OAS Option-adjusted spread.

obligor A counterparty that poses credit risk.

OCC Office of the Comptroller of the Currency

off-balance sheet financing Financing that does not appear on a firm's balance sheet.

off-the-run Refers to US Treasury securities that were not recently auctioned.

Office of the Comptroller of the Currency The primary regulator of US national banks.

Offset The closing of a futures position by taking an opposite position in the same contract.

OID Original issue discount.

on-balance sheet financing Financing that appears on a firm's balance sheet.

on-the-run Refers to US Treasury securities that were recently auctioned.

open-end fund A mutual fund that continually issues or redeems its own shares at their NAV to meet investor demand.

open-ended mortgage bond A mortgage bond whose claim on collateral can be diluted by subsequent bond issuances.

operational risk Risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.

operations risk Risk associated with the day-to-day operation of a non-financial firm.

opportunity costs Transaction costs arising from orders that are not fulfilled on the day they are placed.

option A type of derivative instrument.

option-adjusted duration Duration calculated in a manner that accurately reflects the interest rates sensitivity of options.

option-adjusted spread Yield spread not attributable to embedded options.

option-adjusted yield A metric of yield calculated for fixed income instruments that have embedded options.

option holder The party to whom an option grants rights, usually the purchaser.

option issuer Option writer

option premium The purchase price of an option.

option pricing theory The body of financial theory used by financial engineers to value options and other derivative instruments.

option spread A position combining two or more options on a single underlier.

option valuation Any procedure for assigning a market value to an option.

option writer The party who grants an option, usually the seller of an option.

optional redemption A provision allowing an issuer to call a security.

Orange County debacle In 1994, the Orange County investment pool lost USD 1.7 billion from speculative activities.

ordinary interpolation A flexible technique for interpolating functions.

ordinary least squares A flexible technique for fitting a curve to data so as to minimize the sum of squared differences between the curve and data points.

original issue discount bond Zero-coupon bond.

Ostrander, Patsy Manager of a Fidelity Investments junk bond fund who was convicted of accepting illegal compensation from Michael Milken during the 1980s.

OTC Over the counter.

out-of-the-money A condition where an option is neither at-the-money nor has any intrinsic value.

outperformance option An option to exchange one asset for another.

over the counter Traded in some context other than a formal exchange.

overfit An interpolated function is said to be overfit if it inappropriately weaves up and down in order to fit too many data points.

overlay strategy Addition of managed futures to an existing investment portfolio.

overnight Commencing immediately and lasting for one trading day.

Own Funds Directive 1989 European legislation defining capital for banks.

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