Uncovered Option:
A short option position that is not fully collateralized
if notification of assignment is received. A short call
position is uncovered if the writer does not have a long
stock or long call position. A short put position is
uncovered if the writer is not short stock or long another
put.
Underlying Security (stock):
The stock subject to being purchased or sold upon exercise
of an option contract.
Undervalued Security:
When a security's price is below what a market analyst
calculates based on fundamentals such as earnings
potential, cash flow, and hidden assets.
Undistributed Earnings:
The same as retained earnings. It is earnings that are not
paid as dividends, but reinvested in the company.
Unissued Stock:
Stock authorized in a company's charter but not issued.
Contrast with treasury stock, which has been issued and
then bought back.
Unit Investment Trust:
An unmanaged portfolio of investments put together by an
investment adviser, usually bonds, sold to investors as a
unit which is a fractional ownership of the total package
unit of trade. Units of a trust usually sell for $1,000
including sales commission and are normally not attractive
for short-term trading.
Unit:
Tradable component of an asset: share for stocks and
mutual funds, $1000 quantity for most bonds, and contract
for options and futures.
Unlisted Security:
A stock or bond not listed on an exchange (usually New
York or American) which trade in the over-the-counter
market.
Unpaid Dividend:
A dividend that has been declared by a corporation but not
yet paid.
Unsecured Debt:
Obligation not backed by the pledge of specific
collateral.
Variable Annuity:
A life insurance product contract in which the insurance company
guarantees a minimum total payment based on the performance of an
underlying securities portfolio or market index.
Variable Interest Rate:
Interest rate that is adjusted as market rates change. Can be
found in adjustable rate mortgages, bonds, and certificates of
deposit.
Vega:
A measure of the rate of change in an option's theoretical value
for a one-unit change in the volatility assumption.
Vertical Spread:
Most commonly used to describe the purchase of one option and
writing of another where both are of the same type and of same
expiration month, but have different strike prices. Example:
buying 1 XYZ May 60 call and writing 1 XYZ May 65 call. See also BULL
SPREAD; BEAR
SPREAD.
Vesting:
The entitlement to full pension plan benefits as one's length of
service increase with a particular employer. Normally expressed as
the number of months and years of employment required to be
vested.
VIX:
An index of implied volatility based on the CBOE's
OEX options. The exchange calculates the implied
volatility of eight at-the-money or near-the-money strikes
(both puts and calls) with a weighted average time to
maturity of 30 days.
Volatility:
A statistical measure of the movement of a security over a
specified time. Stocks with larger daily percentage
movements have larger volatility. See also historic,
individual, and implied volatility.
Volume:
The total number of stock, bonds, and option contracts
that have traded in a given period of time. A tool for
technical analysts; Volume figures are reported by
exchanges on a daily basis.
Voting Right:
Most common stock entitles a shareholder to the right to
vote in person, or by proxy, on corporate elections and
other related matters.
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