Mark Berch: Clean

Mark Berch

Escrow receipt
A document provided by a bank in optionstrading to guarantee that the underlying security is on deposit and available for potential delivery.

Best-efforts sale
A method of securitiesdistribution/underwriting in which the securities firm agrees to sell as much of the offering as possible and return any unsold shares to the issuer. As opposed to a guaranteed or fixed-pricesale or bought deal, in which the underwriter agrees to sell a specific number of shares (and holds any unsold shares in its own account if necessary).

Notice Period
The time during which the buyer of a futures contract can be called upon to accept delivery. Typically, the 3 to 6 weeks preceding the expiration of the contract.( - Mark Berch)

Mark Berch: Clean
In the context of general equities, block trade that matches buy or sell orders/interests, sparing the block trader any inventoryrisk (no net position and hence none available for additional customers). Natural. Antithesis of open.

"Put it on "
Used for listed equity securities. "Go to the floor to transact." See: Print.

B2B
An Internet strategy of dealing directly with businesses, rather than consumers, i.e. business to (2) business. ( Mark Berch )

Accounting insolvency
Total liabilities exceed total assets. A firm with a negative net worth is insolvent on the books.

Mark Berch

Disintermediation
Withdrawal of funds from a financial_institution in order to invest them directly.

Mark Berch: Guaranteed Mortgage Certificates (GMC)
First issued by Freddie Mac in 1975, G.M.C.s, like PCs, represent undivided interest in specified conventional whole loans and participations previously purchased by Freddie Mac.

Mark Berch: Term Fed funds
Fed funds sold for a period of time longer than overnight.

Mark Berch

Irrational call option
The implied call imbedded in a MBS. Irrational because the call is sometimes not exercised when it is in the money (interest rates are below the threshold to refinance), and sometimes exercised when it is not in the money. Option exercise like this affects payments on the MBS.

Prearranged trading
Possibly fraudulent practice whereby commoditiesdealers carry out risk-free trades at predetermined prices to acquire tax advantages.

Covered position
Use of an option in a tradingstrategy in the underlyingasset which is already owned.( - Mark Berch)

Mark Berch: Creeping tender offer
The process by which a group attempting to circumvent certain provisions of the Williams Act gradually acquires shares of a target company in the open market.

Overwriting
A speculative option strategy that involves selling call or putoptions on stocks that are believed to be overpriced or underpriced; the options are expected not to be exercised.

Consol
A government bond with no maturity . Popular in Great Britain. The formula for valuing these bonds is simple. The consol payment divided by yield to maturity is the price of the bond. ( Mark Berch )

Capital gain
When a stock is sold for a profit, the capital gain is the difference between the net sales price of the securities and their netcost, or original basis. If a stock is sold below cost, the difference is a capital loss.

Mark Berch

Short interest
Total number of shares of a security that investors have sold short and that have not been repurchased to close out the short position. Usually, investors sell short to profit from price declines. As a result, the short interest is often an indicator of the amount of pessimism in the market about a particular security, although there are other reasons to short that are not related to pessimism. For example, hedgingstrategies for mergers and acquisition as well as derivativepositions may involve short sales.

Mark Berch: Provision for income taxes
An amount on the P & I statement that estimates a company's total income taxliability for the year.

Mark Berch: Form 3
A form required by the SEC and the stock exchange from all holders of 10% or more of a company's stock and all directors and officers, which details securities owned.