Financial Glossary
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O
- A Nasdaq stock symbol specifying that it is the company's second class of preferred shares.
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Obamanomics
- A buzzword that describes the economic philosophy of U.S President Barack Obama. Obamanomics calls for lower tax rates for companies that meet certain criteria, such as providing decent healthcare and maintaining a U.S. workforce and headquarters. Obama's economic platform also calls for higher taxes for high-income families and investment in education, healthcare and the sciences.
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Objective Probability
- The probability that an event will occur based an analysis in which each measure is based on a recorded observation, rather than a subjective estimate. Objective probabilities are a more accurate way to determine probabilities than observations based on subjective measures, such as personal estimates.
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Obligation
- The legal responsibility to meet the terms of a contract. If the obligation is not met there is often recourse for the other party to the contract.
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Obligation Bond
- A municipal bond used to secure a mortgage on property or other physical assets that can be liquidated. The face value of the bond is greater than the value of the property itself.
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Obligor
- An entity that has an obligation to pay all principal and interest payments on a debt.
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Obsolescence Risk
- The risk that a process, product or technology used or produced by a company for profit will become obsolete, and is no longer competitive in the marketplace. Obsolescence risk is most significant for technology-based companies or companies with offerings that are based on technological advantages. This can also extend to the risk that certain costs laid out for obsolete products or services cannot be recouped. These risks can significantly alter a company's growth prospects and earning potential.
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Obsolete Inventory
- Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company.
Also referred to as "dead inventory" or "excess inventory".
- Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company.
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Occupational Labor Mobility
- Refers to the ease with which workers can switch career fields to find gainful employment or meet labor needs. Higher levels of occupational labor mobility help to maintain strong employment and productivity levels, leading many governments to provide occupational retraining to help workers acquire necessary skills and expedite the process.
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Ocean Bill Of Lading
- A document required for the transportation of goods overseas. An ocean bill of lading serves as both the carrier's receipt to the shipper and as a collection document. The document specifies the details of the goods being transported, such as quantity, type and destination.
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October Effect
- The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological expectation rather than an actual phenomenon. Most statistics go against the theory.
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Odd Lot
- An amount of a security that is less than the normal unit of trading for that particular security.
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Odd Lot Theory
- A technical analysis theory/indicator based on the assumption that the small individual investor is always wrong. Therefore, if odd lot sales are up - that is small investors are selling stock - it is probably a good time to buy.
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Odd Lotter
- An individual investor who buys securities, usually stocks, in odd lots. This is the opposite of someone who buys securities in round lots.
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Odd-Days Interest
- Interest that is earned from a mortgage or other loan with closed-end installments that contain a nonstandard payment period. In most cases, the additional interest is added on to the first payment. All remaining payment periods are uniform, assuming the loan has fixed payments and amortizes fully.
Also referred to as "interim interest."
- Interest that is earned from a mortgage or other loan with closed-end installments that contain a nonstandard payment period. In most cases, the additional interest is added on to the first payment. All remaining payment periods are uniform, assuming the loan has fixed payments and amortizes fully.
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OEX
- The ticker symbol for the Standard & Poor's 100 Index.
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Off Board
- A stock transaction that fits one of the following two criteria:
1. A stock trade involving a security that does not trade on a major exchange, i.e., an over-the-counter (OTC) stock.
2. A stock trade involving a stock that is listed on a major exchange but is still executed over the counter, typically between two institutions or an institution and a customer. This type of off-board trade can be done only with 19c3 securities, or stocks that listed on the exchange after 1979.
- A stock transaction that fits one of the following two criteria:
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Off-Balance-Sheet Financing
- A form of financing in which large capital expenditures are kept off of a company's balance sheet through various classification methods. Companies will often use off-balance-sheet financing to keep their debt to equity (D/E) and leverage ratios low, especially if the inclusion of a large expenditure would break negative debt covenants.
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Off-Premise Banking
- Any bank location other than its main location that provides banking services of any kind that don't require tellers. Off-premise banking locations can be found in convenience stores, airports and shopping centers. ATMs can normally be referred to as off-premise banking locations.
- Any bank location other than its main location that provides banking services of any kind that don't require tellers. Off-premise banking locations can be found in convenience stores, airports and shopping centers. ATMs can normally be referred to as off-premise banking locations.
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Off-The-Run Treasuries
- All Treasury bonds and notes issued before the most recently issued bond or note of a particular maturity. These are the opposite of "on-the-run treasuries".
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Off-The-Run Treasury Yield Curve
- The U.S. Treasury yield curve derived using off-the-run treasuries. Off-the-run treasuries refer to U.S. government bonds of a given maturity that are not the most recently issued. While they are not as recent as on-the-run treasuries, off-the-run treasuries can be used to construct a yield curve if there is a problem or distortion with the yield curve as represented by on-the-run treasuries.
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Offensive Competitive Strategy
- A type of corporate strategy that consists of actively trying to pursue changes within the industry. Companies that are managed as offensive competitive generally invest heavily in technology and Research and Development (R&D) in an effort to stay ahead of the competition.
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Offer
- 1. When one party expresses interest to buy or sell an asset from another party. The offering price is often the highest the buyer will pay to purchase an asset, and the lowest that the seller will accept.
2. The act of making an asset available for sale.
- 1. When one party expresses interest to buy or sell an asset from another party. The offering price is often the highest the buyer will pay to purchase an asset, and the lowest that the seller will accept.
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Offer In Compromise
- A program offered by the IRS to taxpayers who are unable to pay their tax debt. Those who qualify are allowed to make an offer in compromise, which is an offer to pay a lesser amount than that which is owed. The offer in compromise program is intended to allow taxpayers with substantial back taxes to settle their tax debt and start over with a clean slate, so that they can remain current on their taxes in the future.
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Offering
- The issue or sale of a security by a company. It is often used in reference to an initial public offering (IPO) when a company's stock is made available for purchase by the public but it can also be used in the context of a bond issue.
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Offering Circular
- An abbreviated prospectus for a new security listing. Delivered to individuals and brokerage houses, these documents are issued to arouse interest in the new issue.
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Offering Memorandum
- A legal document stating the objectives, risks and terms of investment involved with a private placement. This includes items such as the financial statements, management biographies, detailed description of the business, etc. An offering memorandum serves to provide buyers with information on the offering and to protect the sellers from the liability associated with selling unregistered securities.
Also known as a "private placement memorandum" (PPM).
- A legal document stating the objectives, risks and terms of investment involved with a private placement. This includes items such as the financial statements, management biographies, detailed description of the business, etc. An offering memorandum serves to provide buyers with information on the offering and to protect the sellers from the liability associated with selling unregistered securities.
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Offering Price
- The price at which publicly issued securities are made available for purchase by the investment bank underwriting the issue. A security's offering price includes the underwriter's fee and any management fees applicable to the issue.
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Office Audit
- An examination of documents by the Internal Revenue Service (IRS) for a matter that is considered to be reasonably simple.
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Office Of Federal Housing Enterprise Oversight - OFHEO
- The federal regulatory body that oversees the government-sponsored entities (GSEs), Freddie Mac and Fannie Mae. It was established as an independent entity within the Department of Housing and Urban Development by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992. The OFHEO works to ensure the capital adequacy and financial safety of the two housing GSEs.
- The federal regulatory body that oversees the government-sponsored entities (GSEs), Freddie Mac and Fannie Mae. It was established as an independent entity within the Department of Housing and Urban Development by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992. The OFHEO works to ensure the capital adequacy and financial safety of the two housing GSEs.
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Office Of Foreign Asset Control - OFAC
- A department of the U.S. Treasury that enforces economic and trade sanctions against countries and groups of individuals involved in terrorism, narcotics and other disreputable activities.
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Office Of Thrift Supervision - OTS
- The bureau of the U.S. Treasury Department that is responsible for issuing and enforcing regulations governing the nation's savings and loan industry.
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Official Staff Commentary
- Commentary published by the Federal Reserve. Official staff commentaries are laid out in a question-and-answer format. They are used by the Federal Reserve Board's Division of Consumer and Community Affairs to provide formal interpretations of regulations.
