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Financial Glossary

A complete Financial Glossary from one of the most respected names in the industry, Professor Campbell Harvey. 6,000 definitions and 15,000 internal links. Understand financial terms, clarify their meanings, explore the internal links and find out how these terms relate to each other.


Fifth letter of a Nasdaq stock symbol specifying that it is the company's second class of preferred shares.


See: Option adjusted spread


See: Options Clearing Corporation


See: Original issue discount debt


See: Over-the-counter.


See: Out of the money.


See: Organization of Petroleum Exporting Countries

Objective (mutual funds)

The fund's investment strategy category as stated in the prospectus. There are more than 20 standardized categories. E.g. Aggressive growth, balanced.

Objective probability

The true unobservable underlying odds that something is so.


A legal responsibility, such as to repay a debt.

Obligation bond

A municipal bond with a face value greater than the value of the underlying property. The difference is designed to compensate the lender for costs exceeding the mortgage value.


A person who has an obligation to pay off a debt.

Observational Noise

The error between the true value in a system and its observed value due to imprecision in measurement. Also called Measurement Noise. See: Dynamical Noise.

Ocean bill of lading

Receipt for a shipment by boat, that includes freight charges and title to the merchandise.

Odd lot

A trading order for less than 100 shares of stock. Compare round lot.

Odd-lot dealer

A broker who combines odd lots of securities from multiple buy or sell orders into round lots and executes transactions in those round lots.

Odd-lot short-sale ratio

The percentage of total odd-lot sales that is composed of short sales.

Odd-lot theory

The theory that profits can be made by making trades contrary to odd-lot trading patterns, since odd-lot investors have poor timing. This theory is no longer popular.

OEX index

Applies to derivative products. Quotron symbol for the S&P 100 index option.

Off-balance-sheet financing

Financing that is not shown as a liability on a company's balance sheet.


Used for listed equity securities. Transacted away from a national securities exchange even though the stock itself is listed, such as on the NYSE, and instead of on the OTC market, a regional exchange, or in the third or fourth markets (between customers directly). After 9:30 a.m., if the stock has not opened due to the exchange's discretion, trading can occur elsewhere, but the trader must assume the role of a quasi-specialist in the process.

Off-budget Federal entities

Federally owned and controlled entities whose transactions are excluded from the budget totals under provisions of law. Their receipts, outlays, and surplus or deficit are not included in budget receipts, outlays or deficits. Their budget authority is not included in totals of the budget.

Off-floor order

Used for listed equity securities. (1) Order to buy or sell a security that originates off the floor of an exchange; customer orders originating with brokers, as distinguished from orders placed by floor members trading for their own accounts. Exchange rules require that an off-floor order be executed before orders initiated on the floor. Upstairs order. Antithesis of on-floor order; (2) order not handled on the floor but instead upstairs.


Indicates a willingness to sell at a given price. Related: Bid.

Offer price

See: Offer.

Offer wanted

Used in the context of general equities. Notice by a potential buyer of a security that he or she is looking for supply from a potential seller of the security, often requiring a capital commitment. Antithesis of bid wanted.

Offering date

Date on which a new set of stocks or bonds will first be sold to the public.

Offering memorandum

A document that outlines the terms of securities to be offered in a private placement.

Offering scale

The range of prices offered by the underwriter of a serial bond issue with different maturities.

Offering statement

A shortened registration statement required by the Securities and Exchange Commission on debt issues with less than a nine-month maturity.


Often refers to initial public offerings. When a firm goes public and makes an offering of stock to the market.

Office of Thrift Supervision (OTS)

An agency of the U.S. Treasury department responsible for the US savings and loan industry.

Official reserves

Holdings of gold and foreign currencies by official monetary institutions.

Official statement

A statement published by an issuer of a new municipal security describing itself and the issue.

Official settlements balance (overall balance)

An overall measurement of a country's private financial and economic transactions with the rest of the world.

Official unrequited transfers

Include a variety of subsidies, military aid, voluntary cancellation of debt, contributions to international organizations, indemnities imposed under peace treaties, technical assistance, taxes, or fines.


