This is a glossary of terms that are, for the most part, unique to the world of financial investigations, or terms that have a different meaning than that which is commonly understood when they are used in this context.

Obligation Bond: A mortgage bond that has a face value greater than the underlying property's value. The excess amount is the lender's cost that exceeds the mortgage value.

Obligator: Person or organization that has an obligation outstanding. The debtor is legally bound to pay the obligator any interest, if applicable, when due.

OBV (On Balance Volume): Technical Analysis method that tries to pinpoint when a security's shares are being accumulated (being bought) or are being sold. The on balance volume line and the stock price line are placed on one chart. When the two lines cross, the analyst considers it to be meaningful. When the chart indicates that a security is being accumulated, it is considered a buy signal and when being distributed, a sell signal.

OCC (Option Clearing Corporation): Organization equally owned by the exchanges through which the various options exchanges clear their trades. Some of OCC's responsibilities are supervising the listing of options, issuing and guaranteeing option transactions, processing the money transactions, and the assignment of option exercises to writers. The OCC also issues an options prospectus that outlines the rules and risks of trading options.

Odd Lot: Any number of shares traded that is less than its normal trading unit (round lot). Typically, an odd lot is 1 to 99 shares with a round lot being multiples of 100 shares. However, certain inactive stocks have round lots of 10 shares, with odd lots being 1 to 9 shares.
Odd Lot Differential: An extra charge, usually 1/8 of a point, that dealers may add to purchases and subtract from sales when the order's share quantity is less than the standard trading unit or round lot--also referred to as a "differential".

Odd Lot Theory: An investment strategy that assumes small investors are always wrong because they react emotionally to the market and are usually guilty of bad timing. In a rising market, a lot of odd lot buying is considered an indication of a technical weakness in the market and a signal to sell. On the contrary, in a declining market, a lot of odd lot selling is seen as an indication of technical strength and a signal to buy. However, studies of odd lot trading have proven that the theory does not have too much substance and that investors trading odd lots of market leader stocks have generally managed to do reasonably well.

OEX: Symbol for an option on the Standard & Poor's 100 stock index.

Off-Board: Said of listed security transactions that are not executed on a national exchange, or of unlisted security transactions executed over-the-counter.

Offer: The price at which a person is willing to sell a security--also called "asked price". In contrast, the bid price is the price at which a person is willing to buy a security. The asked price is always higher than the bid price.

Offering Circular: Also called a Prospectus, it is a printed document that summarizes a corporation's registration statement for a new issue of non-exempt securities that was filed with the SEC. It details material information about the corporation and the security being issued. A prospectus must be given to all buyers and potential buyers of the new issue.

Offering Date: The date in which a new issue distribution is available to investors to purchase.

Offering Price: The price at which a new or secondary distribution of securities is sold to investing public--also called "public offering price".

Off Floor Order: A security order that is initiated off an exchange floor. These customer orders are placed with a broker and are required to be executed before orders that were initiated on the floor (on-floor orders--floor member orders who are trading for their own accounts).

Office Of Supervisory Jurisdiction (OSJ): As defined by the National Association of Securities Dealers' (NASD)--a member's parent office(s) that is responsible for supervising an office, or a group of offices.

Official Notice Of Sale: A solicitation published, usually in financial newspapers, by municipalities that requests investment bankers to proffer a competitive bid on its pending bond issue. The notice lists the basic facts about the issue, such as its par value, and names the official who can provide further details.

Official Statement: A document prepared for a new municipal issue by or for the issuer. It describes the issue, financial details about the issuer and other relevant facts.

Offshore (OS): Offshore is an international term meaning not only out of your country (jurisdiction) but out of the tax reach of your country of residence or citizenship; synonymous with foreign, transnational, global, international, transworld and multi-national, though foreign is used more in reference to the IRS.

Offshore Scams: Offshore Trusts, Foreign Investment Opportunities, Venture Capital Solicitations, Tax Minimization Strategies . . . these sorts of offshore offerings are rapidly becoming the more popular scams to trap U.S. and Canadian investors. Whereas conflicting time zones, differing currencies, and the high costs of international telephone calls, made it difficult for foreign fraudsters to prey upon North American residents in times past, the Internet has removed the barriers.

