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.
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