Elimination of a long or short position by making an opposite transaction. Related: Liquidation.

Offshore finance subsidiary

A wholly owned affiliate incorporated overseas, usually in a tax haven country, whose function is to issue securities abroad for use in either the parent's domestic or foreign business.

Offshore fund

A mutual fund whose headquarters is based outside the United States.

"O.K. to cross"

Used for listed equity securities. "Legal to cross the buy and sell orders on the exchange floor because transactor is not a principal in the transaction."

Old-line factoring

Factoring arrangement that provides collection, insurance, and finance for accounts receivable.


A Market characterized by a small number of producers who often act together to control the supply of a particular good and its market price.


A Market characterized by a small number of large buyers who control all purchases and therefore the market price of a good or service.

OM Stockholm AB

The derivatives market of Sweden, trading a wide variety of interest rate and bond futures. The exchange trades futures and options on the OMX equity index.

Omitted dividend

A dividend that was scheduled to be declared, but that is not voted by the board of directors probably because the company is experiencing financial difficulties.

Omnibus account

An account carried by one futures commission merchant with another futures commission merchant in which the transactions of two or more persons are combined and carried in the name of the originating broker, rather than designated separately. Related: Commission house.


Used in the context of general equities. Conjunction that denotes trade execution /indication, usually during a pre-opening look. "Looks 6 on 6000 shares at opening." See: for/at.

On balance

Used for listed equity securities. Left over after pairing off other market buy and sell orders, usually before the opening of a stock or market but at times at the close (especially during index expirations). See: Imbalance of orders.

On board

Used in the context of general equities. Long.

On a clean up

Used in the context of general equities. Willingness to participate in part of a trade if all of the stock available is spoken for except for the "clean up amount."

On the close order

A market order that is to be executed as close as possible to the closing price of the day.

On-floor order

Used for listed equity securities. Security order originating with a member on the floor of an exchange when dealing with his or her own account, versus an upstairs order. Antithesis of off-floor order.

On the money

Used in the context of general equities. In-line, or at the same price, as the last sale.

On the opening order

A market order that is to be executed at the price of the first trade of the day.

On the print

Used in the context of general equities. To participate in a block trade that has already transpired, as if that customer had been part of the trade originally; often used by a new party looking to participate in a trade that has just happened. See: Open on the print.

On the run

The most recently issued (and typically the most liquid) government bond in a particular maturity range.

On the sidelines

An investor who decides not to invest due to market uncertainty.

On the take

Used in the context of general equities. Price moving upward, because more buyers are taking offerings, causing offerings to vanish and be replaced by higher ones. Antithesis of come in, get hit.

On the tape

Used in the context of general equities. (1) Trade printed on the ticker tape; (2) news displayed on Reuters or the Dow Jones News Service.

One-decision stock

A quality stock that is not actively traded, but rather held for its growth potential.

One-factor APT

A special case of the arbitrage pricing theory that is derived from the one-factor model by using diversification and arbitrage. It shows that the expected return on any risky asset is a linear function of a single factor.

144 stock

Used in the context of general equities. Restricted stock.

One-man picture

When both bid and the offered prices of a broker come from the same source.

1/f Noise

See: Anti-Persistence

Phase Space

A graph which shows all possible states of a system. In phase space we plot the value of a variable against possible values of the other variables at the same time. If a system has three descriptive variables, we plot the phase space in three dimensions, with each variable taking one dimension.

One-share-one-vote rule

The principle that all shareholders should have equal voting rights in public companies and each shareholder should have one vote.

One-way market

(1) A market in which only one side, the bid or asked, is quoted or firm. (2) A market that is moving strongly in one direction.


Tape symbol showing either the first transaction of the day in a security after a delayed opening or the opening transaction in a security whose price has experienced a large rise or fall from the previous day's closing price.


Used in the context of general equities. Having either buy or sell interest at the indicated price level and side of a preceding trade. "Open on the buy/sell side" means looking for buyers/sellers (for someone who is a seller/buyer). Antithesis of clean.

