Obligation (collateralized mortgage obligation)
A multiple-class mortgage-backed security. The REMIC has replaced the CMO and, today, all CMOs are issued in the form of REMICS; however, the terms are often used interchangeably.
Odd lot
A trade made for less than the normal trading unit.
Off-schedule sales
GSE-issued securities sold through negotiated direct placements or competitive bids, with terms and size determined by the immediate needs of the GSE.
Offer
An expression indicating one's desire to sell a commodity at a given price; opposite of bid. The price at which a seller will sell a security.
Offer wanted
A solicitation for a quote from an investor interested in buying a bond.
Offering circular
A legal document which outlines all material details of a specific funding program.
Offering date
The first day a security is offered for sale to the public.
Offering Price
The price at which a new security is sold and the lowest price available for a round lot of securities.
Offering scale
This is used primarily with municipal bonds. The price, expressed in eighths of a point, or yield, expressed in decimals, for each maturity of serial bonds.
Official notice of sale
A paid announcement made by a municipality regarding an upcoming competitive bond sale.
Official statement
The document an issuer provides which details financial and other information about the issuer and the securities.
Offset
Taking a second futures or options position opposite to the initial or opening position. Selling (or purchasing) futures contracts of the same delivery month purchased (or sold) during an earlier transaction or making (or taking) delivery of the cash commodity represented by the futures contract.
Open interest
The total number of futures or options contracts of a given commodity that have not yet been offset by an opposite futures or option transaction nor fulfilled by delivery of the commodity or option exercise. Each open transaction has a buyer and a seller, but for calculation of open interest, only one side of the contract is counted.
Open market operation
The buying and selling of government securities -Treasury bills, notes, and bonds - by the Federal Reserve.
Open outcry
Method of public auction for making verbal bids and offers in the trading pits or rings of futures exchanges.
Opening range
A range of prices at which buy and sell transactions took place during the opening of the market.
Option
A contract that conveys the right, but not the obligation, to buy or sell a particular item at a certain price for a limited time. Only the seller of the option is obligated to perform. See call option and put option.
Option-adjusted spread (OAS)
For a security with an embedded option, the OAS is the yield spread over a comparable Treasury security after deducting the cost of the option. A reference tool for comparing alternative debt securities that contain embedded options. OAS refers to the yield premium over comparable U.S. Treasury securities that a callable debt security would have if it were non-callable; that is, if the value of the embedded option in the callable debt security were removed from the value of the debt security.
The purchaser of either a call or put option. Option buyers receive the right, but not the obligation, to assume a futures position. Also referred to as the holder.
Option premium
The price of an option is the sum of money that the option buyer pays and the option seller receives for the rights granted by the option.
Option risk
The possibility that a borrower may prepay a mortgage in a time frame that adversely affects the investor's yield.
The person who sells an option in return for a premium and is obligated to perform when the holder exercises his right under the option contract. Also referred to as the option writer.
Option spread
The simultaneous purchase and sale of one or more options contracts, futures, and/or cash positions.
The person who sells an option in return for a premium and is obligated to perform when the holder exercises his right under the option contract. Also referred to as the option seller.
Optional principal redemption bond
Term used to describe callable securities issued by the FHLB with either fixed or floating-rate structures.
Optional redemption
A right to retire all or part of an issue prior to the stated maturity during a specified period of years, often at a premium. The right can be exercised at the option of the issuer.
Order
A commitment made by a purchaser to buy a stated number of bonds at the offered price.
Organization of Petroleum Export Countries (OPEC)
Emerged as the major petroleum pricing power in 1973, when the ownership of oil production in the Middle East transferred from the operating companies to the governments of the producing countries or to their national oil companies. Members are Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.
Original face
The face value or original principal amount of a security on its issue date.
Original issue discount bond
A bond issued at a dollar price less than par which qualifies for special treatment under federal tax law. Under federal tax law for tax-exempt bonds, the difference between the issue price and par value is treated as tax-exempt interest rather than capital gain.
Original issue discount (OID)
The amount below par at which new securities are sold when first offered for sale.
The amount a futures market participant must deposit into his margin account at the time he places an order to buy or sell a futures contract. Also referred to as initial margin.
Original proceeds
The net amount received by an issuer after payment of all expenses that occurred during the issuance of the bond.
Out-of-the-money option
An option with no intrinsic value; i.e., a call whose strike price is above the current futures price or a put whose strike price is below the current futures price.
Over-the-counter market
A market where products such as stocks, foreign currencies, and other cash items are bought and sold by telephone and other means of communications.
Overnight position
The inventory a firm or trader holds at the end of the trading day.