Order Driven Market A stock market where brokers acting on behalf of
clients match trades with each other either on the
trading floor of the exchange or through a central
computer system.
Ordinary Shares Known as common stock in the United States and
equities in the United Kingdom. Shareholders are
the owners of a company and are protected so the
maximum loss is the value of their shares and not
the full debt of the company. Ordinary shares are
divided into Preferred and Deferred ordinaries.
Out-of-the-Money A call option whose exercise price is above the cur-
rent underlying share price or a put option whose
exercise price is below the current underlying share
price. This option has no intrinsic value.
Out-Trade A trade which has been incorrectly matched on the
floor of an exchange.
Over-the-Counter A one-to-one agreement between two counter-
(OTC) parties where the specifications of the product are
completely flexible and non-standardised. A nego-
tiated trade where counterparty risk is potentially
an issue.
Par Value See Nominal Value.
Pension Fund Fund set up by a corporation, labour union, gov-
ernmental entity or other organisation to pay the
pension benefits of retired workers. Pension funds
invest billions annually in the securities markets
and are therefore major market players who also
use derivatives markets.
Physical Delivery A derivative contract that on delivery will result in
the asset being delivered, for example bond futures,
stock options, commodities.
Pit The designated area on the market floor where a
particular contract is traded. It may have an alter-
native name in some markets, for example on the
LME trading takes place in the ‘ring’.
Placement The first stage of money laundering, in which the
money is passed placed in the banking system.
See layering, integration.
Portfolio List of investments held by an individual or com-
pany, or list of loans made by a bank or financial
institution. Can also be the derivatives positions
held by a trader/dealer.
194 Glossary of derivatives terms