Open account

Arrangement whereby sales are made with no formal debt contract. The buyer signs a receipt, and the seller records the sale in the sales ledger.

Open book

See: Unmatched book

Open contracts

Contracts that have been bought or sold without completion of the transaction by subsequent sale or purchase, or by making or taking actual delivery of the financial instrument or physical commodity.

Open depending on the floor

Used for listed equity securities. Having room for a customer buyer or seller contingent on the results of a trade being executed on the floor (i.e., satisfying the specialist book and the orders the trader opened up). See: Open on the print, subject.

Open-end credit

Revolving line of credit that is extended with every purchase or cash advance.

Open-end fund

Used in the context of general equities. Mutual fund that continually creates new shares on demand. Mutual fund shareholders buy the funds at net asset value and may redeem them at any time at the prevailing market prices. Antithesis of closed-end fund.

Open-end lease

A lease agreement that provides for an additional payment at the expiration of the lease to adjust for any change in the value of the property.

Open-end mortgage

Mortgage against which additional debts may be issued. Related: Closed-end mortgage.

Open interest

The total number of derivatives contracts traded that have not yet been liquidated either by an offsetting derivative transaction or by delivery. Related: Liquidation.

Open-market operation

Purchase or sale of government securities by the monetary authorities to increase or decrease the domestic money supply.

Open-market purchase operation

A systematic program of repurchasing shares of stock in market transactions at current market prices, in competition with other prospective investors.

Open-market rates

Interest rates that are determined in the open market by supply and demand, as opposed to being set by the Federal Reserve Board.

Open (good-till-cancelled) order (GTC order)

Order to buy or sell a security that stays active until it is completed or the investor cancels it.


The method of trading used at futures exchanges, typically involving calling out the specific details of a buy or sell order, so that the information is available to all traders.

Open position

A net long or short position whose value will change with a change in prices.

Open on the print

Used in the context of general equities. Block trader's term for a block trade that has been completed with an institutional client and printed on the consolidated tape, but leaves the block trader with stock available (because the trader has taken a long or short position to complete the trade) for new customers who are on the opposite side of the market to the initiating customer.

Open repo

A repurchase agreement with no definite term. The agreement is made on a day-to-day basis, and either the borrower or the lender may choose to terminate. The rate paid is higher than on overnight repo and is subject to adjustment if rates move.

Open up

Used in the context of general equities. Disclose more information (e.g., the exact price and quantity of one's potential interest). See: Put pants on it.


The period at the beginning of the trading session officially designated by an exchange, during which all transactions are considered made "at the opening." Related: Close.

Opening price

The range of prices at which the first bids and offers are made or the first transactions are completed on an exchange.

Opening purchase

Creation of or increase in a long position in a given series of options.

Opening sale

Creation of or increase in a short position in a given series of options.

Opening transaction

Applies to derivative products. (1)Buy or sell transaction that creates a position out of a flat one (writing an option short or buying an option long). Antithesis of closing transaction. (2) First transaction of the day in a stock.

Operating Assets

Another term for working capital.

Operating cash flow

Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements.

Operating cycle

The average time between the acquisition of materials or services and the final cash realization from that acquisition.

Operating expenses

The amount paid for asset maintenance or the cost of doing business. Earnings are distributed after operating expenses are deducted.

Operating exposure

Degree to which exchange rate changes, in combination with price changes, will alter a company's future operating cash flows.

Operating lease

Short-term, cancelable lease. A type of lease in which the contact period is shorter than the life of the equipment, and the lessor pays all maintenance and servicing costs.

Operating leverage

Fixed operating costs, which are characterized as leverage because they accentuate variations in profits.

Operating profit (or loss)

Revenue from a firm's regular activities less costs and expenses and before income deductions.

Operating profit margin

The ratio of operating profit to net sales.

Operating rate

The percentage of total production capacity of a company, industry, or country that is being used.

Operating ratio

A ratio that measures a firm's operating efficiency.

Operating in the red

Doing business while losing money.