- Commentary published by the Federal Reserve. Official staff commentaries are laid out in a question-and-answer format. They are used by the Federal Reserve Board's Division of Consumer and Community Affairs to provide formal interpretations of regulations.
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Offline Debit Card
- A card that combines characteristics of both a traditional (online) debit card and a credit card, allowing the cardholder to pay for goods and services directly from his or her bank account. As with a traditional debit card, a transaction using the offline debit card creates a debit against the cardholder's bank account. But unlike with a traditional debit card, no PIN is required during the transaction - all that is required is the user's signature. These cards are generally issued by credit card companies in association with the bank in which the account is held.
Also known as "check cards".
- A card that combines characteristics of both a traditional (online) debit card and a credit card, allowing the cardholder to pay for goods and services directly from his or her bank account. As with a traditional debit card, a transaction using the offline debit card creates a debit against the cardholder's bank account. But unlike with a traditional debit card, no PIN is required during the transaction - all that is required is the user's signature. These cards are generally issued by credit card companies in association with the bank in which the account is held.
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Offset
- 1. To liquidate a futures position by entering an equivalent, but opposite, transaction which eliminates the delivery obligation.
2. To reduce an investor's net position in an investment to zero, so that no further gains or losses will be experienced from that position.
- 1. To liquidate a futures position by entering an equivalent, but opposite, transaction which eliminates the delivery obligation.
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Offset Mortgage
- A type of mortgage that involves blending a traditional mortgage with one or more deposit accounts; the savings balance(s) held in the latter can be used to offset the mortgage balance. Both the account and the loan are held at the same banking institution, and an initial loan balance (or credit limit) is established, along with an interest rate. The savings account is typically a non-interest bearing account, allowing the bank to earn a positive return on any balances in the account.
When each mortgage payment is made, the interest is calculated on the principal remaining in the mortgage account, minus the aggregate amount of savings in the one or more deposit accounts. Borrowers still have access to their savings; if money is removed from savings during the month, the next mortgage payment will be calculated on a higher principal balance.
For example, if the mortgage principal is $225,000 and $15,000 was held in savings during the last month, the interest due would only be calculated on ($225 – $15) = $210,000.
- A type of mortgage that involves blending a traditional mortgage with one or more deposit accounts; the savings balance(s) held in the latter can be used to offset the mortgage balance. Both the account and the loan are held at the same banking institution, and an initial loan balance (or credit limit) is established, along with an interest rate. The savings account is typically a non-interest bearing account, allowing the bank to earn a positive return on any balances in the account.
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Offshore
- Located or based outside of one's national boundaries.
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Offshore Banking Unit - OBU
- A shell branch located in an international financial center. Offshore banking units (OBUs) make loans in the Eurocurrency market when they accept deposits from foreign banks and other OBUs. OBUs' activities are not restricted by local monetary authorities or governments, but they are prohibited from accepting domestic deposits.
- A shell branch located in an international financial center. Offshore banking units (OBUs) make loans in the Eurocurrency market when they accept deposits from foreign banks and other OBUs. OBUs' activities are not restricted by local monetary authorities or governments, but they are prohibited from accepting domestic deposits.
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Offshore Mutual Fund
- A mutual fund that is based in an offshore jurisdiction, which is generally considered to be outside the United States. The term is often used, perhaps incorrectly, to describe a fund that is not in a high-tax country.
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Offshore Portfolio Investment Strategy - OPIS
- A tax shelter product designed to create large, seemingly real losses to be used for tax sheltering. This tax shelter involves creating a shell company, which enters into a long chain of sophisticated and complex financial investments. These investments usually create fake accounting losses that are more than 100 times larger than the real financial loss. Ultimately, these large losses are then used to offset legitimate capital gains, allowing the tax shelter's creators to pay less tax.
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Offtake Agreement
- An agreement between a producer of a resource and a buyer of a resource to purchase/sell portions of the producer's future production. An offtake agreement is normally negotiated prior to the construction of a facility such as a mine in order to secure a market for the future output of the facility. If lenders can see the company will have a purchaser of its production, it makes it easier to obtain financing to construct a facility .
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OHLC Chart
- Short for "Open, High, Low, Close chart." This is a securities chart that clearly shows the opening, high, low and closing prices for a security.
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Oil ETF
- A category of exchange-traded funds that invest in companies engaged in oil and gas discovery, production, distribution and retail. Some oil ETFs may be set up as commodity pools – with limited partnership interests instead of shares – and invest in derivative contracts such as futures and options.
The benchmark target for an oil ETF may be a market index of oil companies or the spot price of crude itself, and funds may be focused on just United States-based companies or invest around the world. There are even inverse ETFs for oil and other sectors that move in an equal and opposite direction to the underlying index or benchmark. Oil ETFs will attempt to track their relevant index as closely as possible, but small performance discrepancies will be found, especially over short time frames.
- A category of exchange-traded funds that invest in companies engaged in oil and gas discovery, production, distribution and retail. Some oil ETFs may be set up as commodity pools – with limited partnership interests instead of shares – and invest in derivative contracts such as futures and options.
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Oil Sands
- Sand and rock material which contains crude bitumen (a heavy, viscous form of crude oil). Oil sands are found primarily in the Athabasca region of northern Alberta, Canada, and in areas of Venezuela. Bitumen is extracted and processed using two methods:
1. Mining - Large areas of land are cleared of trees and brush, then the top soil and clay are removed to expose the oil sand. This surface mining method uses large trucks and shovels to remove the sand, which can have a volume of anywhere from 1-20% of actual bitumen. After processing and upgrading, the end result is sent to refineries, where it's made into gasoline, jet fuel and other petroleum products.
2. In situ - This relatively new method is mainly used to get bitumen in oil sand that is buried too deep below the earth's surface to be recovered with a truck and shovel. In situ technology injects steam deep beneath the earth to separate the viscous bitumen from the sand and pump it up to the surface. The bitumen then goes through the same upgrading process as it would in the mining method.
- Sand and rock material which contains crude bitumen (a heavy, viscous form of crude oil). Oil sands are found primarily in the Athabasca region of northern Alberta, Canada, and in areas of Venezuela. Bitumen is extracted and processed using two methods:
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Okun Gap
- A macroeconomic term that describes the situation when an economy's potential gross domestic product (GDP) differs from its actual gross domestic product. The gap can either be recessionary or inflationary, but will depend on the economy's current state, including levels of inflation and the unemployment rate.
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Okun's Law
- A relationship between an economy's GDP gap and the actual unemployment rate.
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Old Age, Survivors and Disability Insurance Program - OASDI
- The official name for Social Security in the United States.
- The official name for Social Security in the United States.
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Old Economy
- A term for the old blue chip industries that enjoyed fabulous growth during the early parts of the century as industrialization around the globe, and particularly in the United States, expanded. Since the new economy has arrived, old economy companies have still experienced growth, but at a declining rate.
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Old Lady
- An eighteenth century nickname for the Bank of England. The full name is the Old Lady of Threadneedle Street, which refers to the bank's location. The Bank of England is located in the middle of the city of London on Threadneedle Street.
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Oligopoly
- A situation in which a particular market is controlled by a small group of firms.
An oligopoly is much like a monopoly, in which only one company exerts control over most of a market. In an oligopoly, there are at least two firms controlling the market.
- A situation in which a particular market is controlled by a small group of firms.
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Oligopsony
- Similar to an oligopoly (few sellers), this is a market in which there are only a few large buyers for a product or service. This allows the buyers to exert a great deal of control over the sellers and can effectively drive down prices.
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Omega
- A measure of the change in an option's value with respect to the percentage change in the underlying price. The omega gives option investors an idea of how the option price and the stock price that underlies it move together.
Omega is the third derivative of the option price, and the derivative of gamma.
- A measure of the change in an option's value with respect to the percentage change in the underlying price. The omega gives option investors an idea of how the option price and the stock price that underlies it move together.
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Omnibus Account
- An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined in this type of account, allowing for easier management by the futures merchant.
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OMR
- In currencies, this is the abbreviation for the Oman Rial.
