The price at which a seller offers to sell a security.
An option gives the buyer or holder the right, but not the obligation, to buy or sell an underlying financial asset at a pre-determined price. Unlike the sale or purchase of a futures market contract where the holder has to fulfill the contract at some future date an option gives holder the choice of whether to exercise or not. An option contract specifies a future date on or before which it can be exercised, the expiry date. An option’s strike price or exercise price is the price at which the underlying asset can be bought or sold. Options are very flexible instruments. They allow investors to benefit from favorable price movements while limiting the consequence of unfavorable price movements. Option holders have to pay a premium for this protection as with any insurance contract. There are two kinds of option; a call option, which gives the holder the right to buy the underlying instrument at the strike price and a put option, which gives the holder the right to sell it at the strike price. More than one option transaction can be combined to create a spread. These strategies usually involve the simultaneous purchase and sale of options with different prices, or expiry dates, within the same class. American options can be exercised at any time before the expiry date, whereas European options can be exercised only at the expiry date and not before. Options can be traded on exchanges or they can be traded over the counter (OTC).
A bond, issued at a dollar price less than par which qualifies for special treatment under federal tax law. Under that law, the difference between the issue price and par is treated as tax-exempt income rather than a capital gain, if the bonds are held to maturity.
A security, usually a stock, that has had a sharp rise, usually as a result vigorous buying, making prices too high. This is the opposite of being oversold.
A security, usually a stock (also sometimes a whole market), believed to have declined to an unreasonable level due to vigorous selling. This is the opposite of being overbought.
A securities market that is conducted by dealers throughout the country through negotiation of price rather than through the use of an auction system as represented by a stock exchange.
A communications network through which trades of bonds, non-listed stocks, and other securities take place. Trading activity is overseen by the National Association of Securities Dealers (NASD).
An amortizing structure that permits significant cash-flow engineering, which is generally prohibited with grantor trusts. Owner trusts are often used with auto loans, equipment leases and student loans.