Operating risk

The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk.

Operationally efficient market

Market in which investors can obtain transactions services that reflect the true costs associated with furnishing those services. Also called an internally efficient market.

Operations department

See: Back office.

Opinion shopping

Attempts by a corporation to attain reporting objectives by following questionable accounting principles, with the help of an auditor willing to sanction the practices. Prohibited by the SEC.


Stands for "other people's money," which refers to borrowed funds used to increase the return on invested capital.


Portugal's derivatives exchange (Bolsa de Derivados do Oporto) trading futures on the ten-year government bond, Portuguese stock index, and three-month interbank deposit rate LISBOR (Lisbon Interbank Offered Rate).

Opportunity cost of capital

Expected return that is forgone by investing in a project rather than in comparable financial securities.

Opportunity costs

The difference in the actual performance of a particular investment and some other desired investment adjusted for fixed costs and execution costs. It often refers to the most valuable alternative that is given up.

Opportunity line

Slope of a graph representing portfolios achieved by combining different levels of borrowing and lending with a single risky portfolio. Sometimes called investment opportunity set.

Opportunity set

The possible expected return and standard deviation pairs of all portfolios that can be constructed from a given set of assets.

Optimal contract

The contract that balances the three types of agency costs (contracting, monitoring, and misbehavior) against one another to minimize the total cost.

Optimal portfolio

An efficient portfolio most preferred by an investor because its risk/reward characteristics approximate the investor's utility function. A portfolio that maximizes an investor's preferences with respect to return and risk.

Optimal redemption provision

Provision of a bond indenture that governs the issuer's ability to call the bonds for redemption prior to their scheduled maturity date.

Optimization approach to indexing

An approach to indexing that seeks to optimize some objective, such as to maximize the portfolio yield, to maximize convexity, or to maximize expected total returns.

Optimum capacity

The amount of manufacturing output that creates the lowest cost per unit.

Optimum Leverage Ratio

The borrowing level that maximizes the value of the firm. The cost of capital to the firm is minimized at that same level.


Gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a given date. Investors, not companies, issue options. Buyers of call options bet that a stock will be worth more than the price set by the option (the strike price), plus the price they pay for the option itself. Buyers of put options bet that the stock's price will drop below the price set by the option. An option is part of a class of securities called derivatives, which means these securities derive their value from the worth of an underlying investment.

Option account

A brokerage account that is approved to hold option positions or trades.

Option-adjusted spread (OAS)

(1) The spread over an issuer's spot rate curve, developed as a measure of the yield spread that can be used to convert dollar differences between theoretical value and market prices. (2) The cost of the implied call embedded in an MBS, defined as additional basis-yield spread. When added to the base yield spread of an MBS without an operative call produces the option-adjusted spread.

Option agreement

A form that an options investor opening an option account fills out guarantees the investor will follow trading regulations and has the financial resources to settle possible losses.

Option cycle

The cycle of option expiration months. The most common cycles are: January, April, July, and October (JAJO); February, May, August, and November (FMAN); and March, June, September, and December (MJSD).

Option elasticity

The percentage increase in an option's value, given a 1 percentage point change in the value of the underlying security.

Option holder

A person who has an option that has not been exercised.

Option margin

The margin requirement for options described in Regulation T and in brokers' individual policies.

Option mutual fund

A mutual fund that buys and sells options for aggressive or conservative investment.

Option not to deliver

In the mortgage pipeline, an additional hedge placed in tandem with the forward or substitute sale.

Option premium

The option price.

Option price

Also called the option premium; the price the buyer of the options contract pays for the right to buy or sell a security at a specified price in the future.

Option seller

Also called the option writer; the party who grants a right to trade a security at a given price in the future.

Option series

A group of options on the same underlying security with the same exercise price and maturity month.

Option spread

The trading of options of the same class at the same time in order to profit from changes in the size of the spread between different options.

Option writer

See: Option seller

Optional dividend

A dividends that the shareholder can elect to receive either in cash or in stock.

