OPTIONS
A fence or collar is an option strategy that establishes a trading band around a security or commodity, generally to protect profits. One form of a fence involves the sale of an out-of-the-money call option on an underlying security; all or part of the premium thus received is used to buy a protective out-of-the money put on the security. Both the call and the put have the same expiration date. The call option establishes a ceiling price for the security, while the put option establishes a floor price for it, effectively 'fencing' in the option.
POPULAR TERMS
Capital Commitment
Future capital payments that a firm has pledged to pay out on long-term assets over a particular time period. This also talks about the securities ...
Overwithholding
A term which refers to an excess amount of tax being withheld for an employee. It will be sent back as a refund to the taxpayer after he or she fil ...
Diluted Earnings Per Share - Diluted EPS
It is the measure of a company’s profits.
Covenant
Promise a firm made to an indenture or other formal debt agreement, stating some activities will or won’t be carried out. In finance, it freq ...
Gross Spread
Difference between the security price paid by the underwriter and the actual price charged to the public. The spread compensates the underwriters o ...
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