|Nonqualified Stock Option
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Definition of Nonqualified Stock Option
Nonqualified Stock Option
A stock option not given any favorable tax treatment
A nonqualified stock option that uses a sliding scale for
A nonqualified stock option that allows a deceased option holderâ€™s estate up to three years in which to exercise his or her
A nonqualified stock option whose option price is set substantially
The option of terminating an investment earlier than originally planned.
A merger or consolidation in which an acquirer purchases the acquiree's stock.
Publicly traded issues that may be collateralized by mortgages and MBSs.
An option that may be exercised at any time up to and including the expiration date.
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.
Floating rate preferred stock, the dividend on which is adjusted every
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
Beta equation (Stocks)
The beta of a stock is determined as follows:
Binomial option pricing model
An option pricing model in which the underlying asset can take on only two
Black-Scholes option-pricing model
A model for pricing call options based on arbitrage arguments that uses
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
These are securities that represent equity ownership in a company. Common shares let an
Common stock/other equity
Value of outstanding common shares at par, plus accumulated retained
Common stock equivalent
A convertible security that is traded like an equity issue because the optioned
Common stock market
The market for trading equities, not including preferred stock.
Common stock ratios
Ratios that are designed to measure the relative claims of stockholders to earnings
option on an option.
Conflict between bondholders and stockholders
These two groups may have interests in a corporation that
Convertible exchangeable preferred stock
Convertible preferred stock that may be exchanged, at the
Convertible preferred stock
Preferred stock that can be converted into common stock at the option of the holder.
Covered or hedge option strategies
Strategies that involve a position in an option as well as a position in the
Cumulative preferred stock
Preferred stock whose dividends accrue, should the issuer not make timely
An option to buy or sell a foreign currency.
Over-the-counter options, such as those offered by government and mortgage-backed
The options available to the seller of an interest rate futures contract, including the quality
Direct stock-purchase programs
The purchase by investors of securities directly from the issuer.
Dividend yield (Stocks)
Indicated yield represents annual dividends divided by current stock price.
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.
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
Employee stock fund
A firm-sponsored program that enables employees to purchase shares of the firm's
Employee stock ownership plan (ESOP)
A company contributes to a trust fund that buys stock on behalf of
Securities that give the holder the right to buy or sell a specified number of shares of stock, at
option that may be exercised only at the expiration date. Related: american option.
An option contract that can only be exercised on the expiration date.
Exchange of stock
Acquisition of another company by purchase of its stock in exchange for cash or shares.
Exercising the option
The act buying or selling the underlying asset via the option contract.
Foreign currency option
An option that conveys the right to buy or sell a specified amount of foreign
An option on a futures contract. Related: options on physicals.
Garmen-Kohlhagen option pricing model
A widely used model for pricing foreign currency options.
option that allows the underwriter for a new issue to buy and resell additional shares.
Common stock of a company that has an opportunity to invest money and earn more than the
Common stock with a high dividend yield and few profitable investment opportunities.
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.
Intrinsic value of an option
The amount by which an option is in-the-money. An option which is not in-themoney
Irrational call option
The implied call imbedded in the MBS. Identified as irrational because the call is
Privately placed common stock, so-called because the SEC requires a letter from the purchaser
Liquid yield option note (LYON)
Zero-coupon, callable, putable, convertible bond invented by Merrill
stocks that are traded on an exchange.
An option that allows the buyer to choose as the option strike price any price of the
Liquid yield option note (LYON)
Zero-coupon, callable, putable, convertible bond invented by Merrill Lynch & Co.
stocks that are traded on an exchange.
Margin account (Stocks)
A leverageable account in which stocks can be purchased for a combination of
Margin requirement (Options)
The amount of cash an uncovered (naked) option writer is required to
Multi-option financing facility
A syndicated confirmed credit line with attached options.
Naked option strategies
An unhedged strategy making exclusive use of one of the following: Long call
New York Stock Exchange (NYSE)
Also known as the Big Board or The Exhange. More than 2,00 common
Non-cumulative preferred stock
Preferred stock whose holders must forgo dividend payments when the
Gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a
The percentage increase in an option's value given a 1% change in the value of the
Option not to deliver
In the mortgage pipeline, an additional hedge placed in tandem with the forward or
The option price.
Also called the option premium, the price paid by the buyer of the options contract for the right
Also called the option writer , the party who grants a right to trade a security at a given price in
Option-adjusted spread (OAS)
1) The spread over an issuer's spot rate curve, developed as a measure of
A contract that, in exchange for the option price, gives the option buyer the right, but not
Options contract multiple
A constant, set at $100, which when multiplied by the cash index value gives the
Options on physicals
Interest rate options written on fixed-income securities, as opposed to those written on
A call option is out-of-the-money if the strike price is greater than the market price
Path dependent option
An option whose value depends on the sequence of prices of the underlying asset
Philadelphia Stock Exchange (PHLX)
A securities exchange where American and European foreign
The option of postponing a project without eliminating the possibility of undertaking it.
Preferred equity redemption stock (PERC)
Preferred stock that converts automatically into equity at a
A security that ranks junior to preferred stock but senior to common stock in the right to
A security that shows ownership in a corporation and gives the holder a claim, prior to the
Preferred stock agreement
A contract for preferred stock.
Put an option
To exercise a put option.
This security gives investors the right to sell (or put) fixed number of shares at a fixed price within
Also called the swap option, the seller's choice of deliverables in Treasury Bond and Treasury
Repurchase of stock
Device to pay cash to firm's shareholders that provides more preferable tax treatment
Reverse stock split
A proportionate decrease in the number of shares, but not the value of shares of stock
An option on an option. The buyer generally executes the split fee with first an initial fee,
Ownership of a corporation which is represented by shares which represent a piece of the corporation's
Payment of a corporate dividend in the form of stock rather than cash. The stock dividend
Formal organizations, approved and regulated by the Securities and Exchange Commission
A firm's repurchase of outstanding shares of its common stock.
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