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On Account
- An accounting term that denotes partial payment of an amount owed or the purchase/sale of merchandise or a service on credit. For example, if a firm purchases $5,000 worth of merchandise on account, this refers to the purchase of the goods on credit and a deferral of payment.
- An accounting term that denotes partial payment of an amount owed or the purchase/sale of merchandise or a service on credit. For example, if a firm purchases $5,000 worth of merchandise on account, this refers to the purchase of the goods on credit and a deferral of payment.
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On Stream
- An investment that is on track to earn its expected return.
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On Track
- 1. A type of commodities delivery for futures contracts that is deferred and priced according to the seller's location FOB.
2. A physical commodity that is already loaded on railroad cars or trucks and ready for delivery.
- 1. A type of commodities delivery for futures contracts that is deferred and priced according to the seller's location FOB.
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On-Balance Volume - OBV
- A method used in technical analysis to detect momentum, the calculation of which relates volume to price change. OBV provides a running total of volume and shows whether this volume is flowing in or out of a given security. This indicator was developed by Joe Granville.
- A method used in technical analysis to detect momentum, the calculation of which relates volume to price change. OBV provides a running total of volume and shows whether this volume is flowing in or out of a given security. This indicator was developed by Joe Granville.
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On-The-Run Treasuries
- The most recently issued U.S. Treasury bond or note of a particular maturity. These are the opposite of "off-the-run treasuries".
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On-The-Run Treasury Yield Curve
- The U.S. Treasury yield curve derived using on-the-run treasuries. The on-the-run Treasury curve is the primary benchmark used in pricing-fixed income securities.
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One Night Stand Investment
- Buying a security with the intention of holding it for the long term, but subsequently panicking and selling it the following day.
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One To Many
- A trading platform where all buyers and sellers transact with a sole market operator. Whereas a normal exchange involves the operator matching buyers with sellers, a one-to-many platform operator will purchase the assets from the sellers and sell to the buyers. All bids and offers are posted by the platform operator.
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One-Bank Holding Company
- A corporation that holds at least a quarter of the voting stock of a commercial bank. One-bank holding companies led to the creation of leveraged bank holding companies. These entities are under the supervision of the Federal Reserve.
- A corporation that holds at least a quarter of the voting stock of a commercial bank. One-bank holding companies led to the creation of leveraged bank holding companies. These entities are under the supervision of the Federal Reserve.
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One-Cancel-All Order
- A type of order comprising several limit orders for several companies, but in the event that one gets filled, the rest are canceled. This type of order allows a trader to buy one out of a number of potential stocks at the best price in the shortest amount of time.
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One-Cancels-the-Other Order - OCO
- An order stipulating that if one part of the order is executed, then the other part is automatically canceled.
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One-Day Certificate
- A type of temporary financing used by the U.S. Treasury. One-day certificates are interest bearing and are used when the Treasury must borrow from the Federal Reserve System. These certificates are a type of Special Certificate that is issued to the Federal Reserve Bank of New York.
- A type of temporary financing used by the U.S. Treasury. One-day certificates are interest bearing and are used when the Treasury must borrow from the Federal Reserve System. These certificates are a type of Special Certificate that is issued to the Federal Reserve Bank of New York.
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One-Sided Market
- When the market for a security only shows either one bid or one ask.
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One-Stop Shop
- A company or a location that offers a multitude of services to a client or a customer. The idea is to provide convenient and efficient service and also to create the opportunity for the company to sell more products to clients and customers.
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One-Third Rule
- A rule of thumb that estimates the change in labor productivity based on changes in capital per hour of labor. Specifically, the one-third rule states that on average an increase of 1% in capital per hour of labor will result in approximately a 0.33% increase in labor productivity. This rule assumes no changes in technology or human capital.
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One-Touch Option
- A type of exotic option that gives an investor a payout once the price of the underlying asset reaches or surpasses a predetermined barrier. This type of option allows the investor to set the position of the barrier, the time to expiration and the payout to be received once the barrier is broken. Only two outcomes are possible with this type of option: 1) the barrier is breached and the trader collects the full payout agreed upon at the outset of the contract, or 2) the barrier is not breached and the trader loses the full premium paid to the broker.
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One-Way Market
- 1) A market which only can quote a firm price on either the bid or the ask side. This can be caused by temporary market inefficiencies or by regulatory controls, as can be found in some foreign countries. A one-way market also can be created when there are only buyers, or only sellers, interested in a particular asset or security at a specific point in time.
2) A slang term to describe a market that is moving strongly in one direction with little resistance.
- 1) A market which only can quote a firm price on either the bid or the ask side. This can be caused by temporary market inefficiencies or by regulatory controls, as can be found in some foreign countries. A one-way market also can be created when there are only buyers, or only sellers, interested in a particular asset or security at a specific point in time.
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One-Year Constant Maturity Treasury - 1-Year CMT
- The interpolated one-year yield of the most recently auctioned four-, 13- and 26-week U.S. Treasury bills, plus the most recently auctioned 2-, 3-, 5- and 10-year U.S. Treasury notes as well as the most recently auctioned U.S. Treasury 30-year bond, plus the off-the-runs in the 20-year maturity range.
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Onerous Contract
- A type of contract where the costs involved with fulfilling the terms and conditions of the contract are higher than the amount of economic benefit received. According to the International Accounting Standards (IAS), there are two methods for the recognition of a provision for this type of contract: the liability and impairment approaches.
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Online Banking
- The performance of banking activities via the internet.
Also known as internet or web banking.
- The performance of banking activities via the internet.
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Online Currency Exchange
- An online system for exchanging one country's currency for another. There is no central exchange in the forex market because it is a network of computers that connect banks, brokers and traders together. Online currency exchanges are essentially forex brokers that allow for delivery of the currencies traded.
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Online Trading
- The act of placing buy/sell orders for financial securities and/or currencies with the use of a brokerage's internet-based proprietary trading platforms. The use of online trading increased dramatically in the mid- to late-'90s with the introduction of affordable high-speed computers and internet connections.
Stocks, bonds, options, futures and currencies can all be traded online.
- The act of placing buy/sell orders for financial securities and/or currencies with the use of a brokerage's internet-based proprietary trading platforms. The use of online trading increased dramatically in the mid- to late-'90s with the introduction of affordable high-speed computers and internet connections.
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Ontario Securities Commission - OSC
- The securities regulator that supervises and enforces regulations for the Canadian province of Ontario. Among other responsibilities, the Ontario Securities Commission (OSC) is responsible for regulating exchanges, Alternative Trading Systems (ATSs), and Quotation and Trade Reporting Systems (QTRSs).
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Opco
- An abbreviation for operating company. Opco is most often used to describe the main operating company that is involved in an opco/propco deal. The property company (propco) owns all of the real estate and related debt, providing the parent or operating company with advantages related to financing and credit rating issues.
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OPEC Basket
- A weighted average of oil prices collected from various oil producing countries. This average is determined according to the production and exports of each country and is used as a reference point by OPEC to monitor worldwide oil market conditions.
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Open
- 1. An unexecuted order that is still valid.
2. The start of trading on a securities exchange.
- 1. An unexecuted order that is still valid.
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Open Ended Investment Company - OEIC
- A type of company or fund in the UK that is structured to invest in other companies with the ability to adjust constantly its investment criteria and fund size. The company's shares are listed on the London Stock Exchange, and the price of the shares are based largely on the underlying assets of the fund. There are no bid and ask quotes on the OEIC shares; buyers and sellers receive the same price.
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Open Interest
- 1. The total number of options and/or futures contracts that are not closed or delivered on a particular day.
2. The number of buy market orders before the stock market opens.
- 1. The total number of options and/or futures contracts that are not closed or delivered on a particular day.
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Open Listing
- A property that is simultaneously marketed by multiple real estate agents.
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Open Market Operations - OMO
- The buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system. Purchases inject money into the banking system and stimulate growth while sales of securities do the opposite.
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Open Offer
- A secondary market offering that is similar to a rights issue in which a shareholder is given the opportunity to purchase stock at a price that is lower than the current market price. The purpose of such an offer is to raise cash for the company.
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Open Order
- An order to buy or sell a security that remains in effect until it is either canceled by the customer or executed.
