O - Return to Index

OAS - See Option Adjusted Spread Model.

OASIS® - Is the place where Finance and Technology converge. It can refer to Online Applications Systems and Investment Services. Overlay Asset Strategies and Investment Services and software for online and traditional investment activities.

OAT or OATs (Obligations Assimilables de Tresor) - Are key debt instruments issued by the French Government. They are issued in both fixed and floating rate securities and have maturities ranging from 4 to 30 years. The three basic maturities for the fixed rate bonds are 10, 15, and 30 years. The two basic maturities for the floating rate securities are 4 and 12 years. The 4 year floating security or TRB (Taux Revisable des Bons de Tresor) are indexed on the three month treasury bill. The 12 year TME (Taux Moyen des Emprunts d'Etat) floater is based on an average rate of OATs.

OATS - Refers to Order Audit Trail System which increases the ability to monitor the flow and execution of orders in Nasdaq securities.

OBO - See Order Book Official.

OBV - See On-Balance-Volume.

OCC - See Options Clearing Corporation.

OCO - See One Cancels the Other.

Offer - Is the price asked by a seller.

Offering Circular - Is comparable to a prospectus.

Off-the-Run - Are previously issued treasury securities which are not generally used for benchmark or pricing purposes. They tend to be somewhat less active and liquid than the most recent issuances, particularly in respect for time remaining to maturity.

OID - See Original Issue Discount.

OIS - Refers to Overnight Interest Spreads or Overnight Index Spreads.

Omega - Refers to the last, end or final point, step, process, iteration, entity or so forth. It is related to 9999.

Omnibus Account - Is an account carried on the books by one futures commission merchant (FCM) for another FCM. Here, the transactions of multiple accounts are combined and viewed as one for bookkeeping purposes. This operation does not require the disclosure or identification of the underlying account owners.

On-Balance-Volume - Is an analytical technique which creates a time series to determine whether a stock or futures contract is subject to Accumulation or Distribution. The basic rule is straightforward. If the instrument was up on the day, then the entire volume is assigned a plus sign and is positively interpreted. If the instrument was down on the day, then the entire volume is assigned a minus sign and is negatively interpreted. These pluses and minuses are summed on a cumulative sequential basis. The analysis assumes that if the instrument is trading at the same price over time and the On-Balance-Volume (OBV) series is increasing, then the instrument is being accumulated and is poised for an upside move. Conversely, if the instrument is trading at the same price over time, and the OBV series is decreasing, then the instrument is being distributed and is poised for a downside move. There are many variations of this theme. Some use each transaction while others use only large or block trades.

On-Line Trading - Is the investment activity which takes place over the internet without the physical inclusion of a broker. Orders are entered via terminals and reports are returned to the investor in a similar fashion. Confirmations remain a part of the investment or trading process.

On-the-Runs - Are recently issued treasury securities. These are often used as the benchmarks for indices, baskets and pricing purposes.

One Cancels the Other - Is an order whereby one set of instructions replaces a previous set of instructions. In the process, the previous set of instructions is to be canceled.

One-Tail Test - Is a statistical test which focuses on only one side of a probability distribution. Often this side is the one related to extraordinary losses and not extraordinary gains.

Open End Investment Company - Is a mutual fund that offers and redeems its shares on a daily basis. These funds can be no-load funds which do not charge fees for the initial investment or redemption. These funds can be load funds which do charge fees for investment or redemption according to a published schedule. Compare to Closed End Fund.

Open Interest - Is the amount of open contracts for the futures and options markets. This amount can fluctuate throughout the day and day-by-day. It represents the quantity of contracts which are subject to offset by either liquidation of long positions, covering of short positions or making and taking delivery. Sometimes referred to as commitment or open commitment.

Open Order - Is an order that is or remains live or in effect until it is filled or canceled.

Open Outcry - Is the announcement of bids and offers on the floor of an exchange. This compares to Electronic or Computerized Trading and negotiated transactions.

Opening Transaction - Is the initial purchase or sale of an option contract position. This transaction creates an open position.

Option - Is a derivative contract. There are two primary types of options. See Put and Call. An option is considered as a Wasting Asset because it has a stipulated life to expiration and may expire worthless. Hence, the premium would be wasted.

Option Adjusted Duration - Refers to the measurement of duration which is targeted for the stated first option (put or call) feature. This reduces the duration statistic from its ordinary measurement. For embedded option securities such as mortgages or other prepayable loans, an estimate is calculated for the expected time of the first option exercise.

Option Adjusted Spread Model - Is an approach whereby securities are evaluated by considering the implied option characteristics. Two key variables are interest rate and prepayment rate behavior. These models incorporate the average spread of the Mortgage Backed Security or CMO tranche to the treasury yield curve. The usual reason for differences in evaluations is due to assumptions and modeling efforts for prepayments.

Option Models - Are evaluation tools to determine the price, the premium, or the volatility for a put, call, or complex position or strategy. Sometimes, the list for option models includes: convertible securities, mortgage and asset backed securities, and warrants. Option models may be categorized as credit, currency, equity, index, futures, and physical or cash oriented.

