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Offering Memorandum – like prospectus, a legal document that describes the securities being sold, and the plans of the issuer. An ‘offering memorandum’, or offering circular, is the term more commonly used for private placements, and ‘prospectus’ usually refers to a document filed with the SEC.
Odd Lot – a block of stock consisting of less than 100 shares. When odd lots trade, a premium is usually tacked on by the specialist or market maker. These receive the least favorable price and trade last.
Opening Purchase – a transaction in which the purchaser’s intention is to create or increase a long position in a given series of options.
Opening Sale – a transaction in which the seller’s intention is to create or increase a short position in a given series of options.
Open Interest – the net total amount of outstanding contracts in a future or option.
Open Market Operations – the purchase and sale of government securities by the Federal Reserve in order to control levels of bank reserves.
Option – a contract that gives the owner the right, but not the obligation, to buy or sell the underlying security, say IBM stock at a specific price within a specific time limit. A call option gives the owner the right to buy the underlying security, and a put option gives the owner the right to sell the underlying security. Investors, not companies, issue options. For example, if the owner of the call decides to use the call to purchase IBM stock, the stock will be supplied by another investor, who has originated, or written the IBM call. The stock does not come from the IBM company, which has nothing to do with the transaction.
In general, investors who purchase call options bet the underlying security will be worth more than the price set by the option (the strike price), plus the price they paid for the option itself. Buyers of put options bet the underlying security’s price will go down below the price set by the option. Note that, unlike in futures contracts, the rights and obligations of option buyers and option sellers are not symmetrical. The buyer of the option acquires rights and the seller of the option takes on obligations. The buyer of the call option pays a price to the seller for the rights acquired. This makes considerable sense, because the option seller would be foolish to take on obligations without any compensation. The price paid for the option is often called the value of the option or the option premium.
Original Maturity – the time between when a bond is issued and when the bond is scheduled for maturity.
Other Current Assets – the value of non-cash assets, including prepaid expenses and accounts receivable, due within 1 year.
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 1 year.
Out-of-the-money – a call whose strike price is above the current market price of the underlying security. A put whose strike price is below the current price of the underlying security.
Overbought\Oversold Indicator – in technical analysis: an indicator that attempts to define when prices have moved too far and too fast in either direction and thus are vulnerable to reaction.
Over the Counter (OTC) Market – a network of dealers who trade stocks without a standard formalized exchange. The NASDAQ market is the most well know and largest part of the OTC market.