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Trading Terms Starting With O

  • OCC

    The Options Clearing Corporation. See Clearing Corporation.
  • OEX - S&P 100

    a cash-settled index option contract based on the S&P 100® index, traded on the Chicago Board Options Exchange.
  • OID

    see Original issue discount
  • OTC BB

    see Bulletin board (OTC).
  • Odd lot

    less than 100 shares of stock that are traded together. See also Lot.
  • Odd lot theory

    with respect to technical analysis, a theory that uses the number of odd lots being traded in a stock as a contra-indicator; a substantial number of odd lots being bought indicates a sell signal, and vice versa.
  • Offer / offer price

    see Ask / ask price.
  • Officer

    a person appointed by the board of directors of a company, such as president, chief executive officer, or vice president to both manage the company and carry out the policies established by the board.
  • Offshore fund

    a fund that has been established by a financial institution that is based outside of the U.S. usually for the purpose of lowering an investor's tax burden or concealing his or her assets. These investments may or may not be legal.
  • One cancels other (OCO)

    when two or more orders are entered with instructions that the execution of one order cancels the second, or alternative, order.
  • One time charge

    any expense a company declares in a given reporting period which it states will most likely not recur in the future.
  • Open / opening transaction

    a transaction that creates (or increases) an open option position. An opening buy transaction creates or increases a long position; an opening sell transaction creates or increases a short position.
  • Open-end fund

    a mutual fund that raises money through issuing shares and redeems existing shares on an on-going basis, with investors buying and selling shares at near their net asset value (NAV).
  • Open interest

    the net number of outstanding option contracts that have not been closed with an offsetting transaction, liquidated via exercise, assignment or expired. This number generally represents contracts of a specific option as seen on many option chains, but it may also refer to other groups of options: all options in a particular class, all calls or all puts in a class, all options in the entire market, or all calls or all puts in the market.
  • Open order

    any order entered to buy or sell a security that has been neither executed nor canceled. It is still live or active, or a good order.
  • Open outcry

    a public auction environment, on a physical trading floor, in which exchange members compete verbally with their best bid and ask prices.
  • Open position

    any long (short) securities position that has not been closed, or liquidated, with a closing sale (purchase) transaction.
  • Opening price

    the price of the first transaction for a given security on a given trading day.
  • Operating expense

    any expense a company incurs either in the maintenance of assets or as part of the normal course of doing business.
  • Operating income

    see Earnings before interest and taxes (EBIT).
  • Opportunity cost

    when faced with two (or more) investment opportunities, it is the difference between the value of the choice taken and the value of the alternative(s) not taken.
  • Option / option contract

    an exchange listed option is a contract with standardized contract terms that gives its owner certain rights, and conveys upon the writer certain obligations. These option contracts, classified as securities, come in two types, calls and puts. See Equity option and Index option.
  • Option pricing model

    a mathematical formula used to calculate an option's theoretical value using as input its strike price, the underlying price, volatility and dividend amount, as well as time until expiration and risk-free interest rate. Generated by an option pricing model are the Greeks: delta, gamma, theta, vega and rho. Well known and widely used pricing models include Black-Scholes and Cox-Ross-Rubinstein
  • Option writer

    see Writer.
  • Options approval levels

    investors must request and receive varying levels of approval from their brokerage firm before making certain option trades. Approval for each level depends on an investor's option experience, investment objectives and risk tolerance as balanced against his or her net worth.

    Option approval levels at TradeKing are as follows:
    • Level 1 - Sell covered calls
    • Level 2 - Buy puts, buy calls
    • Level 3 - Buy and sell combinations (spreads and straddles)
    • Level 4 - Sell naked (uncovered) equity puts
    • Level 5 - Sell naked (uncovered) equity calls
    • Level 6 - Sell naked (uncovered) index calls and puts
  • Or better

    with respect to a securities order, an instruction that is implicit to buy at a lower price, or sell at a higher price, than the order's stated limit price if possible.
  • Order

    any instruction from an investor to his or her brokerage firm to buy or sell a security.
  • Order confirmation

    acknowledgment from a brokerage firm, in either paper or electronic form, that a transaction has taken place as well as the price(s) at which it was executed.
  • Order imbalance

    see Imbalance of orders.
  • Original issue discount

    the amount by which a newly issued bond is purchased below its face value, or below par, with the bond still redeemable for full face value at maturity.
  • Out-of-the-money

    a call option is out-of-the-money when its strike price is greater than the current underlying stock price (for an equity option) or index value (for an index option). A put option is out-of-the-money when its strike price is less than the current underlying stock price or index level. Out-of-the-money options have no intrinsic value, only time value.
  • Outperformer

    see Market outperformer.
  • Oversubscribed

    a situation in which the demand for shares in an initial public offering exceeds the supply available. The result is generally a price increase as soon as the shares begin trading in the open market.
  • Over-the-counter option

    a non-standardized option contract, generally more complex than a simple call or put, that trades over-the-counter as opposed to a standardized, exchange-listed option. Also termed Exotic option.
  • Overweighted

    with respect to a portfolio, when more capital is invested in certain assets than others.