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Open Outcry
- A method of trading on a commodity exchange that uses verbal bids and offers in the trading pits.
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Open Rotation
- Orders to be executed only during the initial trading rotation of the specified day.
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Open-End Credit
- A pre-approved loan between a financial institution and borrower that may be used repeatedly up to a certain limit and can subsequently be paid back prior to payments coming due. The pre-approved amount will be set out in the agreement between the lender and the borrower.
Open-end credit is also refered to as a "line of credit" or "revolving line of credit".
- A pre-approved loan between a financial institution and borrower that may be used repeatedly up to a certain limit and can subsequently be paid back prior to payments coming due. The pre-approved amount will be set out in the agreement between the lender and the borrower.
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Open-End Fund
- A type of mutual fund that does not have restrictions on the amount of shares the fund will issue. If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open-end funds also buy back shares when investors wish to sell.
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Open-End Indenture
A clause in a revenue-bond agreement that permits the issuance of additional revenue bonds in the future, provided that the revenue of the previous year was sufficient enough to cover the costs of the new issue.
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Open-end Indenture
- A term in a bond contract that allows the bond issuer to guarantee the collateral used to back the bond issue on any number of other bond issues. This is the opposite of a closed-end indenture in which only one bond can be backed by a single collateral.
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Open-End Lease
- A rental agreement that obliges the lessee (the person making periodic lease payments) to purchase the leased asset at the end of the agreement. Also called a "finance lease".
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Open-End Management Company
- A company that distributes and redeems securities it issues. The most common open-end management companies are mutual fund companies which sell and redeem shares at the net asset value per share.
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Open-Market Transaction
- An order placed by an insider, after all appropriate documentation has been filed, to buy or sell restricted securities openly on an exchange.
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Opening Bell
- A bell that rings to signify the day's start of trading on a securities exchange.
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Opening Price
The price at which a security first trades upon the opening of an exchange on a given trading day.
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Opening Transaction
- The initial or primary transaction of an options contract. Rights for a buyer are created as is the obligation of the seller.
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Operating Cash Flow - OCF
- The cash generated from the operations of a company, generally defined as revenues less all operating expenses, but calculated through a series of adjustments to net income. The OCF can be found on the statement of cash flows.
Also known as "cash flow provided by operations" or "cash flow from operating activities".
One method of calculated OCF is:
- The cash generated from the operations of a company, generally defined as revenues less all operating expenses, but calculated through a series of adjustments to net income. The OCF can be found on the statement of cash flows.
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Operating Cash Flow Demand - OCFD
- A measure of the amount of operating cash flow needed to meet the capital costs of a company's strategic investments. This value is used to compute the cash value added of a company's strategic investments and operations.
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Operating Cash Flow Ratio
- A measure of how well current liabilities are covered by the cash flow generated from a company's operations.
Formula:
- A measure of how well current liabilities are covered by the cash flow generated from a company's operations.
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Operating Company/Property Company Deal - Opco/Propco Deal
- A type of business arrangement in which a subsidiary company (the property company) owns all the revenue-generating properties instead of the main company (operating company). Opco/propco deals allow all financing and credit rating related issues for the companies to remain separate.
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Operating Earnings
- Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue.
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Operating Expense
- A category of expenditure that a business incurs as a result of performing its normal business operations. One of the typical responsibilities that management must contend with is determining how low operating expenses can be reduced without significantly affecting the firm's ability to compete with its competitors.
Also known as "OPEX".
- A category of expenditure that a business incurs as a result of performing its normal business operations. One of the typical responsibilities that management must contend with is determining how low operating expenses can be reduced without significantly affecting the firm's ability to compete with its competitors.
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Operating Income
- The amount of profit realized from a business's own operations, but excluding operating expenses (such as cost of goods sold) and depreciation from gross income.
Also referred to as "operating profit" or "recurring profit".
Calculated as:
- The amount of profit realized from a business's own operations, but excluding operating expenses (such as cost of goods sold) and depreciation from gross income.
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Operating Income Before Depreciation And Amortization - OIBDA
- A non-GAAP measure of financial performance used by companies to show profitability in continuing business activities, excluding the effects of capitalization and tax structure.
Sometimes OIBDA is also considered to not include items such as changes in accounting principles that are not indicative of core operating results, income from discontinued operations and the earnings/losses of subsidiaries.
Calculated as:
- A non-GAAP measure of financial performance used by companies to show profitability in continuing business activities, excluding the effects of capitalization and tax structure.
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Operating Lease
- A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset.
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Operating Leverage
- A measurement of the degree to which a firm or project incurs a combination of fixed and variable costs.
1. A business that makes few sales, with each sale providing a very high gross margin, is said to be highly leveraged. A business that makes many sales, with each sale contributing a very slight margin, is said to be less leveraged. As the volume of sales in a business increases, each new sale contributes less to fixed costs and more to profitability.
2. A business that has a higher proportion of fixed costs and a lower proportion of variable costs is said to have used more operating leverage. Those businesses with lower fixed costs and higher variable costs are said to employ less operating leverage.
- A measurement of the degree to which a firm or project incurs a combination of fixed and variable costs.
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Operating Margin
- A ratio used to measure a company's pricing strategy and operating efficiency.
Calculated as:
Operating margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt.
Also known as "operating profit margin" or "net profit margin".
- A ratio used to measure a company's pricing strategy and operating efficiency.
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Operating Netback
- A measure of oil and gas sales net of royalties, production and transportation expenses. This is a non-GAAP measure used specifically in the oil and gas industry as a benchmark to compare performance between time periods, operations and competitors.
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Operating Profit
- The profit earned from a firm's normal core business operations. This value does not include any profit earned from the firm's investments (such as earnings from firms in which the company has partial interest) and the effects of interest and taxes.
Also known as "earnings before interest and tax" (EBIT).
Calculated as:
- The profit earned from a firm's normal core business operations. This value does not include any profit earned from the firm's investments (such as earnings from firms in which the company has partial interest) and the effects of interest and taxes.
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Operating Ratio
- A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
- A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
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Operational Efficiency
- A market condition that exists when participants can execute transactions and receive services at a price that equates fairly to the actual costs required to provide them. An operationally-efficient market allows investors to make transactions that move the market further toward the overall goal of prudent capital allocation, without being chiseled down by excessive frictional costs, which would reduce the risk/reward profile of the transaction.
Also known as an "internally efficient market".
- A market condition that exists when participants can execute transactions and receive services at a price that equates fairly to the actual costs required to provide them. An operationally-efficient market allows investors to make transactions that move the market further toward the overall goal of prudent capital allocation, without being chiseled down by excessive frictional costs, which would reduce the risk/reward profile of the transaction.
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Operational Risk
- A form of risk that summarizes the risks a company or firm undertakes when it attempts to operate within a given field or industry. Operational risk is the risk that is not inherent in financial, systematic or market-wide risk. It is the risk remaining after determining financing and systematic risk, and includes risks resulting from breakdowns in internal procedures, people and systems.
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Opinion Shopping
- A company's action of searching for an auditor who will give a positive opinion of the company's accounting practices (even though they might not deserve it).
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Opportunity Cost
- 1. The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.
2. The difference in return between a chosen investment and one that is necessarily passed up. Say you invest in a stock and it returns a paltry 2% over the year. In placing your money in the stock, you gave up the opportunity of another investment - say, a risk-free government bond yielding 6%. In this situation, your opportunity costs are 4% (6% - 2%).
- 1. The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.
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Opt-Out Plan
- A type of 401(k) plan that automatically enrolls the employees of a company to save for their retirement. Eligible employees of a company with this policy are enrolled in the plan at a default contribution rate, usually around 3% of wages, and funds are directed into a default allocation. Employees can change the terms of the plan or opt out completely if they don't want to participate. This differs from a typical 401(k) in that retirement savings will continue to accumulate without any action from the participant.
Also known as an "automatic 401(k)".
- A type of 401(k) plan that automatically enrolls the employees of a company to save for their retirement. Eligible employees of a company with this policy are enrolled in the plan at a default contribution rate, usually around 3% of wages, and funds are directed into a default allocation. Employees can change the terms of the plan or opt out completely if they don't want to participate. This differs from a typical 401(k) in that retirement savings will continue to accumulate without any action from the participant.
