Glossary A


The act of not exercising or selling an option before its expiration.

Adjusted Option

An option resulting after an event such as a stock split, stock dividend, merger, or spin-off. An adjusted option may represent some amount other than the one hundred shares that is standard in the U.S. For example, after a 2 for 1 stock split, the adjusted option will represent 200 shares. For certain adjusted options, the multiplier of the option may be something other than the $100 that is standard in the U.S.

Accrued Interest

The interest due on a bond since the last interest payment was made, up to, but not including the settlement date. Anyone wishing to buy the bond pays the market price of the bond plus any accrued interest. Conversely, anyone selling a bond will have the proceeds increased by the amount of accrued interest.


The 'A' in M&A (Mergers and Acquisitions) is when one company buys enough stock of another company to take control of that company. In many take-over attempts, the buying company may offer a price for the other company's stock that is well above current market value. The management of the company that is being bought might ask for a better stock price or try to join with a third company to counter the take-over attempt.

Affidavit of Domicile

A notarized affidavit executed by the legal representative of an estate reciting the residence of the decedent at the time of death. This document would be required when transferring ownership of a security from a deceased person's name.

All-Or-None Order (AON)

An order that must be filled completely when the order is executed or not filled at all. In other words, partial fills are not allowed on this type of order.

American Depository Recept (ADR)

Foreign company equities traded on a U.S. exchange. The ADR is issued by a U.S. bank representing a specified number of the foreign company's shares, which are held in trust by the bank. ADRs facilitate the trading of foreign stocks in U.S. markets. ADRs have exposure to currency fluctuations.

American-Style Option

An option contract that can be exercised at any time from the time the option is purchased up to and including the expiration date of the option.


The simultaneous purchase and sale of identical or equivalent financial instruments in order to benefit from a discrepancy in their price relationship.

Ask or Offer

The price of a stock or option at which a seller is offering to sell a security, that is, the price that investor may purchase a stock or option.


To have received notification of an assignment on short options by The Options Clearing Corporation through a broker.


When the seller (writer) of an option receives an exercise notice that obligates him to sell (in the case of a call) or purchase (in the case of a put) the underlying stock at the option's strike price.

At-The-Money (ATM)

An option is at-the-money when the price of the underlying asset is at or near the option’s strike price.

Automated Order Entry System

Some exchanges have computerized systems designed to route stock and option orders directly to the trading pit. They are intended to speed the execution of orders. These systems generally have limits on the size of orders. Examples of these systems are: RAES, AUTO EX, and SUPERDOT.


The Options Clearing Corporation (OCC) uses this procedure to exercise in-the-money options at expiration. Doing so protects the owner of the option from losing the intrinsic value of the option because of the owner's failure to exercise. Unless instructed not to do so by the owner of the option (through the owner's broker), The Options Clearing Corporation will exercise all expiring equity options that are held in client accounts if they are in-the-money by .01 or more. TD Ameritrade will automatically exercise an option position if it is .01 or greater in-the-money at expiration unless the owner of the option instructs otherwise.