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Numerical Terms
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O
At The Money - The Strike nearest the current price of the Underlying.
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 Transaction -
A trade which adds to the net position of an investor. An opening buy transaction adds more long securities to the account. An opening sell transaction adds more short securities. See also Closing Transaction.
Open Interest -
The number of outstanding option contracts in the exchange market or in a particular class or series.
Option Pricing Curve -
A graphical representation of the projected price of an option at a fixed point in time. It reflects the amount of time value premium in the option for various stock prices, as well. The curve is generated by using a mathematical model. The delta (or hedge ratio) is the slope of a tangent line to the curve at a fixed stock price. See also Delta, Hedge Ratio, and Model.
Options Clearing Corporation (OCC) -
The issuer of all listed option contracts that are trading on the national option exchanges.
Order Book Official -
The exchange employee in charge of keeping a book of public limit orders on exchanges utilizing the "maker-maker" system, as opposed to the "specialist system", of executing orders. See also Market-Maker and Specialist.
Out-of-the-money -
A call option is out-of-the-money if the strike price is greater than the market price of the underlying security. A put option is out-of-the-money if the strike price is less than the market price of the underlying security.
Over-the-Counter Option (OTC) -
An option traded off-exchange, as opposed to a listed stock option. The OTC option has a direct link between buyer and seller, has no secondary market, and has no standardization of striking prices and expiration dates. See also Listed Stock Option and Secondary Market.
Overvalued -
Describing a security trading at a higher price than it logically should. Normally associated with the results of option price predictions by mathematical models. If an option is trading in the market for a higher price than the model indicates, the option is said to be overvalued. See also Fair Value and Undervalued.
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