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Opt-Out Vote
- A shareholder vote that is undertaken in order to determine if certain laws and regulations regarding corporate takeovers are to be waived during a particular corporate action. An opt-out vote, if successful, will remove certain legal restrictions that would have prevented a corporate takeover from occurring, or allow the takeover to occur sooner than it otherwise would have.
- A shareholder vote that is undertaken in order to determine if certain laws and regulations regarding corporate takeovers are to be waived during a particular corporate action. An opt-out vote, if successful, will remove certain legal restrictions that would have prevented a corporate takeover from occurring, or allow the takeover to occur sooner than it otherwise would have.
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Optimization
- In the context of technical analysis, it is the process of adjusting one's trading system in an attempt to make it more effective. These adjustments include changing the number of periods used in moving averages, changing the number of indicators used, or simply taking away what doesn't work.
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Optimized Portfolio as Listed Securities - OPALS
- A portfolio of securities used to closely track an index without the exposure of purchasing all securities within that index.
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Option
- A financial derivative that represents a contract sold by one party (option writer) to another party (option holder). The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date (excercise date).
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Option Adjustable-Rate Mortgage - Option ARM
- A type of mortgage where the mortgagor (borrower) has several options as to which type of payment is made to the mortgagee (lender). In addition to having the choice of making payments of interest and principal that amounts to those made in conventional mortgages, option ARMs also have alternative payment options where the mortgagor can make significantly smaller payments by making interest-only payments or minimum payments.
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Option Adjusted Spread - OAS
- Mainly used for fixed-income products, OAS measures the yield spread that is not directly attributable to the security's characteristics.
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Option Agreement
- 1. A signed agreement between an investor who is seeking to open an options account and his or her brokerage firm. This agreement is used to verify the investor's level of experience and to ensure that the investor clearly understands the various risks involved when trading options.
2. An agreement between two parties that provides one of the parties with the right but not the obligation to buy, sell or obtain a specific asset at an agreed upon price at some time in the future.
- 1. A signed agreement between an investor who is seeking to open an options account and his or her brokerage firm. This agreement is used to verify the investor's level of experience and to ensure that the investor clearly understands the various risks involved when trading options.
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Option Chain
- A way of quoting options prices through a list of all of the options for a given security.
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Option Class
- The set of all the call options or all the put options for a particular stock, index fund, or futures security on a listed exchange. The number of options available for purchase or sale within a given option class will depend on the size and trading volume of the underlying company or index, as well as overall market conditions.
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Option Cycle
- A pattern of months in which option contracts usually expire (usually a nine month period). There are three common cycles:
JAJO - January, April, July, and October
MJSD - March, June, September, and December
FMAN - February, May, August, and November
- A pattern of months in which option contracts usually expire (usually a nine month period). There are three common cycles:
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Option Disclosure Document
- A publication issued by the Options Clearing Corporation (OCC) that first-time option traders are required to read before being allowed to make any option trades. The document prepares traders for the options market.
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Option Premium
- 1. The income received by an investor who sells or "writes" an option contract to another party.
2. The current price of any specific option contract that has yet to expire. For stock options, the premium is quoted as a dollar amount per share and most contracts represent the commitment of 100 shares.
- 1. The income received by an investor who sells or "writes" an option contract to another party.
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Option Pricing Theory
- Any model- or theory-based approach for calculating the fair value of an option.
The most commonly used models today are the Black-Scholes model and the binomial model. Both theories on options pricing have wide margins for error because their values are derived from other assets, usually the price of a company's common stock. Time also plays a large role in option pricing theory, because calculations involve time periods of several years and more. Marketable options require different valuation methods than non-marketable ones, such as those given to company employees.
- Any model- or theory-based approach for calculating the fair value of an option.
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Option Schedule
- A list of options grants to an employee or employees of a company that contain the date and size (in shares) of each grant, as well as the expiration date, exercise price and vesting schedule. Option schedules for high-level officers and directors of a public company must be reported to the SEC and are also typically shown on 10-Q and 10-K filings for the company.
- A list of options grants to an employee or employees of a company that contain the date and size (in shares) of each grant, as well as the expiration date, exercise price and vesting schedule. Option schedules for high-level officers and directors of a public company must be reported to the SEC and are also typically shown on 10-Q and 10-K filings for the company.
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Option Series
- A specific set of calls or puts on the same underlying security, in the same class and with the same strike price and expiration date.
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Optionable Stock
- A stock that has options trading on a market exchange. Not all companies that trade publicly have exchange traded options, this is due to requirements that need to be met, such as minimum share price and minimum outstanding shares.
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Options Backdating
- The process of granting an option that is dated prior to the date that the company granted that option. In this way, the exercise price of the granted option can be set at a lower price than that of the company's stock at the granting date. This process makes the granted option in-the-money and of value to the holder.
- The process of granting an option that is dated prior to the date that the company granted that option. In this way, the exercise price of the granted option can be set at a lower price than that of the company's stock at the granting date. This process makes the granted option in-the-money and of value to the holder.
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Options Clearing Corporation - OCC
- A clearing organization that acts as both the issuer and guarantor for option and futures contracts.
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Options Contract
- One options contract represents one hundred shares in the underlying stock. The quoted price of an option is per share.
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Options Price Reporting Authority - OPRA
- A committee of representatives from participating exchanges responsible for providing last-sale options quotations and information from the participating exchanges.
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Oracle Of Omaha
- A nickname for Warren Buffett, who is arguably one of the greatest investors of all time. He is called the "Oracle of Omaha" because his investment picks and comments on the market are very closely followed by the investment community, and he lives and works in Omaha, Nebraska.
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Oral Will
- An oral will is one that is communicated orally to witnesses, usually on the person's deathbed. An oral will is usually made in haste, which opens up the possibility for errors.
Oral wills are very controversial, because disappointed relatives can contend that the decedent was not of sound mind and body or that someone exerted undue influence on the decedent when the will was made.
- An oral will is one that is communicated orally to witnesses, usually on the person's deathbed. An oral will is usually made in haste, which opens up the possibility for errors.
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Order
- The instruction, by a customer to a brokerage, for the purchase or sale of a security with specific conditions.
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Order Audit Trail System - OATS
- An automated computer system owned by the National Association of Security Dealers (NASD) that is used to record information relating to orders, quotes and other related trade information from all equities that are traded on the Nasdaq, including over the counter (OTC) stocks. This system simplifies an order's progression from the initial receipt of the order to its eventual execution or cancellation, so that it can be easily tracked for auditing purposes.
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Order Book Official
- A trading floor participant responsible for maintaining a list of public market or limit orders of a specific option class using the "market-marker" system of executing orders.
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Order Driven Market
- An auction market in which prices are determined by the publication of orders to buy or sell shares.
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Order Imbalance
- A situation resulting from an excess of buy or sell orders for a specific security on a trading exchange, making it impossible to match the buyers' and sellers' orders. For securities that are overseen by a market maker or specialist, shares may be brought in from a specified reserve to add liquidity, temporarily clearing out excess orders from the inventory so that the trading in the security can resume at an orderly level. Extreme cases of order imbalance may cause suspension of trading until the imbalance is resolved.
- A situation resulting from an excess of buy or sell orders for a specific security on a trading exchange, making it impossible to match the buyers' and sellers' orders. For securities that are overseen by a market maker or specialist, shares may be brought in from a specified reserve to add liquidity, temporarily clearing out excess orders from the inventory so that the trading in the security can resume at an orderly level. Extreme cases of order imbalance may cause suspension of trading until the imbalance is resolved.
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Order Management System - OMS
- An electronic system developed to execute securities orders in an efficient and cost-effective manner. Brokers and dealers use OMSs when filling orders for various types of securities and are able to track the progress of each order throughout the system.
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Order Protection Rule
- One of the provisions of Regulation NMS that ensures that investors receive an execution price that is equivalent to what is being quoted on any other exchanges where the security is being traded. The order protection rule requires that each exchange establish and enforce policies to ensure consistent price quotation for all NMS stocks, which include those on the major stock exchanges as well as many over-the-counter (OTC) stocks.