Optional payment bond

A bond whose principal and/or interest may be paid in foreign or domestic currency at the discretion of the bondholder.

Options Clearing Corporation (OCC)

Applies to derivative products. Financial institution that is the actual issuer and guarantor of all listed option contracts.

Options contract

A contract that, in exchange for the option price, gives the option buyer the right, but not the obligation, to buy (or sell) a financial asset at the exercise price from (or to) the option seller within a specified time period, or on a specified date (expiration date).

Options contract multiple

A constant, set at $100, that when multiplied by the cash index value gives the dollar value of the stock index underlying an option. That is the dollar value of the underlying stock index = Cash index value x $100 (the options contract multiple).

Options on physicals

Interest rate options written on fixed income securities, as opposed to those written on interest rate futures contracts.

Or better

Used in the context of general equities. Indication on the order ticket of a limit order to buy or sell securities at a price better than the specified limit price if a better price can be obtained. Does not imply a not-held order, but rather puts more emphasis on executing at the limit if available.

Oral contract

A contract not recorded on paper or on computer, buy made vocally which is usually enforceable.


Instruction to a broker/dealer to buy, sell, deliver, or receive securities or commodities that commits the issuer of the "order" to the terms specified. See: indication, inquiry, bid wanted, offer wanted.

Order imbalance

Orders of one kind for a stock not offset by the opposite orders, which causes a wide spread between bid and offer prices.

Order Parameter

In a nonlinear dynamic system, a variable-acting link a macrovariable, or combination of variables-that summarizes the individual variables that can affect a system. In a controlled experiment, involving thermal convection, for example, temperature can be a control parameter; in a large complex system, temperature can be an order parameter, because it summarizes the effect of the sun, air pressure, and other atmospheric variables. See: Control parameter.

Order room

The brokerage firm department receives and processes all orders to buy and sell securities.

Order splitting

Breaking up orders so that they can be processed as small orders for execution by SOES. Prohibited by NASD.

Order ticket

A form detailing an order instruction that a customer gives an account executive.

Ordering Costs

Costs that occur when an order is placed regardless of the size of the order.

Ordinary income

The income derived from the regular operating activities of a firm or individual.

Ordinary interest

Interest based on a 360-day year instead of a 365-day year, resulting in what can be a significant difference.

Ordinary shares

Apples mainly to international equities. Shares of non-U.S. companies traded in their individual home markets. Usually cannot be delivered in the US See: ADR.

Organization chart

A chart showing the hierarchical interrelationships of positions within an organization.

Organization of Petroleum Exporting Countries (OPEC)

A cartel of oil-producing countries.

Organized exchange

A securities marketplace where purchasers and sellers regularly gather to trade securities according to the formal rules adopted by the exchange.

Original face value

The principal amount of a mortgage as of its issue date.

Original issue discount debt (OID debt)

Debt that is initially offered at a price below par.

Original Issue Discount securities (OIDS)

Bonds on which the coupon rate is set considerably below the yield to maturity at the time of issuance so that the bonds are issued at a discount from a par value.

Original margin

The margin needed to cover a specific new position. Related: Margin, security deposit (initial).

Original maturity

Maturity at issue. For example, a five-year note has an original maturity of five years; one year later it has a maturity of four years.


The making of mortgage loans.


A bank, savings and loan, or mortgage banker that initially made a mortgage loan that is part of a pool. Also, an investment bank that has worked with the issuer of a new securities offering from the beginning and is usually appointed manager of the underwriting syndicate.

Orphan stock

A stock that is ignored by research analysts and as a result may be trading at low price earnings ratios.

Oslo Stock Exchange

An exchange founded in 1819 and trading stocks, bonds, and stock options that is considered the options market of Norway.

OTC Bulletin Board

An electronic quotation listing of the bid and asked prices of OTC stocks that do not meet the requirements to be listed on the NASDAQ stock-listing system.

OTC margin stock

Shares traded over-the-counter that can be used as margin securities under Regulation T.

