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Home  >  Additional info  >  Forex terms' list  >  Forex glossary - O


Forex glossary - O



Off-Balance Sheet - Financing or the raising of money by a company that does not appear on the company's balance sheet, such as Interest Rate Swaps and Forward Rate Agreements.

Offer - Indicates a willingness to sell a futures contract at a given price.

Official Settlements Account - A US balance of payments measure based on movement of dollars in foreign official holdings and US reserves. Also referred to as reserve transaction account.

Offset - Selling if one has bought, or buying if one has sold, a futures or options on futures contract.

Offsetting a hedge - For a short hedger, to buy back futures and sell a commodity. For a long hedger, to sell back futures and buy a commodity.

Offsetting a long option - Offset a put by selling a put with the same strike price. Offset a call by selling a call with the same strike price.

Off-Shore - The operations of a financial institution which although physically located in a country, has little connection with that country's financial systems. In certain countries a bank is not permitted to do business in the domestic market but only with other foreign banks. This is known as an off shore banking unit.

Old Lady - Old lady of Threadneedle Street, a term for the Bank of England.

One Cancels Other Order (O.C.O. Order) - An order that through its execution cancels the other part of the same order.

Open interest - Total number of futures or options on futures contracts that have not yet been offset or fulfilled for delivery.

Open Market Operations - The central bank operations in the markets to influence exchange and interest rates.

Open order - See Good-til-canceled.

Open outcry - The method of trading publicly so that each trader has a fair chance to buy or sell.

Open/Open Position - An order that has yet to be executed and is still valid. An open position puts a trader at risk if the market prices rise or fall, i.e. the trader is vulnerable to movements in the exchange rate.

Open Order - An order to buy or sell that remains valid until it is executed or canceled by the customer. An order that is executed when the price of a share or currency reaches a predetermined price.

Opening - The beginning of the trading session.

Opening range - The range of prices at which the first bids and offers were made or first transactions were completed. Must be initiated by at least one trade.

Options - These are tradable contracts giving the right, but not obligation, to buy or sell commodities, securities or currencies at a future date and at a prearranged price. Options are used to hedge against adverse price movements or to speculate against price rises or falls. Holding options is riskier than holding shares, but offer potentially higher returns.

Option assignment - The random selection of an option writer to take a futures position when an option is exercised.

Option buyer - One who purchases an option and pays a premium.

Option Class - All options of the same type - calls or puts -listed on the same underlying instrument.

Option seller - One who sells an option and receives a premium.

Option Series - All options of the same class having the same exercise/strike price and expiration date.

Order - An instruction by a customer to a broker/trader to buy or sell at certain price or market price. The order remains valid until executed or cancelled by the customer.

Order-cancels-other (OCO) - An order that includes two orders, one of which cancels the other when filled. Also referred to as one-cancels-other.

Out-of-the-Money - A put option is out-of-the-money if the exercise/strike price is below the price of the underlying instrument. A call option is out-of-the money if the exercise/strike price is higher than the price of the underlying instrument.

Outright Deal - A forward deal that is not part of a swap operation.

Outright Forward - Foreign exchange transaction involving either the purchase or the sale of a currency for settlement at a future date.

Outright Rate - The forward rate of a foreign exchange deal based on spot price plus forward discount/premium.

Out-trades - A situation that results when there is some confusion or error on a trade - for example, when both traders think they were buying.

Overbought - A term used to characterize a market in which asset prices have risen at a pace that is above typical market acceleration, and hence is due for a retracement. The EUR/USD chart above is a good example of an overbought condition.

Overheated (Economy) - Is an economy on a high growth rate trajectory placing pressure on the production capacity resulting in increased inflationary pressures and higher interest rates.

Overnight - A position that remains open until the start of the next business day.

Overnight Limit - Net long or short position in one or more currencies that a dealer can carry over into the next dealing day. Passing the book to other bank dealing rooms in the next trading time zone reduces the need for dealers to maintain these unmonitored exposures.

Oversold - The opposite of oversold; exists when the price of a market decelerates at an abnormally fast rate, and hence is due for an upwards reversal.

Over The Counter (OTC) - A market conducted directly between dealers and principals via a telephone and computer network rather than a regulated exchange trading floor. These markets have not been very popular because of the risks both the parties face in case the other party fails to honour the contract. They were never part of the Stock Exchange since they were seen as "unofficial".

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