ABANDON: The act of not selling an option before the expiration date.

ACCRUED INTEREST: This is the interest due on a bond proceeding from the date of the last interest payment all the way up to the settlement date. Any person wishing to buy the bond pays the market price of the bond as well as any accrued interest. On the contrary, anyone selling a bond will have the earnings increased by the amount of accrued interest.

ACQUISITION: An acquisition is when one company (A) buys enough stock of some other company (B) to take control of that company. When the buyout of company (B) is "hostile", the buying company (A) may offer a price for the other company's stock that is well above current market value. When this type of situation occurs, management of company (B) might ask for a better stock price, or in some situations try to join another company to counter company (A)'s takeover.

ADJUSTED OPTION: This is the end result of an option after an event such as a stock dividend, stock split (2 for 1 stock split), or merger. An adjusted option may represent some amount other than the one hundred shares that is standard in the U.S. On other adjusted options, the multiplier of the option may be something other than the $100 that is standard in the U.S.

AFFIDAVIT OF DOMICILE: A notarized affidavit implemented by the legal representative of an estate declaiming the residence of the decedent at the time of decease. This type of document would be needed if someone was transferring ownership of a security from a deceased person's name. 

ALL-OR-NONE ORDER (AON): A buy or sell order that must be filled completely when executed or not filled at all. For example, if you send an AON order to your broker requesting 50 shares at $10, the broker will not fill the order unless he or she can obtain the 50 shares at $10. 

AMERICAN DEPOSITORY RECEIPT (ADR): A negotiable certificate issued by a U.S. bank representing a specified number of shares in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help lower administration and duty costs that would otherwise be levied on each transaction. ADRs have connection to currency volatility. ADRs facilitate the trading of foreign stocks in U.S. markets.

AMERICAN STOCK EXCHANGE (AMEX): This is one of the major stock and option exchanges in the U.S. 

AMERICAN-STYLE OPTION: This is an option contract that can be exercised at any time of its life. The majority of exchange-traded options are American.

ARBITRAGE: This is the instantaneous purchase and sale of an asset in order to profit from a difference in the price. This usually takes place on different exchange or marketplace. It is also known as a "riskless profit". 

ASK or OFFER: This is the opposite of bid, which is the price a buyer is willing to pay for a security, and the ask will always be higher than the bid. The terms "bid" and "ask" are used in covering stocks, bonds, currency and derivatives.

ASSIGNED: This is when you receive notification of an assignment on short options by The Options Clearing Corporation. 

ASSIGNMENT: A statement received by an option writer stating that the option sold has been exercised by the purchaser of the option. 

AT-THE-MONEY (ATM): The definition is when the price of the stock is at or near the strike price.

AUTOMATED EXECUTION SYSTEM (AUTO EX): This is the computerized order routing system on the American Stock Exchange.

AUTOMATED ORDER ENTRY SYSTEM: Exchanges that have computerized systems designed to route orders directly to the trading pit. They are intended to speed the execution of orders. 

AUTOMATIC EXERCISE: This is when the Options Clearing Corporation (OCC) exercises in-the-money options at expiration. If not instructed otherwise by the owner of the option, The Options Clearing Corporation will exercise all expiring equity options that are held in customer accounts if they are in-the-money by .01 or more. It protects the owner of the option from losing the intrinsic value of the option due to failure to exercise.

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