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Open position

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Definition of Open position

Open Position Image 1

Open position

A net long or short position whose value will change with a change in prices.



Related Terms:

Average Propensity to Consume

Ratio of consumption to disposable income. See also marginal propensity to consume.


Average Propensity to Save

Ratio of saving to disposable income. See also marginal propensity to save.


Buy on opening

To buy at the beginning of a trading session at a price within the opening range.


Changes in Financial Position

Sources of funds internally provided from operations that alter a company's
cash flow position: depreciation, deferred taxes, other sources, and capital expenditures.


Clear a position

To eliminate a long or short position, leaving no ownership or obligation.



Composition

Voluntary arrangement to restructure a firm's debt, under which payment is reduced.


Deemed Disposition

Under certain circumstances, taxation rules assume that a transfer of property has occurred, even though there has not been an actual purchase or sale. This could happen upon death or transfer of ownership.


Open Position Image 2

Fallacy of Composition

The incorrect conclusion that something that is true for an individual is necessarily true for the economy as a whole.


Federal Open Market Committee (FOMC)

Fed committee that makes decisions about open-market operations.


Financial Position

Status of a firm's assets, liabilities, and equity accounts as of a certain time, as shown in its financial statement.


Limitation on asset dispositions

A bond covenant that restricts in some way a firm's ability to sell major assets.


Long position

An options position where a person has executed one or more option trades where the net
result is that they are an "owner" or holder of options (i. e. the number of contracts bought exceeds the
number of contracts sold).
Occurs when an individual owns securities. An owner of 1,000 shares of stock is said to be "Long the stock."
Related: Short position


Long position

Outright ownership of a security or financial instrument. The
owner expects the price to rise in order to make a profit on some future sale.


long position

Purchase of an investment.


Marginal Propensity to Consume

Fraction of an increase in disposable income that is spent on consumption.


Marginal Propensity to Import

Fraction of an increase in disposable income that is spent on imports.


Open Position Image 3

Marginal Propensity to Save

Fraction of an increase in disposable income that is saved.


MM dividend-irrelevance proposition

Theory that under ideal conditions, the value of the firm is unaffected by dividend policy.



MM's proposition I (debt irrelevance proposition)

The value of a firm is unaffected by its capital structure.


MM's proposition II

The required rate of return on equity increases as the firm’s debt-equity ratio increases.


Modigliani and Miller Proposition I

A proposition by Modigliani and Miller which states that a firm cannot
change the total value of its outstanding securities by changing its capital structure proportions. Also called
the irrelevance proposition.


Modigliani and Miller Proposition II

A proposition by Modigliani and Miller which states that the cost of
equity is a linear function of the firm's debt-equity-ratio.


Open account

Arrangement whereby sales are made with no formal debt contract. The buyer signs a receipt,
and the seller records the sale in the sales ledger.


open account

Agreement whereby sales are made with no formal debt contract.


Open book

See: unmatched book.


open-book management

a philosophy about increasing a firm’s performance by involving all workers and by ensuring
that all workers have access to operational and financial
information necessary to achieve performance improvements


Open contracts

Contracts which have been bought or sold without the transaction having been completed by
subsequent sale or purchase, or by making or taking actual delivery of the financial instrument or physical
commodity.


Open Economy

An economy which engages in a significant amount of trade. Contrast with closed economy.



Open-end fund

Also called a mutual fund, an investment company that stands ready to sell new shares to the
public and to redeem its outstanding shares on demand at a price equal to an appropriate share of the value of
its portfolio, which is computed daily at the close of the market.


Open-end mortgage

Mortgage against which additional debts may be issued. Related: closed-end mortgage.


Open (good-til-cancelled) order

An individual investor can place an order to buy or sell a security. That
open order stays active until it is completed or the investor cancels it.


Open interest

The total number of derivative contracts traded that not yet been liquidated either by an
offsetting derivative transaction or by delivery. Related: liquidation


Open-market operation

Purchase or sale of government securities by the monetary authorities to increase or
decrease the domestic money supply.


Open-Market Operations

Buying or selling of bonds by the central bank.


Open-market purchase operation

A systematic program of repurchasing shares of stock in market
transactions at current market prices, in competition with other prospective investors.


Open-outcry

The method of trading used at futures exchanges, typically involving calling out the specific
details of a buy or sell order, so that the information is available to all traders.


open purchase ordering

a process by which a single purchase
order that expires at a set or determinable future
date is prepared to authorize a supplier to provide a large
quantity of one or more specified items on an as-requested
basis by the customer


Open repo

A repo with no definite term. The agreement is made on a day-to-day basis and either the
borrower or the lender may choose to terminate. The rate paid is higher than on overnight repo and is subject
to adjustment if rates move.


Opening price

The range of prices at which the first bids and offers were made or first transactions were
completed.


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.


Opening, the

The period at the beginning of the trading session officially designated by the exchange during
which all transactions are considered made "at the opening". Related: Close, the


Policy-Ineffectiveness Proposition

Theory that anticipated policy has no effect on output.


Position

A market commitment; the number of contracts bought or sold for which no offsetting transaction
has been entered into. The buyer of a commodity is said to have a long position and the seller of a commodity
is said to have a short position . Related: open contracts


Position diagram

Diagram showing the possible payoffs from a derivative investment.


Preopening Costs

A form of start-up cost incurred in preparing for the opening of a new store or facility.


Reopen an issue

The Treasury, when it wants to sell additional securities, will occasionally sell more of an
existing issue (reopen it) rather than offer a new issue.


Short position

Occurs when a person sells stocks he or she does not yet own. Shares must be borrowed,
before the sale, to make "good delivery" to the buyer. Eventually, the shares must be bought to close out the
transaction. This technique is used when an investor believes the stock price will go down.


short position

The sale of an investment, particularly by someone who does not yet own it.


Short sale, short position

The sale of a security or financial instrument not
owned, in anticipation of a price decline and making a profit by purchasing the
instrument later at a lower price, and then delivering the instrument to
complete the sale. See Long position.


Take a position

To buy or sell short; that is, to have some amount that is owned or owed on an asset or
derivative security.


Delivery notice

The written notice given by the seller of his intention to make delivery against an open, short
futures position on a particular date. Related: notice day



 

 

 

 

 

 

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