OID (Original Issue Discount): A new bond issue that is usually offered below par. The bond's value is increased (accreted) over its life from the original discounted price up to par. At the bond's maturity, it will be valued at par. Interest on these types of bonds are not paid until maturity. However, the interest is taxed as it is accreted. An example of an OID is a zero coupon bond.

Omitted Dividend: A dividend that is scheduled to be declared, but has not been voted for by a corporation's board of directors. The board may not vote for the dividend because the corporation is having financial problems and has determined that it is more important to conserve the cash than to pay a dividend to shareholders. Once announced to the public, if the omitted dividend is not expected, the corporation's stock price will usually decline.

On Balance Volume: Technical Analysis method that tries to pinpoint when a security's shares are being accumulated (being bought) or are being sold. The on balance volume line and the stock price line are placed on one chart. When the two lines cross, the analyst considers it to be meaningful. When the chart indicates that a security is being accumulated, it is considered a buy signal and when being distributed, a sell signal.

On Floor Order: A security order that is initiated on an exchange floor. These orders are initiated by members on the exchange floor who are trading for their own accounts.

On The Close Order: A brokerage client's order to trade a NYSE security only if it can be executed on the moment the closing bell starts ringing on the exchange. The client has no guarantee of receiving the stock's final price.

On The Opening Order: A brokerage client's order to trade a NYSE security only if it can be executed as the first transaction of the trading session for that security. If the order cannot be executed as such, it is canceled immediately.

OPD: A ticker tape symbol that signifies that a security's price has changed materially from the previous day's close. A material change is usually 2 or more points on stocks selling at $20 or higher, 1 or more points on stocks selling at less than $20. OPD also designates a security's first transaction of the trading session after it has had a delayed opening.

Open: The status of an order that has not yet been executed.

Open End Indenture: A secured bond indenture that allows collateral to be repledged for the issuance of additional bonds.

Open End Management Company: A management investment company that issues new shares on demand when people buy them. The shares are bought at net asset value and may be redeemed back to the management company at any time at the current market price. Commonly called a "mutual fund", the type of vehicle that the shareholder's funds are invested in is dependent on the type of fund and its objectives.

Opening: At the beginning of a trading day, the price for a particular security or commodity.

Opening Transaction: The purchase or sale of an option. If a sale is an opening transaction, the investor is a writer.

Open Interest: The amount of outstanding contracts on a specific underlying security. A contract is considered to be outstanding if it is has not expired, or been exercised or closed out. Open interest also applies to the total number of contracts in an options market and is included in the options and commodity pages of daily newspapers.

Open Order: A good-til-canceled order. It stays in effect until it is either canceled or executed.

Open Repo: Repurchase agreement that has an undefined repurchase date that continues on a day-to-day basis--either party may end it at any time. Each day the interest rate is adjusted to reflect changes in the market.

Operating Income: A corporation's net sales minus its cost of goods sold, depreciation and selling and administrative costs. The total, shown on the corporation's income statement, indicates how much of the company's profits is attributable to its principal business.

Operating Profit Or Loss: Before tax profit (loss) that a corporation earns from operations after all operating costs have been deducted.

Operating Profit Margin: Ratio, used by fundamental analysts, that relates operating income to net sales. Operating profit margin equals operating income divided by net sales.

OPM (Other People's Money): Industry lingo used when individuals or corporations use borrowed funds to increase their investment returns.

Option Agreement: An agreement by which a brokerage firm client agrees to follow the rules and regulations of the Options Clearing Corporation.

Optional Dividend: A dividend in which the shareholder has a choice of whether to be paid in either cash or stock.

Optional Payment Bond: A bond in which the bondholder has the choice of receiving principal and/or interest in one or more foreign currencies as well as in domestic currency.

Option Fund: Mutual fund that trades options to increase the value of fund shares. The fund may either be conservative or aggressive. A conservative fund, commonly called an "option income fund", may buy stocks and increase shareholders' income through the premium earned by writing options on the stocks within the portfolio. An aggressive fund, commonly called an "option growth fund", may buy options in securities that the fund manager thinks will fall or rise sharply in the near term. If the manager is correct, large profits can be made on the exercise of the options.

