payments and that must be paid over a period of more
than one year.
Other Sources - Funds generated from operations by sources other than
depreciation and deferred taxes.
Out - Referring to general equities, no longer obligated to an order.
Out Of Print - Clean; not open on the print; the opposite of open.
Out Of The Name - Referring to general equities, no longer has an active
position in a particular stock.
Out Option - An option with an outstrike expiration price as well as an
expiration date.
Out There - Referring to general equities, term meaning that there are
buyers and sellers in the market for a particular security.
Out-Of-The-Money - Not in an advantageous position; term used to
describe a call option that has a strike price that is greater than the
market price of the underlying security; term used to describe a put
option that has a strike price that is less than the market price of the
underlying security; term describing a client’s position that would
result in a loss if exercised in its current situation.
Outperformance Option - A call option with a payoff based on the amount
by which one of two underlying instruments or indexes outperforms the
other.
Outright Forward Currency Transaction - A separate forward currency
trade which is not part of a swap.
Outright Rate - Actual forward rate in dollars per currency unit, or in
currency unit per dollar.
Outside Market - Referring to general equities, market that does not
just involve trading between brokers for their own accounts; outside of
the inside market.
Outside Of You - Referring to listed equity securities, a term
describing an order bidding for or offering stock at the same price as
your order.
Outsourcing - The act of purchasing a large percentage of
materials/services from outside suppliers.
Outstanding - Referring to general equities, term describing stocks that
are held by shareholders, as opposed to stock held in the company
treasury.
Outstanding Share Capital - The issued share capital minus the par value
of shares that are not outstanding (held in the company treasury).
Outstanding Shares - Shares of firm stock that are owned by investors
rather than the company treasury.
Outstanding Stock - Shares of firm stock that are owned by investors
rather than the company treasury.
Outstrike - The price at which a down-and-out or up-and-out call or
down-and-out or up- and-out put expires or pays off if the price of the
underlying touches or trades through the price.
Over-The-Counter - Abbreviated as OTC, a market for non-listed
securities; the opposite of listed; any security not listed on an
organized exchange.
Overage - Often refers to convertible securities, the difference between
the amount of common stock that one party needs to sell and the amount
that the other party wishes to buy in exchange for the same amount of
convertible in a swap transaction.
Overbought - Referring to general equities, too high in price; the
opposite of oversold; a stock or market in which more and stronger
buying has occurred than is explainable using fundamental rules.
Overbought\Oversold Indicator - An indicator that shows the price of a
particular security has moved too far and too fast in either direction.
Overcollateralization - A deposit of more than sufficient collateral in
order to increase rating from a rating agency or to reassure a creditor.
Overfunded Pension Plan - A pension plan that has assets that exceed its
liabilities.
Overhang - Referring to general equities, a large block of securities or
commodities contracts that would put downward pressure on prices if
released on the market.
Overlap The Market - Referring to general equities, create a crossed
market (where the inside market’s highest bid price is above the lowest
offer price) by showing a willingness to sell on the bid side and buy on
the offer side.
Overlay Risk Management - An approach to asset risk management that
turns over most of an asset portfolio to asset managers, usually
selected for their skillfulness in derivative instruments.
Overlay Strategy - An approach that utilizes futures for asset
allocation by pension sponsors. This is done in order to avoid
disrupting
Overline Situation - A loan participation situation that exists because
the borrower needs funding that would over-extend his credit line with
his normal lender.
Overnight Delivery Risk - The possibility of loss created by differing
time zones between settlement centers that require that payment or
delivery by one party of a transaction be made without being able to
confirm the receipt of funds until the next day.
Overnight Repo - A repurchase agreement that has a term of one day.
Overperform - Situation when a security appreciates in value at a rate
faster than the overall market.
Overreaching - Referring to general equities, the creation of artificial
stock volume.
Overreaction Hypothesis - The conjecture that investors will overreact
to unanticipated news which will result in exaggerated movement in
prices followed by corrections.
Overshooting - The inclination of a pool of mortgage backed securities
to display a very high rate of prepayments the first time it crosses the
refinancing threshold.
Oversold - Referring to general equities, the opposite of overbought;
term describing a security that is technically too low in price,
therefore a correction is expected; a stock or market in which more and
stronger selling has occurred than is explainable using fundamental
rules.
Oversubscribed Issue - In issue that has a lesser supply than its
demand. Therefore, the underwriter must allocate the shares or bonds
among investors.
Oversubscription Privilege - Privilege by which shareholders can apply
for shares that are not taken up.
Overvalued - A stock with a current price that it higher than could be
justified by a fundamental analysis of its firm.
Overwriting - The sale of a larger number of options than a fixed common
stock portfolio can cover with the belief that the options will usually
expire worthless or be repurchased at a profit. |