The order protection rule is also known as "Rule 611", or the "trade-through rule".
- One of the provisions of Regulation NMS that ensures that investors receive an execution price that is equivalent to what is being quoted on any other exchanges where the security is being traded. The order protection rule requires that each exchange establish and enforce policies to ensure consistent price quotation for all NMS stocks, which include those on the major stock exchanges as well as many over-the-counter (OTC) stocks.
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Order Splitting
- When brokers split up larger orders to qualify them for the Small Order Execution System (SOES) and, therefore, have them automatically executed.
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Ordering Rules
- The order in which Roth IRA assets are distributed. Assets are distributed from a Roth IRA in the following order:
1. IRA participant contributions
2. Taxable conversions
3. Non-taxable conversions
4. Earnings
- The order in which Roth IRA assets are distributed. Assets are distributed from a Roth IRA in the following order:
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Orderly Market
- Any market in which the supply and demand are reasonably equal.
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Ordinary And Necessary Expenses - O & NE
- Expenses incurred by individuals for their business or primary employment. "Ordinary and necessary" expenses are categorized as such for income tax purposes, and these expenses are generally considered tax deductible in the year they are incurred.
These expenses are outlined in Section 162(a) of the Internal Revenue Code and must pass basic tests of relevance to business, as well as necessity.
- Expenses incurred by individuals for their business or primary employment. "Ordinary and necessary" expenses are categorized as such for income tax purposes, and these expenses are generally considered tax deductible in the year they are incurred.
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Ordinary Annuity
- A series of fixed payments made at the end of each period over a fixed amount of time.
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Ordinary Income
- Income received that is taxed at the highest rates, or ordinary income rates. Ordinary income is composed mainly of wages, salaries, commissions and interest income (as from bonds). Ordinary Income can only be offset with standard tax deductions, while capital gains income can only be offset with capital losses.
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Ordinary Loss
- Any loss incurred by a taxpayer that is not considered a capital loss. Ordinary losses can stem from many causes, including casualty and theft. Ordinary losses that are larger than a taxpayer's gross income for the year can leave the client with zero taxable income on their 1040.
- Any loss incurred by a taxpayer that is not considered a capital loss. Ordinary losses can stem from many causes, including casualty and theft. Ordinary losses that are larger than a taxpayer's gross income for the year can leave the client with zero taxable income on their 1040.
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Ordinary Shares
- Any shares that are not preferred shares and do not have any predetermined dividend amounts. An ordinary share represents equity ownership in a company and entitles the owner to a vote in matters put before shareholders in proportion to their percentage ownership in the company.
Ordinary shareholders are entitled to receive dividends if any are available after dividends on preferred shares are paid. They are also entitled to their share of the residual economic value of the company should the business unwind; however, they are last in line after bondholders and preferred shareholders for receiving business proceeds. As such, ordinary shareholders are considered unsecured creditors.
Also known as "common stock".
- Any shares that are not preferred shares and do not have any predetermined dividend amounts. An ordinary share represents equity ownership in a company and entitles the owner to a vote in matters put before shareholders in proportion to their percentage ownership in the company.
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Organic Act of the Department of Labor
- An act of law reluctantly signed by former U.S. president William Howard Taft in 1913 that created the Department of Labor and the Department of Commerce, dividing the former Department of Commerce and Labor.
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Organic Growth
- The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and therefore, are not considered organic.
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Organization for Economic Cooperation and Development - OECD
- A group of 30 member countries that discuss and develop economic and social policy. OECD countries are democratic countries that support free market economies.
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Organization of Petroleum Exporting Countries - OPEC
- An organization consisting of the world's major oil-exporting nations, OPEC was founded in 1960 to coordinate the petroleum policies of its members and to provide member states with technical and economic aid. OPEC is a cartel that aims to manage the supply of oil in an effort to set the price of oil on the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
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Organized Labor
- An association of workers united as a single, representative entity for the purpose of improving the workers' economic status and working conditions through collective bargaining with employers. Also known as "unions". There are two types: the horizontal union, in which all members share a common skill, and the vertical union, composed of workers from across the same industry.
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Original Cost
- All of the costs directly associated with acquiring an asset and putting it into use.
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Original Equipment Manufacturer - OEM
- 1. The original definition: a company whose products are used as components in another company's product. The OEM will generally work closely with the company that sells the finished product (often called a "value-added reseller" or VAR) and customize the designs based on the VAR's needs.
2. The more recent definition: a company that buys a product and incorporates or re-brands it into a new product under its own name.
- 1. The original definition: a company whose products are used as components in another company's product. The OEM will generally work closely with the company that sells the finished product (often called a "value-added reseller" or VAR) and customize the designs based on the VAR's needs.
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Original Face
- The par value of a mortgage-backed security at the time it is issued. Unlike most other types of bonds, mortgage-backed securities return both principal and interest to the holder in periodic payments (usually monthly). Over time, the outstanding principal balance of a mortgage-backed security will be reduced. The original face remains an important and distinguishing piece of information associated with a mortgage-backed security.
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Original Issue Discount - OID
- The discount from par value at the time that a bond or other debt instrument is issued. It is the difference between the stated redemption price at maturity and the issue price.
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Origination
- The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property.
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Origination Fee
- An up-front fee charged by a lender for processing a new loan application, used as compensation for putting the loan in place. Origination fees are quoted as a percentage of the total loan and are generally between 0.5% and 1% on mortgage loans in the
- An up-front fee charged by a lender for processing a new loan application, used as compensation for putting the loan in place. Origination fees are quoted as a percentage of the total loan and are generally between 0.5% and 1% on mortgage loans in the
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Origination Points
- A type of fee borrowers pay to lenders or loan officers in order to compensate them for the role they play in evaluating, processing and approving mortgage loans. Credit history is one factor that plays a role in the amount of origination points a borrower needs to pay. Unlike the other types of points (for example, discount points), origination points are not tax deductible.
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Oscillator
- A technical analysis tool that is banded between two extreme values and built with the results from a trend indicator for discovering short-term overbought or oversold conditions. As the value of the oscillator approaches the upper extreme value the asset is deemed to be overbought, and as it approaches the lower extreme it is deemed to be oversold.
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Oslo Stock Exchange (OSL) .OL
- The major securities trading market in Norway, the Oslo Stock Exchange (in Norwegian, the "Oslo Børs") opened for trading in 1881. Initially, the Exchange did not see much activity, and its only function was to fix prices once a month - it did not trade any stocks. Today, equities, primary capital certificates, derivatives, fixed income instruments, mutual funds and exchange traded funds can be traded through the Oslo Stock Exchange. Its main index is the OBX Index.
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Ostrich
- A slang term given to investors or other market participants who ignore important pieces of information or situations, which have the ability to impact them or the market in which they operate. The reasons behind type of action can include risk aversion and bias.
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OTC Options
- Exotic options traded on the over-the-counter market, where participants can choose the characteristics of the options traded.
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Other Current Assets
- A balance sheet item that includes the value of non-cash assets due within one year.
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Other Current Liabilities
- A balance sheet entry used by companies to group together current liabilities that are not assigned to common liabilities such as debt obligations or accounts payable.
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Other Long-Term Liabilities
- A balance sheet item that includes obligations that do not currently require interest payments.
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Other Post-Employment Benefits - OPEB
- Post-employment benefits that an employee will begin to receive at the start of retirement. This does not include pension benefits paid to the retired employee. Other post-employment benefits that a retiree can be compensated for are life insurance premiums, healthcare premiums and deferred-compensation arrangements.
- Post-employment benefits that an employee will begin to receive at the start of retirement. This does not include pension benefits paid to the retired employee. Other post-employment benefits that a retiree can be compensated for are life insurance premiums, healthcare premiums and deferred-compensation arrangements.
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Other Post-Retirement Benefits
- Benefits, other than pension distributions, paid to employees during their retirement years. Most post-retirement benefits include life insurance and medical plans. Although these benefits are mostly employer-paid, retired employees often share in the cost of these benefits through co-payments, payment of deductibles and making employee contributions to the plan when required.
