Friday, February 3rd 2012 - 06:03:58 pm

TradeStocksAmerica.com Glossary of Terms

Glossary of Terms
(Some abbreviations are for communication on the Trading Room)

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Offering price - In general, same as ask price. Or for an underwriting of an IPO, the price at which the first investors (typically institutions) are able to purchase shares.

On Balance Volume (OBV): A method used in technical analysis to detect momentum, the calculation of which relates volume to price change. OBV provides a running total of volume and shows whether this volume is flowing in or out of a given security. This indicator was developed by Joe Granville in 1976.
OBV attempts to detect when a financial instrument (stock, bond, etc.) is being accumulated by a large number of buyers or sold by many sellers. Traders will use an upward sloping OBV to confirm an uptrend, while a downward sloping OBV is used to confirm a downtrend. Finding a downward sloping OBV while the price of an asset is trending upward can be used to suggest that the "smart" traders are starting to exit their positions and that a shift in trend may be coming.

Odd lot - is an order less than 100 shares.

Optionable stock - A stock on which listed options are traded.

Options are financial instruments that convey the right, but not the obligation, to engage in a future transaction on some underlying security. For example, buying a call option provides the right to buy a specified quantity of a security at a set price (strike price) at some time on or before expiration, while buying a put option provides the right to sell. Upon the option holder's choice to exercise the option, the party who sold, or wrote, the option must fulfill the terms of the contract.

OTC Bulletin Board - An electronic quotation system for unlisted, non-Nasdaq, over-the-counter securities.

Outstanding stock - The shares of a corporation's stock that have been issued and are in the hands of the public; also called shares outstanding.

Overbought - refers to when a financial instrument has risen in price because of an excessive amount of buying in a short period of time and could signal that stocks are ready for a drop in price.

Oversold - refers to when a financial instrument has dropped in price because of an excessive amount of selling in a short period of time and could signal that stocks are ready for a rise in price. Various measures can be applied to determine whether a stock is oversold.

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