Option Holder: Person who has bought a call or put option that has not yet expired and who has not yet exercised or sold it. A holder of a call option wants the underlying security's price to rise. A holder of a put option holder wants the underlying security's price to fall.

Option Premium: The market price of an option that is paid by an option buyer to the option writer (seller) for the right to buy (call) or sell (put) the underlying security at a specified price (called "strike price" or "exercise price") by the option's expiration date. The premium is set by the supply and demand of option traders as they evaluate the underlying security's future market value. Premium prices are quoted in increments of eighths or sixteenths.

Options: 1: A contract giving an investor a right to buy (call) or sell (put) a fixed amount of shares (usually 100 shares) of a given stock (or indexes and commodities) at a specified price within a limited time period (usually three, six, or nine months). The purchaser hopes that the stock's price will go up (if he bought a call) or down (if he bought a put) by an amount sufficient to provide a profit when he sells the option. If the stock price holds steady or moves in the opposite direction, the price paid for the option is lost entirely. Individuals may write (sell) as well as purchase options.

A buyer of a call option, for the right to buy 100 shares of the underlying security at a fixed (strike) price before a specified future date (expiration), pays the call option writer a fee called a premium. If the option is not exercised before it expires, the premium paid is lost. Thus, a call buyer believes that the price of the underlying shares will rise before the option expires. If the call buyer does exercise the option, the shares are bought from the writer at the option's strike price. The amount due to the writer equals the strike price multiplied by the number of shares. A buyer of a call option is generally bullish about the security, or in the case of index options, the market. A writer of a call option usually believes the security or the market will not move substantially up--thus, not making it worthwhile for the buyer to exercise.

A buyer of a put option, for the right to sell 100 shares of the underlying security at a fixed price before a specified future date, also pays a premium to the writer of the put. A put buyer believes that the price of the underlying security is going to decline. If the put buyer exercises the option, the underlying security shares are sold to the put writer at the option's strike price. A put buyer is generally bearish about the security or the overall market. The writer typically believes the security or the overall market will not move substantially down--thus, not making it worthwhile for the buyer to exercise.

Buyers of options do not have to exercise an option in order to profit--they may attempt to profit on the option by selling it before its expiration by trading on the rise and fall of premium prices. Writers may also attempt to profit by buying back the option sold at a lower price (or it can expire worthless). An option seller can either write uncovered (interchangeably called "naked") or covered options. Naked options are far riskier.

Or Better Order (OB): A limit order to buy or sell a security that specifies to the broker that he should try to execute the order at a better price than the limit price. If the broker cannot do so, the order will be executed at the limit price. The abbreviation "OB" must be written on the order ticket.

Orders: In regard to securities, it is a client's instruction to a broker to buy or sell a security. There are many types of order qualifiers that stipulate such things as the amount of time in which to leave an order in and at what price to execute an order.

Order Ticket: A form that is completed by a broker when receiving an order from a client. The order ticket will show the type of order (buy or sell), the number of shares, the security's name, the price qualifications (such as market or limit) and the client's name and account number.

Original Issue Discount (OID): A new bond issue that is usually offered below par. The bond's value is increased (accreted) over its life from the original discounted price up to par. At the bond's maturity, it will be valued at par. Interest on these types of bonds are not paid until maturity. However, the interest is taxed as it is accreted. An example of an OID is a zero coupon bond.

OSJ (Office Of Supervisory Jurisdiction): As defined by the National Association of Securities Dealers' (NASD)--a member's parent office(s) that is responsible for supervising an office, or a group of offices.

OTC (Over The Counter): A market for securities that are not listed on an exchange. Security orders are transacted via telephone and a computer network that connects dealers. As opposed to the NYSE, which is an auction market, the OTC is a negotiated market. OTC dealers may either act as either principals or agents for customers. The OTC market is regulated by the NASD. OTC stock prices are listed daily in newspapers, with the National Market System stocks listed separately from the rest of the OTC market. The OTC market is a main market for bonds.