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Other Real Estate Owned - OREO
- In bank accounting, this term refers to real property owned by a banking institution which is not directly related to its business. In balance sheet terms, other real estate owned (OREO) assets are considered non-earning assets for purposes of regulatory accounting.
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Out Of The Money - OTM
- 1. For a call, when an option's strike price is higher than the market price of the underlying asset.
2. For a put, when the strike price is below the market price of the underlying asset.
- 1. For a call, when an option's strike price is higher than the market price of the underlying asset.
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Out Trade
- A trade that cannot be cleared by the associated exchange clearing house because of discrepancies between the data submitted by both parties on the opposite sides of a transaction.
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Out-Of-Pocket Expenses
- An expense incurred and paid for by an individual for personal use, or relating to one's employment or business. This can also relate to ongoing costs of operating a fixed asset, such as a car or a home.
Some out-of-pocket expenses may be reimbursed by an employer or other group if the expense is incurred directly on their behalf. In addition, some out-of-pocket expense categories can be deducted from one's personal income taxes.
- An expense incurred and paid for by an individual for personal use, or relating to one's employment or business. This can also relate to ongoing costs of operating a fixed asset, such as a car or a home.
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Outlay Cost
- Any concrete costs that can be identified in the past, present or future.
Also referred to as "explicit costs".
- Any concrete costs that can be identified in the past, present or future.
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Outperform
- An analyst recommendation meaning a stock is expected to do slightly better than the market return.
Also known as "market outperform", "moderate buy", or "accumulate".
- An analyst recommendation meaning a stock is expected to do slightly better than the market return.
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Outperformance Option
- An exotic call option that's value is determined by the differing performance of two underling assets or securities. The holder gains on the amount one asset outperforms another, both of which are pre-determined. These options are typically European-style, settled in cash, and traded in the over-the-counter market.
Also referred to as "margrabe option".
- An exotic call option that's value is determined by the differing performance of two underling assets or securities. The holder gains on the amount one asset outperforms another, both of which are pre-determined. These options are typically European-style, settled in cash, and traded in the over-the-counter market.
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Outplacement
- Assistance provided through a third-party company and paid for by a former employer to help a laid-off employee find new employment. Outplacement assistance may include career counseling and analysis, professional resume writing, cover-letter writing, interview practice, salary-negotiation advice and resume distribution to employment agencies and head hunters.
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Output Gap
- An economic measure of the difference between the actual output of an economy and the output it could achieve when it is most efficient, or at full capacity. There are two types of output gaps: positive and negative. A positive output gap occurs when actual output is more than the full-capacity output. Negative output gap occurs when actual output is less than full-capacity output.
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Outright Futures Position
- A position in a futures contract that is not offset.
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Outright Option
- An option that is bought or sold by itself; in other words, the option position is not hedged by another offsetting position. An outright option can be either a call or a put.
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Outside Director
- Any member of a company's board of directors who is not an employee or stakeholder in the company.
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Outside Earnings
- The amount of income an elderly individual under the age of 70 has earned outside of his or her social security benefits.
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Outside Reversal
- A charting trend in which a stock price's high and low for the day exceed those of the preceding day.
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Outsourcing
- A practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.
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Outstanding Shares
- Stock currently held by investors, including restricted shares owned by the company's officers and insiders, as well as those held by the public. Shares that have been repurchased by the company are not considered outstanding stock.
Also referred to as "issued and outstanding" if all repurchased shares have been retired.
- Stock currently held by investors, including restricted shares owned by the company's officers and insiders, as well as those held by the public. Shares that have been repurchased by the company are not considered outstanding stock.
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Outward Arbitrage
- A form of arbitrage involving the rearrangement of a bank's cash by taking its local currency and depositing it into eurobanks. The interest rate will be higher in the interbank market, which will enable the bank to earn more on the interest it receives for the use of its cash.
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Outward Direct Investment - ODI
- A business strategy where a domestic firm expands its operations to a foreign country either via a
- A business strategy where a domestic firm expands its operations to a foreign country either via a
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Over-Hedging
- A hedged position in which the offsetting position is for a greater amount than the underlying position held by the firm entering into the hedge. While hedging ensures price certainty, over-hedging can in effect become partly a hedge and partly a speculative investment and can unduly hurt a firm.
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Over-The-Counter - OTC
- A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" can be used to refer to stocks that trade via a dealer network as opposed to on a centralized exchange. It also refers to debt securities and other financial instruments such as derivatives, which are traded through a dealer network.
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Over-The-Counter Bulletin Board - OTCBB
- A regulated electronic trading service offered by the National Association of Securities Dealers (NASD) that shows real-time quotes, last-sale prices and volume information for over-the-counter (OTC) equity securities. Companies listed on this exchange are required to file current financial statements with the SEC or a banking or insurance regulator. There are no listing requirements, such as those found on the Nasdaq and New York Stock Exchange, for a company to start trading on the OTCBB.
Stocks that trade on the OTCBB, will have the suffix ".OB".
- A regulated electronic trading service offered by the National Association of Securities Dealers (NASD) that shows real-time quotes, last-sale prices and volume information for over-the-counter (OTC) equity securities. Companies listed on this exchange are required to file current financial statements with the SEC or a banking or insurance regulator. There are no listing requirements, such as those found on the Nasdaq and New York Stock Exchange, for a company to start trading on the OTCBB.
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Over-The-Counter Exchange Of India - OTCEI
- An electronic stock exchange based in India that is comprised of small- and medium-sized firms looking to gain access to the capital markets. Like electronic exchanges in the U.S. such as the Nasdaq, there is no central place of exchange and all trading is done through electronic networks.
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Over-The-Counter Market
- A decentralized market of securities not listed on an exchange where market participants trade over the telephone, facsimile or electronic network instead of a physical trading floor. There is no central exchange or meeting place for this market.
Also referred to as the "OTC market".
- A decentralized market of securities not listed on an exchange where market participants trade over the telephone, facsimile or electronic network instead of a physical trading floor. There is no central exchange or meeting place for this market.
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Overadvance
- When a company obtains a loan in order to increase their inventory prior to an expected increase in sales volume.
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Overallotment
- Selling more securities than are available in an IPO.
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Overbought
- 1. A situation in which the demand for a certain asset unjustifiably pushes the price of an underlying asset to levels that do not support the fundamentals.
2. In technical analysis, this term describes a situation in which the price of a security has risen to such a degree - usually on high volume - that an oscillator has reached its upper bound. This is generally interpreted as a sign that the price of the asset is becoming overvalued and may experience a pullback.
- 1. A situation in which the demand for a certain asset unjustifiably pushes the price of an underlying asset to levels that do not support the fundamentals.
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Overcapitalization
- When a company has too much capital for the needs of its business.
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Overcast
- A forecasting error that occurs when estimating volumes of items such as future cash flows, performance levels or production. Overcasting produces an estimation that is above the realized value.
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Overcollateralization - OC
- The process of posting more collateral than is needed to obtain or secure financing. Overcollateralization is often used as a method of credit enhancement by lowering the creditor's exposure to default risk.
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Overcontribution
- Any contribution to a tax-deductible retirement savings plan exceeding the maximum allowed contribution for a given period as determined by the retirement plan's registrar. Overcontributions are subject to the retirement plan's regulations or laws. Overcontributions are usually subject to some form of monetary penalty, intentioned to reduce their occurrences.
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Overdraft
- An extension of credit from a lending institution when an account reaches zero. An overdraft allows the individual to continue withdrawing money even if the account has no funds in it. Basically the bank allows people to borrow a set amount of money.
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Overhang
- A measure of the potential dilution to which a common stock's existing shareholders are exposed due to the potential that stock-based compensation will be awarded to executives, directors or key employees of the company. It is usually represented in percentage form and is calculated as stock options granted, plus the remaining options that have yet to be granted divided by the total shares outstanding.
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Overhead
- An accounting term that refers to all costs not including or related to direct labor, materials, or administration costs.
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Overheated Economy
- When a prolonged period of good economic growth and activity causes high levels of inflation (from increased consumer wealth) and inefficient supply allocations as producers overproduce and create excess production capacity in an attempt to capitalize on the high levels of wealth. Unfortunately, these inefficiencies and inflation will eventually hinder the economy's growth and cause a recession.
