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Definition of Put option
This security gives investors the right to sell (or put) fixed number of shares at a fixed price within
A contract that gives the holder the right to sell an asset for a
Right to sell an asset at a specified exercise price on or before the exercise date.
Contract that grants the right to sell at a specified price at some time in the future.
To exercise a put option.
A spread strategy in which an investor buys an out-of-the-money put option, financing it by
A put option position in which the option writer also is short the corresponding stock or has
A strategy that involves rebalancing hedge positions as market conditions change; a
A strategy designed to reduce investment risk using call options, put options, short selling, or futures
A put option that has a strike price higher than the underlying futures price, or a call option
A call or put option based on a stock market index.
An unhedged strategy making exclusive use of one of the following: Long call
Gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a
See call option and put option
A call option is out-of-the-money if the strike price is greater than the market price
A strategy that involves buying a put option on the underlying security that is
The price at which the asset will be sold if a put option is exercised. Also called the strike or
A bond that allows the holder to redeem the bond at a
For options, a combination of call or put options on the same stock
A short put option position in which the writer does not have a corresponding short stock
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
An option contract that can be exercised at any time between the date of purchase and
Arbitrage-free option-pricing models
Yield curve option-pricing models.
option based on the average price of the asset during the life of the option.
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
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
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.
option on an option.
computer-aided design (CAD)
a system using computer graphics for product designs
computer-aided manufacturing (CAM)
the use of computers to control production processes through numerically
computer integrated manufacturing (CIM)
the integration of two or more flexible manufacturing systems through the use of a host computer and an information networking system
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.
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
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
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.
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.
Foreign currency option
An option that conveys the right to buy or sell a specified amount of foreign
The level of output produced by the economy when operating at the natural rate of unemployment.
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.
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
Imputation tax system
Arrangement by which investors who receive a dividend also receive a tax credit for
To assign a value to a good or service in place of a market value that is not available.
The value of consumption services obtained by owning one's house rather than having to pay rent.
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 number (prefaced as a multiplier
Tables that indicate how much each industry requires of the production of each other
One of several investment accounts in which your premiums may be invested within your life insurance policy.
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
Liquid yield option note (LYON)
Zero-coupon, callable, putable, convertible bond invented by Merrill
Liquid yield option note (LYON)
Zero-coupon, callable, putable, convertible bond invented by Merrill Lynch & Co.
An option that allows the buyer to choose as the option strike price any price of the
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.
Nonqualified Stock Option
A stock option not given any favorable tax treatment
A right to buy or sell specific securities or commodities at a stated
Right to buy or sell a specified property at a specified amount at some time in the future.
Option-adjusted spread (OAS)
1) The spread over an issuer's spot rate curve, developed as a measure of
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
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
The difference between full employment output and current output.
Path dependent option
An option whose value depends on the sequence of prices of the underlying asset
A covenant allowing the bondholder to demand repayment in the event of a hostile merger.
The option of postponing a project without eliminating the possibility of undertaking it.
Potential Output or Potential GDP
Output produced when the economy is operating at its natural rate of unemployment.
An option granting the right to sell the underlying futures contract. Opposite of a call.
An option to sell a stipulated amount of stock or securities within a
A bond that the holder may choose either to exchange for par value at some date or to extend for a
Put-call parity relationship
The relationship between the price of a put and the price of a call on the same
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