See: Accumulation; Chartist; Technical Analysis; Volume

One Cancels The Other Order

See: Either/Or Order; Orders

On Floor Order
A security order that is initiated on an exchange floor. These orders are initiated by members on the exchange floor who are trading for their own accounts.

See: Floor; Off Floor Order

On The Close Order
A brokerage client's order to trade a NYSE security only if it can be executed on the moment the closing bell starts ringing on the exchange. The client has no guarantee of receiving the stock's final price.

See: Bell; Close, The; On The Opening Order; Orders

On The Opening Order
A brokerage client's order to trade a NYSE security only if it can be executed as the first transaction of the trading session for that security. If the order cannot be executed as such, it is canceled immediately.

See: On The Close Order; Opening, The; Orders

OPD
A ticker tape symbol that signifies that a security's price has changed materially from the previous day's close. A material change is usually 2 or more points on stocks selling at $20 or higher, 1 or more points on stocks selling at less than $20. OPD also designates a security's first transaction of the trading session after it has had a delayed opening.

Delayed Opening; Ticker Symbol; Ticker Tape

Open
The status of an order that has not yet been executed.

See: Good Til Canceled Order; Open Order; Orders

Open End Indenture
A secured bond indenture that allows collateral to be repledged for the issuance of additional bonds.

See: Additional Bonds Test; Collateral; Indenture; Pledge

Open End Management Company
A management investment company that issues new shares on demand when people buy them. The shares are bought at net asset value and may be redeemed back to the management company at any time at the current market price. Commonly called a "mutual fund", the type of vehicle that the shareholder's funds are invested in is dependent on the type of fund and its objectives.

See: Closed End Management Company; Investment Company; Mutual Fund; Net Asset Value; Redemption

Opening, The
At the beginning of a trading day, the price for a particular security or commodity.

See: Delayed Opening; On The Opening Order

Opening Transaction
The purchase or sale of an option. If a sale is an opening transaction, the investor is a writer.

See: Closing Transaction; Options; Writer

Open Interest
The amount of outstanding contracts on a specific underlying security. A contract is considered to be outstanding if it is has not expired, or been exercised or closed out. Open interest also applies to the total number of contracts in an options market and is included in the options and commodity pages of daily newspapers.

See: Closing Transaction; Expiration; Exercise; Options; Underlying Security

Open Order
A good-til-canceled order. It stays in effect until it is either canceled or executed.

See: Cancel Order; Execution; Good Til Canceled Order; Open; Orders

Open Repo
Repurchase agreement that has an undefined repurchase date that continues on a day-to-day basis--either party may end it at any time. Each day the interest rate is adjusted to reflect changes in the market.

Operating Income
A corporation's net sales minus its cost of goods sold, depreciation and selling and administrative costs. The total, shown on the corporation's income statement, indicates how much of the company's profits is attributable to its principal business.

See: Balance Sheet; Depreciation; FIFO; Financial Statement; Income Statement; LIFO

Operating Profit Or Loss
Before tax profit (loss) that a corporation earns from operations after all operating costs have been deducted.

See: Operating Profit Margin

Operating Profit Margin
Ratio, used by fundamental analysts, that relates operating income to net sales. Operating profit margin equals operating income divided by net sales.

See: Fundamental Analysis; Operating Income; Operating Profit Or Loss

OPM (Other People's Money)
Industry lingo used when individuals or corporations use borrowed funds to increase their investment returns.

Option Agreement
An agreement by which a brokerage firm client agrees to follow the rules and regulations of the Options Clearing Corporation.

See: Options; Options Clearing Corporation

Optional Dividend
A dividend in which the shareholder has a choice of whether to be paid in either cash or stock.

See: Cash Dividend; Stock Dividend

Optional Payment Bond
A bond in which the bondholder has the choice of receiving principal and/or interest in one or more foreign currencies as well as in domestic currency.

Option Fund
Mutual fund that trades options to increase the value of fund shares. The fund may either be conservative or aggressive. A conservative fund, commonly called an "option income fund", may buy stocks and increase shareholders' income through the premium earned by writing options on the stocks within the portfolio. An aggressive fund, commonly called an "option growth fund", may buy options in securities that the fund manager thinks will fall or rise sharply in the near term. If the manager is correct, large profits can be made on the exercise of the options.

See: Exercise; Mutual Fund; Options; Option Writer

Option Holder
Person who has bought a call or put option that has not yet expired and who has not yet exercised or sold it. A holder of a call option wants the underlying security's price to rise. A holder of a put option holder wants the underlying security's price to fall.

See: Call Option; Exercise; Expiration; Options; Put Option; Underlying Security

Option Premium
The market price of an option that is paid by an option buyer to the option writer (seller) for the right to buy (call) or sell (put) the underlying security at a specified price (called "strike price" or "exercise price") by the option's expiration date. The premium is set by the supply and demand of option traders as they evaluate the underlying security's future market value. Premium prices are quoted in increments of eighths or sixteenths.

See: Call Option; Expiration Date; Options; Option Writer; Put Option; Strike Price; Underlying Security

Options
1: A contract giving an investor a right to buy (call) or sell (put) a fixed amount of shares (usually 100 shares) of a given stock (or indexes and commodities) at a specified price within a limited time period (usually three, six, or nine months). The purchaser hopes that the stock's price will go up (if he bought a call) or down (if he bought a put) by an amount sufficient to provide a profit when he sells the option. If the stock price holds steady or moves in the opposite direction, the price paid for the option is lost entirely. Individuals may write (sell) as well as purchase options.

A buyer of a call option, for the right to buy 100 shares of the underlying security at a fixed (strike) price before a specified future date (expiration), pays the call option writer a fee called a premium. If the option is not exercised before it expires, the premium paid is lost. Thus, a call buyer believes that the price of the underlying shares will rise before the option expires. If the call buyer does exercise the option, the shares are bought from the writer at the option's strike price. The amount due to the writer equals the strike price multiplied by the number of shares. A buyer of a call option is generally bullish about the security, or in the case of index options, the market. A writer of a call option usually believes the security or the market will not move substantially up--thus, not making it worthwhile for the buyer to exercise.

A buyer of a put option, for the right to sell 100 shares of the underlying security at a fixed price before a specified future date, also pays a premium to the writer of the put. A put buyer believes that the price of the underlying security is going to decline. If the put buyer exercises the option, the underlying security shares are sold to the put writer at the option's strike price. A put buyer is generally bearish about the security or the overall market. The writer typically believes the security or the overall market will not move substantially down--thus, not making it worthwhile for the buyer to exercise.

Buyers of options do not have to exercise an option in order to profit--they may attempt to profit on the option by selling it before its expiration by trading on the rise and fall of premium prices. Writers may also attempt to profit by buying back the option sold at a lower price (or it can expire worthless). An option seller can either write uncovered (interchangeably called "naked") or covered options. Naked options are far riskier.