OTC Bulletin Board: Electronic listing of bid and asked quotations of over the counter stocks that do not meet the NASDAQ listing requirements. The system provides continuous quotations on stocks (foreign stocks are only updated twice-daily). It facilitates trading and provides greater surveillance non-NASDAQ stocks.

OTC Margin Stock: Corporations whose stocks, which are traded over-the-counter, have met specific criteria under Regulation T of the Federal Reserve Board that qualifies them as a margin security.

Other People's Money (OPM): Industry lingo used when individuals or corporations use borrowed funds to increase their investment returns.

Out Of Favor Stock Or Industry: Stock or industry that investors do not currently like. There are many reasons that can cause this disfavor. The banking industry, for example, would be out of favor if interest rates rise because it could harm the bank's profit. Investors who buy stocks that are out of favor are called "contrarian investors". Their goal is to purchase the stock cheaply and to sell it when their earnings increase.

Out Of Line: Said of a stock whose price is either too high or low in comparison to similar stocks in the same industry. The comparison is usually based on the price/earnings ratio (PE).

Out Of The Money: An option that has no intrinsic value--for example, an option whose strike price, in the case of a put, is lower than the stocks current price, or in the case of a call, is higher. An investor who buys an out-of-the-money option is speculating that the option will rise in value and become in-the-money.

Outstanding Stock: Common shares of a corporation that are held by investors. The figure is shown on the corporation's balance sheet as "capital stock issued and outstanding".

Out The Window: Said of a new issue that has been distributed very quickly to investors--also called "hot issue".

Overbought: A single security or a market that technical analysts believe has risen to an unreasonable level and thus, should start to decline. If all shareholders who want to buy the stock have already done so, there should only be sellers in the market, and thus, the price will drop.

Overheating: An economy that is expanding so quickly that there is concern about inflation rates rising. The Federal Reserve usually tries to slow the economy's pace by tightening the money supply. This causes less money to be chasing after goods and services.

Overissue: Capital stock shares issued above the amount authorized to be issued. The security's registrar (typically a bank acting as an agent) works with the security's transfer agent in issuing new shares and canceling and reissuing certificates for transfer to new owners. These two parties keep track of the outstanding shares to prevent overissuance of shares.

Overlapping Debt: Debt of a political entity, such as a state, where its tax base extends to the tax base of another political entity, such as a county within the state. When evaluating a municipal bond, if the issuer has overlapping debt, it should be considered.

Overnight Position: Broker-dealer who has a long position or a short position in a security at the end of a trading day.

Oversold: A single security or a market that technical analysts believe has declined to an unreasonable level and thus, should start to rise. If all shareholders who want to sell the stock have already done so, there should only be buyers in the market, and thus, the price will rise.

Oversubscribed: Term used when a new stock issue has more potential buyers than shares. The stock will usually rise in price when it starts trading on the open market as buyers who could not previously purchase the issue will now do so.

Over The Counter (OTC): A market for securities that are not listed on an exchange. Security orders are transacted via telephone and a computer network that connect dealers. As opposed to the NYSE, which is an auction market, the OTC is a negotiated market. OTC dealers may either act either as principals or as agents for customers. The OTC market is regulated by the NASD. OTC stock prices are listed daily in newspapers, with the National Market System stocks listed separately from the rest of the OTC market. The OTC market is a main market for bonds.

Over The Counter Securities: A security not listed or traded on an exchange. The stocks are usually those of smaller companies that do not meet the NYSE or AMEX listing requirements.

Overtrading: In new issue underwritings, a situation in which a broker-dealer offers to buy a security from a client at premium. In return, the client will purchase shares of the new issue. The underwriter can still profit on the deal if the premium amount is less than what would be received from the underwriting spread.

Overvalued: Said of a security whose price is not justified by its price/earnings ratio and thus, should eventually decline.

Overwriting: Speculative trading strategy wherein an option writer, based on his belief that the underlying security is either overvalued or undervalued, will sell call options or put options in large quantities. The writer assumes that the options will not be exercised.

Ownership: Ownership constitutes the holding or possession of limited liability company legal claim or title to an offshore asset.

I welcome your comments, questions and suggestions.