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Definition of CBOE
Chicago Board Options Exchange. A securities exchange created in the early 1970s for the public
The option of terminating an investment earlier than originally planned.
An option that may be exercised at any time up to and including the expiration date.
An option that can be exercised any time until its
The second-largest stock exchange in the United States. It trades
An option contract that can be exercised at any time between the date of purchase and
Yield curve option-pricing models.
option based on the average price of the asset during the life of the option.
Bond or note secured by assets of company.
Gives the lessee the option to purchase the asset at a price below fair market
contracts with trigger points that, when crossed, automatically generate buying or selling of
Packages that involve the exchange of more than two currencies against a base currency at
A nickname for the New York Stock exchange. Also known as The exchange. More than 2,000
General term for a document demanding payment.
An option pricing model in which the underlying asset can take on only two
A model for pricing call options based on arbitrage arguments that uses
The Treasury and federal agencies are moving to a book-entry system in which securities are not represented by engraved pieces of paper but are maintained in computerized records at the
cafeteria plan a “menu” of fringe benefit options that include
cash or nontaxable benefits
Call an option
To exercise a call option.
An option contract that gives its holder the right (but not the obligation) to purchase a specified
A contract that gives the holder the right to buy an asset for a
Right to buy an asset at a specified exercise price on or before the exercise date.
Cash settlement contracts
Futures contracts, such as stock index futures, that settle for cash, not involving
Chicago Mercantile Exchange (CME)
A not-for-profit corporation owned by its members. Its primary
Commodities Exchange Center (CEC)
The location of five New York futures exchanges: Commodity
option on an option.
Conditional sales contracts
Similar to equipment trust certificates except that the lender is either the
Convertible exchangeable preferred stock
Convertible preferred stock that may be exchanged, at the
Cost Accounting Standards Board (CASB)
a body established by Congress in 1970 to promulgate cost accounting
Covered or hedge option strategies
Strategies that involve a position in an option as well as a position in the
An option to buy or sell a foreign currency.
Refers to establishing and liquidating the same position or positions within one day's trading.
Over-the-counter options, such as those offered by government and mortgage-backed
IOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and
The options available to the seller of an interest rate futures contract, including the quality
Non-interest-bearing money market instruments that are issued at a discount and
A sinking fund provision that may allow repurchase of twice the required number of bonds
Barrier option that comes into existence if asset price hits a barrier.
Barrier option that expires if asset price hits a barrier.
Effective Exchange Rate
The weighted average of several exchange rates, where the weights are determined by the extent of our trade done with each country.
Elasticity of an option
Percentage change in the value of an option given a 1% change in the value of the
An option that is part of the structure of a bond that provides either the bondholder or
Equation of Exchange
The quantity theory equation Mv = PQ.
securities that give the holder the right to buy or sell a specified number of shares of stock, at
Escalating Price Option
A nonqualified stock option that uses a sliding scale for
option that may be exercised only at the expiration date. Related: american option.
An option that can be exercised only on its expiration date.
An option contract that can only be exercised on the expiration date.
The marketplace in which shares, options and futures on stocks, bonds, commodities and indices
Governmental restrictions on the purchase of foreign currencies by domestic citizens or
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Exchange of stock
Acquisition of another company by purchase of its stock in exchange for cash or shares.
An offer by the firm to give one security, such as a bond or preferred stock, in exchange for
The price of one country's currency expressed in another country's currency.
Amount of one currency needed to purchase one unit of another.
Exchange Rate Mechanism (ERM)
The methodology by which members of the EMS maintain their
Exchange Rate, Nominal
The price of one currency in terms of another, in this book defined as number of units of foreign currency per dollar.
Exchange Rate, Real
The nominal exchange rate corrected for price level differences.
Exchange rate risk
Also called currency risk, the risk of an investment's value changing because of currency
The variability of a firm's value that results from unexpected exchange rate changes or the
Security that grants the security holder the right to exchange the security for the
Instruments exempt from the registration requirements of the securities Act of 1933 or the
Exercising the option
The act buying or selling the underlying asset via the option contract.
A variety of options available to an investor to recover their invested capital and the return on their investment.
expectations theory of exchange rates
Theory that expected spot exchange rate equals the forward rate.
Federal agency securities
securities issued by corporations and agencies created by the U.S. government,
Federal Reserve Board
Board of Governors of the Federal Reserve System.
A country's decision to tie the value of its currency to another country's currency, gold
Fixed Exchange Rate
An exchange rate held constant by a government promise to buy or sell dollars at the fixed rate on the foreign exchange market.
Flexible Exchange Rate
An exchange rate whose value is determined by the forces of supply and demand on the foreign exchange market.
Floating exchange rate
A country's decision to allow its currency value to freely change. The currency is not
Floating Exchange Rate
See flexible exchange rate.
Foreign currency option
An option that conveys the right to buy or sell a specified amount of foreign
Currency from another country.
The currency of a foreign country.
Foreign exchange controls
Various forms of controls imposed by a government on the purchase/sale of
Foreign exchange dealer
A firm or individual that buys foreign exchange from one party and then sells it to
Foreign Exchange Market
A worldwide market in which one country's currency is bought or sold in exchange for another country's currency.
Foreign Exchange Reserves
A fund containing the central bank's holdings of foreign currency or claims thereon.
Foreign exchange risk
The risk that a long or short position in a foreign currency might have to be closed out
Foreign exchange swap
An agreement to exchange stipulated amounts of one currency for another currency
Forward Exchange Market
A market in which foreign exchange can be bought or sold for delivery (and payment) at some specified future date but at a price agreed upon now.
Forward exchange rate
exchange rate fixed today for exchanging currency at some future date.
forward rate of exchange
exchange rate for a forward transaction.
Free on board
Implies that distributive services like transport and handling performed on goods up to the
Free-on-Board (FOB) Destination
A shipping arrangement agreed to between buyer and
Free-on-Board (FOB) Shipping Point
A shipping arrangement agreed to between buyer and
An option on a futures contract. Related: options on physicals.
Garmen-Kohlhagen option pricing model
A widely used model for pricing foreign currency options.
The process of offering a company’s shares for sale to the public through an
Gold exchange standard
A system of fixing exchange rates adopted in the Bretton Woods agreement. It
Negotiable U.S. Treasury securities.
option that allows the underwriter for a new issue to buy and resell additional shares.
Heavenly Parachute Stock Option
A nonqualified stock option that allows a deceased option holder’s estate up to three years in which to exercise his or her
Historical exchange rate
An accounting term that refers to the exchange rate in effect when an asset or
Incentive Stock Option
An option to purchase company stock that is not taxable
Index and Option Market (IOM)
A division of the CME established in 1982 for trading stock index
A call or put option based on a stock market index.
Initial Public Offering
A firms first offering of its shares to the investment public, after registration requirements of the various securities regulators have been met.
Initial public offering (IPO)
A company's first sale of stock to the public. securities offered in an IPO are
initial public offering (IPO)
First offering of stock to the general public.
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