Trading positions not closed by the end of the trading day and held overnight. For securities trading, overnight positions expose the investor to risk because a number of events can negatively impact a position while the trading floor is closed. |||In forex trades, 5pm EST is considered the end of the trading day. Positions opened at 4:59pm EST and closed at 5:01pm EST are considered overnight positions because a new "day" begins after 5pm. Rollover interest is paid out or received on overnight positions based on the closing interest rate.
1. The transfer of an individual's rights or property to another person or business. 2. A notice received by an option writer stating that the option sold has been exercised by the purchaser of the option. 1. Essentially, an assignment is the transfer of ownership. An example of an assignment is when a person sells his or her car, thereby transferring the title to another.2. When assigned, the option writer has an obligation to complete the requirements of the option contract. If the option was a call (put) option, then the writer would have to sell (buy) the underlying security at the stated strike price. Assignment 1. The transfer of an individual's rights or property to another person or business. 2. A notice received by an option writer stating that the option sold has been exercised by the purchaser of the option. 1. Essentially, an assignment is the transfer of ownership. An example of an assignment is when a person sells his or her car, thereby transferring the title to another.2. When assigned, the option writer has an obligation to complete the requirements of the option contract. If the option was a call (put) option, then the writer would have to sell (buy) the underlying security at the stated strike price.
A futures contract with a provision permitting the contract holder to convey his or her rights of assignment to a third party. This enables the contract holder to assign the rights and obligations of a contract to another to perform and receive the benefits of that contract before it closes. For example, if an investor holds a futures contract and the holder finds that the security has appreciated by 1% at or before the contract is closed, then the contract holder may decide to assign the contract to a third party for the appreciated amount, thus making a profit on the contract before it even closes.Not all futures contacts have this provision. In fact, most exchange traded contracts are not assignable. Assignable Contract A futures contract with a provision permitting the contract holder to convey his or her rights of assignment to a third party. This enables the contract holder to assign the rights and obligations of a contract to another to perform and receive the benefits of that contract before it closes. For example, if an investor holds a futures contract and the holder finds that the security has appreciated by 1% at or before the contract is closed, then the contract holder may decide to assign the contract to a third party for the appreciated amount, thus making a profit on the contract before it even closes.Not all futures contacts have this provision. In fact, most exchange traded contracts are not assignable.
The difference in earnings or performance between what is actually achieved and what could have been achieved with the absence of specific fees, expenses or lost time. Forgone earnings represent the investment capital that the investor spent on investment fees. The assumption is that if the investor had been exposed to lower fees, he or she would have generated a better return. This term is often used when referring to management fees or other expenses paid to mutual funds, exchange-traded funds, or other pooled investment vehicles. Foregone earnings as they relate to investment performance can be a big drag on the long-term growth of assets. Something as seemingly innocent as a front-end load or a 1% management fee can cost thousands of dollars as the years pile up, thanks to the wonders of compound returns. To limit forgone earnings, it is important to look at the costs associated with each investment. For example, say you have $10,000 to invest and one fund charges 0.5%, while the other fund charges 2%. If you invest in the 2% fund, you will be charged $200, while the 0.5% fund only charges $50. The difference, or $150, is your forgone earnings, which could have been invested instead of being lost to fees.
The number of currency positions a trader can carry over from one trading day until the next. The central bank that regulates the bank or financial institution where the positions are held sets the overnight limit. These limits are reviewed on an ongoing basis. |||Overnight limits are preventative measures enacted by central banks to keep financial institutions from accumulating more currency exposure than can be hedged by the close of the trading day. This also has the effect of making financial institutions keep a closer eye on exposure to exchange rate movements throughout the day. Central banks can also set intraday limits to mitigate risk in the foreign exchange market.
In mutual funds, a unique number identifying your account with the fund. Like a bank account number, the folio number can be used as a way to uniquely identify fund investors and keep records of items such as how much money each investor has placed with the fund, their transaction history and contact details. A folio number can also be used to identify journal entries or parcels of land. All mutual funds need some sort of recordkeeping system in place. This information is necessary for ensuring each investor is returned the money they are entitled to, and for determining what fee structure applies to each investor. While recordkeeping is most often facilitated by the broker, in some cases an investor may be asked for a folio number by the fund provider to help ensure accuracy. This folio number may be present on investment statements or may be obtained through your broker.
A form of arbitrage involving the rearrangement of a bank's cash by taking its local currency and depositing it into eurobanks. The interest rate will be higher in the interbank market, which will enable the bank to earn more on the interest it receives for the use of its cash. |||Outward arbitrage works because it allows the bank to lend for more abroad then it could in the local market. For example, assume an American bank goes to the interbank market to lend at the higher eurodollar rate. Money will be shifted from an American bank's branch within the U.S. to a branch located outside of the U.S. The bank will earn revenues on the spread between the two interest rates. The larger the spread, the more will be made.
An option payoff that is equal to the asset's price if the asset is below the strike price, otherwise the payoff is zero. Watch: Put Option These types of options don't function like regular (plain vanilla) options that pay the difference between the exercise (strike) price and market price at expiry. Asset-or-Nothing Put Option An option payoff that is equal to the asset's price if the asset is below the strike price, otherwise the payoff is zero. Watch: Put Option These types of options don't function like regular (plain vanilla) options that pay the difference between the exercise (strike) price and market price at expiry.
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