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Financial Terms | |
CBOE |
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Definition of CBOECBOEChicago Board Options Exchange. A securities exchange created in the early 1970s for the public
Related Terms:Abandonment optionThe option of terminating an investment earlier than originally planned. American optionAn option that may be exercised at any time up to and including the expiration date. American optionAn option that can be exercised any time until its American Stock Exchange (AMEX)The second-largest stock exchange in the United States. It trades American-style optionAn option contract that can be exercised at any time between the date of purchase and Arbitrage-free option-pricing modelsYield curve option-pricing models. Asian optionoption based on the average price of the asset during the life of the option. ![]() Asset-Backed SecuritiesBond or note secured by assets of company. Bargain-purchase-price optionGives the lessee the option to purchase the asset at a price below fair market Barrier optionscontracts with trigger points that, when crossed, automatically generate buying or selling of Basket optionsPackages that involve the exchange of more than two currencies against a base currency at Big BoardA nickname for the New York Stock exchange. Also known as The exchange. More than 2,000 Bill of exchangeGeneral term for a document demanding payment. Binomial option pricing modelAn option pricing model in which the underlying asset can take on only two Black-Scholes option-pricing modelA model for pricing call options based on arbitrage arguments that uses Book-entry securitiesThe 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 includecash or nontaxable benefits Call an optionTo exercise a call option. Call optionAn option contract that gives its holder the right (but not the obligation) to purchase a specified Call OptionA contract that gives the holder the right to buy an asset for a call optionRight to buy an asset at a specified exercise price on or before the exercise date. Cash settlement contractsFutures 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 Compound optionoption on an option. Conditional sales contractsSimilar to equipment trust certificates except that the lender is either the Convertible exchangeable preferred stockConvertible 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 strategiesStrategies that involve a position in an option as well as a position in the Currency optionAn option to buy or sell a foreign currency. Day tradingRefers to establishing and liquidating the same position or positions within one day's trading. Dealer optionsOver-the-counter options, such as those offered by government and mortgage-backed Debt securitiesIOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and Delivery optionsThe options available to the seller of an interest rate futures contract, including the quality Discount securitiesNon-interest-bearing money market instruments that are issued at a discount and Doubling optionA sinking fund provision that may allow repurchase of twice the required number of bonds Down-and-in optionBarrier option that comes into existence if asset price hits a barrier. Down-and-out optionBarrier option that expires if asset price hits a barrier. Effective Exchange RateThe weighted average of several exchange rates, where the weights are determined by the extent of our trade done with each country. Elasticity of an optionPercentage change in the value of an option given a 1% change in the value of the Embedded optionAn option that is part of the structure of a bond that provides either the bondholder or Equation of ExchangeThe quantity theory equation Mv = PQ. Equity optionssecurities that give the holder the right to buy or sell a specified number of shares of stock, at Escalating Price OptionA nonqualified stock option that uses a sliding scale for European optionoption that may be exercised only at the expiration date. Related: american option. European optionAn option that can be exercised only on its expiration date. European-style optionAn option contract that can only be exercised on the expiration date. ExchangeThe marketplace in which shares, options and futures on stocks, bonds, commodities and indices Exchange controlsGovernmental restrictions on the purchase of foreign currencies by domestic citizens or Exchange of assetsAcquisition of another company by purchase of its assets in exchange for cash or stock. Exchange of stockAcquisition of another company by purchase of its stock in exchange for cash or shares. Exchange offerAn offer by the firm to give one security, such as a bond or preferred stock, in exchange for Exchange rateThe price of one country's currency expressed in another country's currency. exchange rateAmount 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, NominalThe price of one currency in terms of another, in this book defined as number of units of foreign currency per dollar. Exchange Rate, RealThe nominal exchange rate corrected for price level differences. Exchange rate riskAlso called currency risk, the risk of an investment's value changing because of currency Exchange riskThe variability of a firm's value that results from unexpected exchange rate changes or the Exchangeable SecuritySecurity that grants the security holder the right to exchange the security for the Exempt securitiesInstruments exempt from the registration requirements of the securities Act of 1933 or the Exercising the optionThe act buying or selling the underlying asset via the option contract. Exit OptionsA variety of options available to an investor to recover their invested capital and the return on their investment. expectations theory of exchange ratesTheory that expected spot exchange rate equals the forward rate. Federal agency securitiessecurities issued by corporations and agencies created by the U.S. government, Federal Reserve BoardBoard of Governors of the Federal Reserve System. Fixed-exchange rateA country's decision to tie the value of its currency to another country's currency, gold Fixed Exchange RateAn exchange rate held constant by a government promise to buy or sell dollars at the fixed rate on the foreign exchange market. Flexible Exchange RateAn exchange rate whose value is determined by the forces of supply and demand on the foreign exchange market. Floating exchange rateA country's decision to allow its currency value to freely change. The currency is not Floating Exchange RateSee flexible exchange rate. Foreign currency optionAn option that conveys the right to buy or sell a specified amount of foreign Foreign exchangeCurrency from another country. Foreign ExchangeThe currency of a foreign country. Foreign exchange controlsVarious forms of controls imposed by a government on the purchase/sale of Foreign exchange dealerA firm or individual that buys foreign exchange from one party and then sells it to Foreign Exchange MarketA worldwide market in which one country's currency is bought or sold in exchange for another country's currency. Foreign Exchange ReservesA fund containing the central bank's holdings of foreign currency or claims thereon. Foreign exchange riskThe risk that a long or short position in a foreign currency might have to be closed out Foreign exchange swapAn agreement to exchange stipulated amounts of one currency for another currency Forward Exchange MarketA 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 rateexchange rate fixed today for exchanging currency at some future date. forward rate of exchangeexchange rate for a forward transaction. Free on boardImplies that distributive services like transport and handling performed on goods up to the Free-on-Board (FOB) DestinationA shipping arrangement agreed to between buyer and Free-on-Board (FOB) Shipping PointA shipping arrangement agreed to between buyer and Futures optionAn option on a futures contract. Related: options on physicals. Garmen-Kohlhagen option pricing modelA widely used model for pricing foreign currency options. Go publicThe process of offering a company’s shares for sale to the public through an Gold exchange standardA system of fixing exchange rates adopted in the Bretton Woods agreement. It Government securitiesNegotiable U.S. Treasury securities. Greenshoe optionoption that allows the underwriter for a new issue to buy and resell additional shares. Heavenly Parachute Stock OptionA nonqualified stock option that allows a deceased option holder’s estate up to three years in which to exercise his or her Historical exchange rateAn accounting term that refers to the exchange rate in effect when an asset or Incentive Stock OptionAn 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 Index optionA call or put option based on a stock market index. Initial Public OfferingA 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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