Offer Price: The price that the IPO is first sold to the public at. The lead manager has ultimate control over setting the offer price. The offer price is not necessarily the price that the stock will begin trading at. See also Asked Price.
Offer Range: The offer range is the price range that the company expects the IPO to price within. This will be listed on the front page of the preliminary prospectus. The range may change before the IPO if demand or market conditions change.
Open Order: Also known as Good 'til Canceled. An order to buy or sell a security that remains in effect until it is either canceled by the customer or executed.
Operating Margin: The key measure of profitability and performance is a company's operating margin. The operating margin is determined by subtracting the operating expenses from the total revenues and then dividing that result by the total revenue. One time gains and losses, interest expenses, interest income, other income, and taxes are excluded from the operating margin.
Option: The right to buy (a call option) or sell (a put option) a fixed amount of a given stock at a specified price within a specified time. Options are also traded on indexes, foreign currencies and debt instruments. A signed and approved OPTION AGREEMENT is a prerequisite to trading options.
Option Premium: The amount per share paid by an option buyer to the seller. An option premium that is quoted at 2 1/8 means an option buyer would pay $212.50 for an option contract controlling 100 shares.
Out-of-the-Money: For a call option, the market price of the underlying security is lower than the exercise price. For a put option, the market price of the underlying security is higher than the exercise price.
Over-the-counter (OTC): Marketplace for securities that are not listed on an exchange. OTC trading is regulated largely by the FINRA, a self-regulatory group. OTC securities are traded by many registered dealers rather than through an exchange specialist. Other OTC markets include those for government and municipal bonds.
Overallotment Provision: Another term for the green shoe clause, which is a part of the underwriting agreement that allows the underwriters to buy additional shares at the offering price to cover an overallotment for a period of time after the IPO.
Oversubscribed: When there are more orders for an IPO than shares available, it is oversubscribed. Oversubscription to a new issue generally means there will be an increase in the stock price in the aftermarket.