The basic factors for an option model are: the underlying market price, the strike or exercise price, the interest rate for discounting purposes, the volatility, and the time to expiration. Some models require expected dividends, coupons and foreign exchange considerations.

Some of these models are: Binomial, Black, Black Scholes, Cox, Ingersoll, and Ross (CIR), Gastineau-Madansky, Heath, Jarrow, and Morton (HJM), Ho and Lee, Hull and White, Jamshidian, Rendleman and Bartter, Vasicek, and Whaley. Often these models have modifications. Usually, the modifications are at the practices level in order to expedite calculations.

Option Trading Strategies - Can be market directional, volatility directional, market neutral, volatility neutral, time value capture, time value payment, and numerous variants of the aforementioned.

The basic building blocks are puts and calls. These puts and calls can be American Style or European Style. They can be ordinary - plain vanilla - or exotic. Among the latter are: Asian, Binary, Lookback, Knockin and Knockout. There are many other structures as well.

Some specific strategies are: Backspreads, Bear, Box, Bull, Butterflies, Condors, Conversion, Credit, Debit, Diagonal, Fence, Guts, Horizontal, Purchased Call, Purchased Put, Ratio, Reverse Conversion, Sold Call, Sold Put, Straddles, Strangles, Synthetic Long Call, Synthetic Long Futures or Underlying, Synthetic Long Put, Synthetic Long Straddle, Synthetic Short Call, Synthetic Short Futures or Underlying, Synthetic Short Put, Synthetic Short Straddle, Vertical, and Volatility.

There are also compound and nested options or strategies. Among these are: call-on-a-call, a call-on-a-put, a put-on-a-put, and a put-on-a-call.

Option Type - is the Put or Call designation.

Options Clearing Corporation - Is the entity through which various securities exchanges clear options transactions. This clearing activity consists of serving as the buyer to all sellers and the seller to all buyers in terms of guaranteeing contractual performance.

OR - Refers to Operations Research.

Order - Is a set of instructions with the intent of executing a transaction. The following is a list of order types. See: All or None (AON) or All or Nothing, Buy on Close, Buy on Opening, Contingent, Discretionary, Non-Discretionary, Do Not Reduce (DNR) , Exchange for Physicals (EFP) , Fill or Kill (FOK) , Good Till Canceled (GTC) , Immediate or Cancel (IOC) , Limit (LMT) , Market, Market if Touched (MIT), Market on Close (MOC) , Market on Opening, Not Held, One Cancels the Other (OCO), Open Order, Sell on Close, Sell on Opening, Stop (STP), Stop Limit (STP LMT), and various combinations as with spreads, options, and other instruments.

Order Book Official - Is the book of public orders held for execution by the Chicago Board Options Exchange (CBOE).

Order Support System - Is the Chicago Board Options Exchange's (CBOE) automated order system.

Orderly - Refers to trading or markets which behave in a smooth, rational manner.

Ordinary Dividend - Is a payment declared or paid by a corporation. It reflects the recently established or declared amount. It is not expected to be a one-time or special declaration.

Original Issue Discount - Is a bond which is sold at a discount to par. It can also be a zero coupon bond. This designation refers to either corporate or treasury bonds. The accretion on these bonds can be subject to taxation even though there is no periodic cash flow.

Original Margin - See Initial Margin.

Origination Fee - Is the cost for initiating a mortgage. Some use the term more broadly. Here, it would refer to the process of considering a mortgage application.

OSS - See Order Support System.

OT - Refers to off topic.

OTC - See Over-the-Counter.

OTOH - Refers to on-the-other-hand.

OTS - Is the Office of Thrift Supervision.

Out - Is the designation that an order has been canceled by the customer prior to its completion or partial execution.

Outcry - Is the process whereby floor brokers publicly announce to their peers the price and quantities sought for purchase or sale.

Outliers - Are probabilistically remote events. Often viewed as statistically independent as well. Various techniques can test if actual data differ in a statistically significant manner from the benchmark or normal distribution. Also, independence assumptions can be tested to see if they are accurate representations of the underlying processes.

Over the Counter (OTC) - Is the marketplace where securities are not listed on an exchange. Many derivatives, fixed income securities, and very small capitalization stocks belong in this group. Another notable difference between Over the Counter instruments and listed securities is that OTC instruments tend to be customized whereas listed instruments are standardized.

Overnight Repos - Are Repurchase Agreements which are negotiated or renegotiated (rolled over) for 1 day periods. They are a form of borrowing/lending.

Overwrites - Is the option activity whereby a party grants or sells more than one option relative to the underlying instrument. In the event of sudden adverse price movement, in terms of the option position, the delta equivalency can be in excess of 1 to 1.

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Copyright © 1998-2019 Barkley International, Inc. All Rights Reserved. - Page created Tuesday, May 19, 1998 by Oasis Management®. Last Modified on Sunday, June 16, 2019.