Theory that advocates that stocks tend to decline during the month of October. Large market crashes have occurred in October – 1929 and 1987. Mainly a psychological expectation, rather than actual phenomenon
Offer (Price)
MARKET: General
Also known as ask — this refers to the price at which a market (price) maker is prepared to sell (offer) the underlying financial instrument, asset or represents the rate in the interest rate markets at which a market maker will be willing to lend funds.
Off-Market Swaps
MARKET: Derivatives
This swap is constructed such that the fixed rate (coupon) of the swap differs from the current fair-value swap rate, i.e. either higher or lower than the current swap rate. In a “below-market swap”, the fixed-rate receiver gets a fixed rate which is lower than the current swap rate and receives an upfront payment to compensate for this difference. In the “above-market swap”, the fixed rate receiver is paid a fixed rate which is above the prevailing swap rate and therefore makes an upfront payment to compensate for this difference.
Oligopoly
MARKET: Economics
A situation in which a particular market is controlled by a small group of firms and an individual supplier can therefore influence the price.
OPEC
Organisation of Petroleum Exporting Countries
Open Interest
MARKET: Derivatives
The total number of futures contracts that are currently active on a specific underlying security, and that have identical (fungible) terms. This includes the total contracts for a specific expiration (delivery) date that have been traded, but have not yet expired or been closed-out through an opposite transaction. A position is closed-out when a market participant who is long the contract, sells it, or, conversely, when a market participant who is short the contract, buys it back.
Open Market Operations (OMO)
MARKET: Economics
The implementation of policy by the monetary authorities is usually concluded through open market operations. This represents the means by which a central bank controls the domestic money supply by buying and selling government securities, or other debt securities. Monetary targets, such as interest rates or exchange rate levels, are generally used to guide this implementation.
Open Market Operations (OMO)
MARKET: Economics
The implementation of policy by the monetary authorities is usually concluded through open market operations. This represents the means by which a central bank controls the domestic money supply by buying and selling government securities, or other debt securities. Monetary targets, such as interest rates or exchange rate levels, are generally used to guide this implementation.
Open Outcry
MARKET: General
A method of communication between market professionals on a stock or futures exchange which involves shouting prices and the use of hand signals to transfer information about buy and sell orders in the respective contracts. An example of an exchange that uses this trading method is the New York Stock Exchange. The opposite method of trading would be screen-based trading.
Open Position
MARKET: General
Either a long (bought) or short (sold) position which leaves the buyer (seller) exposed to changes in the price/rate/value of the underlying instrument/asset or contract.
Operational Risk
MARKET: Risk Management
The risk that includes the potential for financial loss that can result from procedural errors or failures in internal control, such as fraud.
Option
MARKET: Options
A contract that gives the buyer the right, but not the obligation, to buy (call) or sell (put) a pre-specified quality and quantity of a specified financial asset or instrument at an agreed price/rate, on or before the maturity date of the option.
Option Pricing
MARKET: Options
Mathematical and statistical models are used to derive the price of an option contract. Essentially, the option premium is influenced by the following factors: the market value/price of the underlying asset at maturity, the strike (exercise) price of the option, the time to expiry, the short-term risk-free interest rate and the volatility of the underlying asset.
Ordinary Annuity
MARKET: TVM
A financial product whose payments or contributions (cash flows) are made at the end of each period (e.g. monthly or annually) and are of the same monetary value. An example of an ordinary annuity would be an investment product into which you pay R1,000 per month for a given investment period for the purpose of receiving a lump sum at the end of the period.
Over-the-Counter (OTC)
MARKET: General
In OTC markets, counterparties conclude transactions directly with one another. The counterparties agree all the terms and conditions of the transaction with each other before the transaction is wrapped up. OTC markets basically imply that there is no physical trading location, like an exchange, where prices, rates and other terms are quoted.
Out-of-the-Money
MARKET: Options
An out-of-the-money option has no intrinsic value. A call (put) option is out-of-the-money when the strike price is above (below) the current market value of the underlying security.
Outright Exchange Rate
MARKET: FX
The forward (outright) exchange rate agreed between two parties entering into a forward exchange contract (FEC), which represents the rate at which the two currencies will be settled/exchanged at a specified date in the future.
Outright Forward
MARKET: FX
An agreement/contract between two parties to buy or sell an asset, currency, commodity, interest rate or index at a pre-specified future date. The trade date and delivery/maturity date are separated. It is generally used to control and hedge price risk, for example, currency exposure risk (e.g. forward contracts (FECs)) or commodity prices (e.g. forward contracts on gold or oil).
Outright Forward Contract
MARKET: FX
An agreement between two parties to buy or sell a specific currency against another at a specified exchange rate on specified date in the future.