Other capital

In the balance of payments, other capital is a residual category that groups all the capital transactions that have not been included in direct investment, portfolio investment, and reserves categories. It is divided into long-term capital and short-term capital and, because of its residual status, can differ from country to country. Generally speaking, other long-term capital includes most nonnegotiable instruments of a year or more, like bank loans and mortgages. Other short-term capital includes financial assets that can be liquidated in less than a year such as currency, deposits, and bills.

Other current assets

Value of noncash assets, including prepaid expenses and accounts receivable, due within one year.

Other income

Income from activities that are not undertaken in the ordinary course of a firm's business.

Other long-term liabilities

Value of leases, future employee benefits, deferred taxes, and other obligations not requiring interest payments that must be paid over a period of more than one year.

Other sources

Amount of funds generated during the period from operations by sources other than depreciation or deferred taxes. Part of free cash flow calculation.


Used in the context of general equities. (1) No longer obligated to an order, as it has already been canceled: (2) advertised on Autex.

Out-of-favor industry or stock

An unpopular industry or stock that usually has a low price-earnings ratio.

Out of line

A stock price that is too high or too low in comparison with similar-quality stocks in the same industry, according to its price/earnings ratio.

Out-of-the-money option

A call option is out of the money if the strike price is greater than the market price of the underlying security. That is, you have the right to purchase a security at a price higher than the market price, which is not valuable. A put option is out of the money if the strike price is lower than the market price of the underlying security.

Out of the name

Used in the context of general equities. To no longer have an active trading profile/ position in the stock.

Out of print

Not open on the print. See: Clean.

Out there

Used in the context of general equities. Indication gained from their trading and inquiry activity that buyers and/or (more often) sellers are in the market and should be found to get their order. "Feels like IBM is 'out there'."

Out with

Used in the context of general equities. Showing of an inquiry to another broker by a customer ("he's out with....").


Payments on obligations in the form of cash, checks, the issuance of bonds or notes, or the maturing of interest coupons.

Outright quote

A quote in which all the digits of the bid and offer prices are quoted. See: Points quote.

Outright rate

Actual forward rate expressed in dollars per currency unit, or vice versa.

Outside director

A director of a company who is not an employee of that company and brings in outside experience to help make board decisions.

Outside market

Used in the context of general equities. Outside the inside market (above the lowest offering and below the highest bid).

Outside of you

Used for listed equity securities. Another order bidding for or offering stock at the same price that the trader has put on the floor himself, represented by another broker in the trading crowd. These orders may have different price limits (possible top or low on floor mentioned to floor broker but not announced in the crowd). See: Matching orders.


Purchasing a significant percentage of intermediate components from outside suppliers.


Used in the context of general equities. Stock held by shareholders (verses the company's treasury stock).

Outstanding share capital

Issued share capital less the par value of shares that are held as the company's treasury stock.

Outstanding shares

Shares that are currently owned by investors.

Over-the-counter (OTC)

A decentralized market (as opposed to an exchange market) where geographically dispersed dealers are linked by telephones and computer screens. The market is for securities not listed on a stock or bond exchange. The NASDAQ market is an OTC market for US stocks. Antithesis of listed.


Apples mainly to convertible securities. Difference between how much common stock one party must sell and the other wishes to buy for the same amount of convertible in a swap.

Overall FTC limitation

A limitation on the FTC equal to foreign source income times US tax on worldwide income divided by worldwide income.

Overall market price coverage

Total assets less intangibles divided by the total of the market value of the security issue and the book value of liabilities and issues having a prior claim. This is used to determine how much of the market value of a certain class of securities would be covered in liquidation.


Used in the context of general equities. Technically too high in price, and hence a technical correction is expected. See: Heavy. Antithesis of oversold.

Overbought-oversold indicator

An indicator that attempts to define when prices have moved too far and too fast in either direction and thus are vulnerable to reaction.


Said to occur when a firm cannot service its debt even though its debt/equity ratio is not excessive.


Provision of instant credit by a lending institution.

Overfunded pension plan

A pension plan that has a positive surplus (i.e., assets exceed liabilities).


