|
|
|
Glossary of Terms
As the commerce and industry have evolved, each sector has developed a vocabulary that uniquely describes its products,
technology, and business practices, known as a jargon of respective domain. Often, these words seem incomprehensible to
the layman. This short lexicon is not meant to be a comprehensive dictionary of markets; nevertheless it would be a useful
guide for the beginners who are keen to no more about financial markets and futures industry.
O
-
Offer :-
A motion to sell a futures or options contract
at a specified price. Opposite of bid.
-
Off-Peak :-
The load for the remaining hours that are
not on-peak (See on-peak).
-
Offset :-
A transaction which liquidates or closes
out an open contract position. In spread positions, one side offsets the
other without liquidating the entire position. Risk is reduced when one
side offsets the other.
-
Omnibus Account :-
An account carried by one futures commission
merchant with another in which the transactions of two or more persons
are combined rather than designated separately and the identity of the
individual accounts is not disclosed.
-
On-Peak :-
Refers to hours of the business day when
demand is at its peak. For example, the NYMEX Division California-Oregon
border and Palo Verde electricity futures contracts define the on-peak
period from the hour ending 0700 to the hour ending 2200 (6 A.M. to 10
P.M.), prevailing time. In the physical market, on-peak definitions vary
by North America Electric Reliability Council region. One Cancels the
Other Two orders submitted simultaneously, either of which may be filled.
If one order is filled, the other is considered to be canceled.
-
Open Interest or Commitment :-
The number of open or outstanding contracts
for which an individual or entity is obligated to the Exchange because
that individual or entity has not yet made an offsetting sale or purchase,
an actual contract delivery, or, in the case of options, exercised the
option.
-
Open Order :-
A resting order that is good until canceled.
-
Open Outcry :-
A method of public auction for making verbal
bids and offers for contracts in the trading pits or rings of commodity
exchanges.
-
Opening Price :-
The price for a given futures commodity that
is generated by trading through open outcry during the opening range of
trading on a commodity exchange.
-
Option :-
A contract which gives the holder the right,
but not the obligation, to purchase or to sell the underlying futures
contract at a specified price within a specified period of time in exchange
for a one-time premium payment. The contract also obligates the writer,
who receives the premium, to meet these obligations.
-
Original Margin :-
The initial deposit of funds, as good faith
monies, when a position is initiated in order to guarantee fulfillment
of its obligations. Also known as initial margin.
-
Out-of-the-Money :-
An option which has no intrinsic value. For
calls, an option whose exercise price is above the market price of the
underlying future. For puts, an option whose exercise price is below the
futures price.
-
Outages :-
A planned outage is the shutdown of a generating
unit, transmission line, or other facility for inspection and maintenance,
in accordance with an advance schedule. A forced outage is the unplanned
loss of service of a generating unit, transmission line, or other facility
for purposes other than inspection and maintenance.
-
Overbought :-
A technical opinion that the market price
has risen too steeply and too fast in relation to underlying fundamental
factors.
-
Oversold :-
A technical opinion that the market price
has declined too steeply and too fast in relation to underlying fundamental
factors.
-
Overwrite :-
The writing of more options than one expects
to have exercised. Call options are overwritten because the writer considers
the underlying overvalued. Put options are overwritten because the underlying
is considered undervalued.
|