Glossary of Financial Terms: U-V
Description
This article is from the Glossary of
Financial Terms.
Glossary of Financial Terms: U-V
- Uncovered call
A short call option position in which the writer does not own
shares of underlying stock represented by his option
contracts. Also called a "naked" call, it is much riskier for the
writer than a covered call, where the writer owns the underlying
stock. If the buyer of a call exercises the option to call, the
writer would be forced to buy the stock at market price.
- Uncovered put
A short put option position in which the writer does not have a
corresponding short stock position or has not deposited, in a cash
account, cash or cash equivalents equal to the exercise value of
the put. Also called "naked" puts, the writer has pledged to buy
the stock at a certain price if the buyer of the options chooses
to exercise it. The nature of uncovered options means the writer's
risk is unlimited.
- Underlying security
Options: the security subject to being purchased or sold upon
exercise of an option contract. For example, IBM stock is the
underlying security to IBM options. Depositary receipts: The
class, series and number of the foreign shares represented by the
depaositary receipt.
- Volatility
A measure of risk based on standard deviation in fund performance
over 3 years. Scale is 1-9; higher rating indicates higher
risk.
Std Deviation Rating Std Deviation Rating
up to 7.99 1 20.00-22.99 6
8.00-10.99 2 23.00-25.99 7
11.00-13.99 3 26.00-28.99 8
14.00-16.99 4 29.00 and up 9
17.00-19.99 5
 
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