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Overlapping Debt
- The debt of a political entity, such as a state where its tax base overlaps the tax base of another political entity, such as a city within the state.
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Overlay
- A management style that harmonizes an investor's separately managed accounts, preventing the formation of inefficiencies. Overlay management uses software to track an investor's combined position from the separate accounts. Any possible portfolio adjustments will be analyzed by the overlay system, which ensures the overall portfolio will remain in balance and prevent any inefficient transactions from occurring.
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Overnight Delivery Risk
- The risk that occurs as a result of conducting transactions between different time zones. More specifically, this refers to how the receiving party may not necessarily know whether the other party fulfilled its obligations until the next trading day.
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Overnight Index Swap
- An interest rate swap involving the overnight rate being exchanged for some fixed interest rate.
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Overnight Rate
- The interest rate at which a depository institution lends immediately available funds (balances within the central bank) to another depository institution overnight.
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Overnight Trading
- The buying or selling of currencies between 9pm and 8am local time. This type of transaction occurs when an investor takes a position at the end of the trading day in a foreign market that will be open while the local market is closed. The trade will be executed sometime that evening or early morning.
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Overreaction
- A market hypothesis stating that investors and traders react disproportionately to new information about a given security. This will cause the security's price to change dramatically, so that the price will not fully reflect the security's true value immediately following the event. Typically, the price swing from overreaction is not long lasting, as the stock price will tend to return back to its true value over time.
The overreaction hypothesis is not consistent with the efficient market hypothesis.
- A market hypothesis stating that investors and traders react disproportionately to new information about a given security. This will cause the security's price to change dramatically, so that the price will not fully reflect the security's true value immediately following the event. Typically, the price swing from overreaction is not long lasting, as the stock price will tend to return back to its true value over time.
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Overseas Private Investment Corporation - OPIC
- A U.S. government agency that assists businesses looking to invest abroad. Operated out of Washington, D.C., the Overseas Private Investment Corporation (OPIC) helps companies investing overseas analyze and manage risks and tries to promote development in emerging markets in addition to supporting domestic foreign policies.
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Overshopped
- The perception that a firm's attempt to raise capital by selling equity or debt through a private or public offering is an act of desperation. When a company's management overshops a financing deal, it leaves investment banks, bridge financiers, lenders and private equity groups wondering why they should be the ones to take on the risk of financing a project that others have rejected.
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Oversold
- 1. A condition in which the price of an underlying asset has fallen sharply, and to a level below which its true value resides. This condition is usually a result of market overreaction or panic selling.
2. A situation in technical analysis where the price of an asset has fallen to such a degree - usually on high volume - that an oscillator has reached a lower bound. This is generally interpreted as a sign that the price of the asset is becoming undervalued and may represent a buying opportunity for investors.
- 1. A condition in which the price of an underlying asset has fallen sharply, and to a level below which its true value resides. This condition is usually a result of market overreaction or panic selling.
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Overstay
- The act of holding an investment for too long. It often occurs when traders attempt to time the market by identifying the end of a price trend and the beginning of a new one, but, due to greed and fear, tend to overstay their positions. This usually results in reduced gains or, worse, further losses.
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Oversubscribed
- A situation in which the demand for an initial public offering of securities exceeds the number of shares issued.
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Oversubscription Privilege
- A privilege provided to existing shareholders in a company when the company issues a rights or warrants offering. This enables shareholders to "subscribe" to purchase extra shares that are not picked up by the remaining shareholders.
When a company issues a rights or warrants offering, existing shareholders are given the option to maintain their current percentage of ownership in the company by acquiring the rights to further shares. If any current shareholders decide to not accept all of the rights for which they are eligible, these extra rights/warrants become available to the rest of the shareholders at a predetermined ratio (ie. the right to purchase 0.25 shares for every existing share held).
- A privilege provided to existing shareholders in a company when the company issues a rights or warrants offering. This enables shareholders to "subscribe" to purchase extra shares that are not picked up by the remaining shareholders.
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Overtrading
- 1. Excessive buying and selling of stocks by a broker on an investor's behalf in order to increase the commission the broker collects.
This situation has been known to arise when brokers are pressured to place a newly issued security underwritten by a firm's investment banking arm.
Also known as "churning".
2. A situation in which a company is growing its sales faster than it can finance them. This usually leads to enormous accounts payable or accounts receivable and a lack of working capital to finance operations.
- 1. Excessive buying and selling of stocks by a broker on an investor's behalf in order to increase the commission the broker collects.
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Overvalued
- A stock with a current price that is not justified by its earnings outlook or price/earnings (P/E) ratio and, therefore, is expected to drop in price. Overvaluation may result from an emotional buying spurt, which inflates the stock's market price, or from a deterioration in a company's financial strength.
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Overweight
- 1. A situation where a portfolio holds an excess amount of a particular security when compared to the security's weight in the underlying benchmark portfolio. Actively managed portfolios will make a security overweight when doing so will allow the portfolio to achieve excess returns.
2. An analyst's opinion regarding the future performance of a security. Overweight will usually signify that the security is expected to outperform either its industry, sector or, even, the market altogether.
- 1. A situation where a portfolio holds an excess amount of a particular security when compared to the security's weight in the underlying benchmark portfolio. Actively managed portfolios will make a security overweight when doing so will allow the portfolio to achieve excess returns.
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Overwrite
- A type of covered-call strategy that consists of writing call options on stocks that the writer already owns to generate maximum current income from options premiums and dividends.
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Overwriting
- An options strategy that involves the sale of call or put options on stocks that are believed to be overpriced or underpriced. The options are not expected to be exercised.
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Ovoboby
- A condition in which a market is considered to be overbought, overly bullish, overvalued and is experiencing upward pressure on Treasury yields. If the market falls into this condition, it is thought to be a warning sign to investors of potential near-term market downturns along with the potential for longer term negatives.
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Own-Occupation Policy
- An insurance policy that covers individuals who become disabled and are unable to perform the majority of the occupational duties that they have been trained to perform. This type of insurance policy is contingent on the individual being employed at the time the disability occurs.
Also known as a "pure own-occupational policy".
- An insurance policy that covers individuals who become disabled and are unable to perform the majority of the occupational duties that they have been trained to perform. This type of insurance policy is contingent on the individual being employed at the time the disability occurs.
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Owner Earnings Run Rate
- An extrapolated estimate of an owner’s earnings (free cash flow) over a defined period of time (typically a year). This assumes that the firm's financial performance stays consistent throughout the period. Therefore, this estimate can be difficult to assess if the firm is operating in a business that experiences seasonality, because owner earnings from one period may not be applicable across the entire time period.
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Owner Financing
- When a property buyer finances the purchase directly through the person or entity selling it. This often occurs when the prospective buyer cannot obtain funding through a conventional mortgage lender, or is unwilling to pay the prevailing market interest rates. The seller may agree to owner financing if he or she is having difficulty selling the property.
Owner financing may only cover part of the purchase price, with a smaller bank loan making up the difference.
Also known as "creative financing" or "seller financing".
- When a property buyer finances the purchase directly through the person or entity selling it. This often occurs when the prospective buyer cannot obtain funding through a conventional mortgage lender, or is unwilling to pay the prevailing market interest rates. The seller may agree to owner financing if he or she is having difficulty selling the property.
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Owners' Equivalent Rent - OER
- The amount of rent that could be paid to substitute a currently owned house for an equivalent rental property. Owners' equivalent rent (OER) is a dollar amount that is published by the U.S. Bureau of Labor Statistics to measure the change in implicit rent, which is the amount a homeowner would pay to rent or would earn from renting his or her home in a competitive market.
Owners' equivalent rent is obtained by directly asking sampled homeowners the following question: "If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities?" It is also referred to as rental equivalence.
- The amount of rent that could be paid to substitute a currently owned house for an equivalent rental property. Owners' equivalent rent (OER) is a dollar amount that is published by the U.S. Bureau of Labor Statistics to measure the change in implicit rent, which is the amount a homeowner would pay to rent or would earn from renting his or her home in a competitive market.
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