Used in the context of general equities. Sizable block of securities or commodities contracts that, if released on the market, would put downward pressure on prices; prohibits buying activity that would otherwise translate into upward price movement. Examples include shares held in a dealer's inventory, a large institutional holding, a secondary distribution still in registration, and a large commodity position about to be liquidated.

Overhanging Bond

A convertible bond issue that investors do not convert into common stock because the stock has not appreciated in value.


The expenses of a business that are not attributable directly) the production or sale of goods.


An economy that is growing very quickly, with the risk of high inflation.


An excess of issued shares over authorized shares.

Overlap the market

Used in the context of general equities. Create a crossed market by expressing a willingness to sell on the bid side of the market and buy on the offer side.

Overlapping debt

The portion of debt of political subdivisions or neighboring special districts that a municipality is responsible for.

Overlay strategy

A strategy of using futures for asset allocation by pension sponsors to avoid disrupting the activities of money managers.

Overnight delivery risk

A risk brought about because differences in time zones between settlement centers require that payment or delivery on one side of a transaction be made without knowing until the next day whether the funds have been received in an account on the other side. Particularly apparent when delivery takes place in Europe for payment in dollars in New York.

Overnight position

A broker-dealer's position in a security at the end of a trading day.

Overnight repo

A repurchase agreement with a term of one day.


To appreciate at a rate faster than appreciation of the overall market.


Used in the context of general equities. Creating artificial volume in astock through activity not generated by normal/natural buyers and sellers in the market.

Overreaction hypothesis

The supposition that investors overreact to unanticipated news, resulting in exaggerated movements in stock prices followed by corrections.


The tendency of a pool of MBS to reflect an especially high rate of prepayments the first time it crosses the threshold for refinancing, specially if two or more years have passed since the date of issue without the weighted average coupon of the pool crossing the refinancing threshold.


Used in the context of general equities. Technically too low in price, and hence a technical correction is expected. Antithesis of overbought.

Oversubscribed issue

Investors are not able to buy all the shares or bonds they want, so underwriters must allocate the shares or bonds among investors. This occurs when a new issue is underpriced or in great demand because of growth prospects.

Oversubscription privilege

In a rights issue, arrangement by which shareholders are given the right to apply for any shares that are not taken up.


Excessive broker trading in a discretionary account. Underwriters persuade brokerage clients to purchase some part of a new issue in return for the purchase by the underwriter of other securities from the clients at a premium. This premium is offset by the underwriting spread.


A stock price that is seen as too high according to the company's price-earnings ratio, expected earnings, or financial condition.


Deducting and paying too much tax that may be refunded to the taxpayer or applied against the next period's obligation.


A speculative options trategy that involves selling call or put options on stocks that are believed to be overpriced or underpriced; the options are expected not to be exercised.

Own foreign offices

US reporting institutions' parent organizations, branches, and/or majority owned subsidiaries located outside the United States.

Owner's equity

Paid-in capital plus donated capital plus retained earnings less liabilities.

Ownership-specific advantages

Property rights or intangible assets, including patents, trademarks, organizational and marketing expertise, production technology, and management and general organizational abilities, that form the basis for a company's advantage over other firms.

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Brokerage Products and Services offered by StockCross Financial Services, Inc. - Member FINRA and SIPC.

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. The prospectus and, if available, the summary prospectus contain this and other information about the investment company.  To obtain a prospectus contact StockCross at 800.993.2015. Read the prospectus carefully before investing.

Options involve risk and are not suitable for all investors. Detailed information on our policies and the risks associated with options can be found in the StockCross Options Application and Agreement, Customer Agreement, and by downloading the Characteristics and Risks of Standardized Options, and 2012 Supplements from The Options Clearing Corporation, or by requesting a copy from StockCross free of charge. 

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. The Margin Disclosure Statement and Agreement (PDF) is available for download, or by requesting a copy from StockCross free of charge. 

Testimonials may not be representative of the experience of other clients and are no guarantee of future performance or success.

Copyright StockCross Financial Services, Inc. 2018.