The A, B, Cs of Money: O

OCTOBER EFFECT: Investors get all wobbly in October because some pretty big dips have happened in this ghoulish month. A few crappy days have lead people to say with vigour (and in a deep, propounding voice) "stocks fall in value during October," but the statistics don't support the claim. Prolly just a media thing to make a story and keep investors hopping.  Gotta get those traders trading y'know.

OFFER: When you choose a house that you want to buy, you have to make an offer to the seller.   The Offer to Purchase is a formal, legal agreement that offers a specific price for a property. The offer may be "firm", which means that no conditions are attached or "conditional" which means that specific conditions must be met – typically things like inspections and financing approvals — before the offer becomes binding on the buyer.

OPEN MORTGAGE: A mortgage that allows the borrower to repay the debt at any time and without prepayment charges. CLOSED mortgages, on the other hand, are those for which the interest rate is specified and term is fixed.

OPPORTUNITY COST: If you spend $50 on dinner, you can't spend the same $50 for those fabulous shoes that are on sale today only! That's the opportunity cost of having used the money. The opportunity cost of spending $5 on coffee every morning is the lost compounding on your savings over the long term.

OPTION: An option is a contract that offers the right to buy (a Call option) or sell (a Put option) a security at an agreed-upon price (called the strike price) during a certain timeframe or by a specific date (called the exercise date).  If you buy a call, you're betting the stock price will go up. If you buy a put, you're betting the sock price will go down.

OUT OF THE MONEY: When a call option's strike price is higher than the market price of the underlying asset, it's said to be "out of the money" or worthless. For a put, the strike price must be below the market price for the put to be out of the money.

OTC: Short for over-the-counter, which means the security is traded in some context other than on a formal exchange. Usually OTC stocks belong to small companies that can't make it to the Big Market, so dealers and brokers negotiate directly with each other.  Since bonds don't trade on a formal exchange, they are considered OTC securities.

OVERDRAFT: This happens when you spend money that's not in your bank account and the bank covers your butt. You can buy overdraft protection, which should really be renamed "Too Lazy to Keep Track Protection." Designed for people who don't want to have to be bothered with making sure they have enough money before they go shopping, overdraft protection protects your credit history from becoming bruised because you bounce a payment. Some people consider it permission to live beyond their means.

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