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Glossary - N, O

 

Naked Call

A call option where the writer is not short the underlying security.

Naked Put

A put option where the writer is not long the underlying security.

Neckline

A trendline drawn along the reaction lows of a head and shoulders top or the rally peaks of a head and shoulders bottom.

Negative Divergence

When two or more averages, indices or indicators fail to show confirming trends.

Neural Network

An artificial intelligence program that is capable of learning through a training process of trial and error.

 Non-confirmation

A market is said to be "In gear" when most averages and indicators that form a part of it confirm successive highs or lows.  For example, when the Dow Jones Industrial Average (DJIA) makes new highs, but the advance/decline (A/D) line does not, a non-confirmation is said to occur.  If other indicators or averages also fail to confirm, conditions are regarded as bearish until the non-confirmations are cleared up, and vice versa.

 

O

OAS

Option-adjusted spread.

Odd Lots

Units of stock of less than 100 shares; these do not customarily appear on the tape.

Odd-Lot Shorts

Odd lots that are sold short.  Since odd lots are usually the vehicle of uninformed traders, a high level of odd-lot shorts in relation to total odd-lot sales often characterizes a major market bottom.  A low level of odd-lot shorts compared with total odd-lot sales is a sign of a market top.

Offer

That which shows one's desire to sell a commodity at a given price; opposite of bid.

On Balance Volume (OBV)

On Balance Volume is an indicator developed by Joe Granville. OBV is calculated by starting with an arbitrary number. If the next period is up the volume for that period is added to the starting point and vice versa. The OBV then becomes a cumulative running total of this calculation. OBV is interpreted using divergence analysis as well as other trend determining techniques such as trendline and moving average analysis.

Opening Range

The range of prices that occur during the first 30 seconds to fifteen minutes of trading, depending on the preference of the individual.

Option

The right to buy or sell specific securities at a specified price within a specified time.  A "put" gives the holder the right to sell the stock, a "call" the right to buy the stock.  In recent years options on specific stocks have been listed on several exchanges, so that it is now possible to trade these instruments in the same way that the underlying stocks can be bought and sold.

Oscillator

An indicator used to identify overbought and oversold price regions.

Out-of-the-Money Option

Condition where an option has no intrinsic value.  

Out Trade

A mismatched trade between two traders in the pit, which is settled the next day.

Outside Day (Bar)

A day in which the trading range completely encompasses that of the previous session. It is often a signal that market psychology has changed and therefore represents a short-term reversal signal. Outside “days” (bars) can also be observer for Intraday, weekly and monthly data.

Overbought Condition

A high momentum or oscillator reading that indicates prices have moved too far from the norm. i.e. that the probabilities favor a trend reversal.

Oversold Condition

A low momentum or oscillator reading that indicates prices have moved too far from the norm. i.e. that the probabilities favor a trend reversal.

Overbought/Oversold Indicator

An indicator that attempts to define when prices have moved too far and too fast in either direction and thus are vulnerable to a reaction.

Over-the-Counter (OTC) Market

An informal collection of brokers and dealers.  Securities traded include almost all federal, state, municipal, and corporate bonds and all widely owned equity issues not listed on the stock exchanges.

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