What Is “Overvalued”? An overvalued stock has a current price that is not justified by its earnings outlook, known as profit projections, or its price-earnings (P/E) ratio. Consequently, analysts and other economic experts expect the price to drop eventually. Key Takeaways: An overvalued stock has a current price that is not justified by its earnings outlook
What Is Overweight? An overweight investment is an asset or industry sector that comprises a higher-than-normal percentage of a portfolio or an index. An investor might choose to devote a greater portion of the portfolio to a sector that seems particularly promising, or an investor might go overweight on defensive stocks and bonds at a
What Is Overwriting? Overwriting is a trading strategy that involves selling options that are believed to be overpriced, with the assumption that the options won’t get exercised before they expire. Key Takeaways Overwriting is a strategy to sell (write) options that are overpriced under the assumption that the options won’t get exercised.Overwriting is used to
What Is Outbound Cash Flow? Outbound cash flow is any money a company or individual must pay out when conducting a transaction with another party. Outbound cash flows can include cash paid to suppliers, employee compensation, and taxes paid on income. Key Takeaways Outbound cash flow is any money a company or individual must pay
What Is an Outlay Cost? An outlay cost is a cost incurred in order to execute a strategy or acquire an asset. Outlay costs are also paid to vendors to acquire goods such as inventory or services, such as consulting or software design. They are concrete expenses that are actually incurred in order to achieve
What Is Out of the Money (OTM)? “Out of the money” (OTM) is an expression used to describe an option contract that only contains extrinsic value. These options will have a delta of less than 0.50. An OTM call option will have a strike price that is higher than the market price of the underlying
What Is an Output Gap? The term output gap refers to the difference between the actual output of an economy and the maximum potential output of an economy expressed as a percentage of gross domestic product (GDP). A country’s output gap may be either positive or negative. A negative output gap suggests that actual economic output
What Is an Outright Option? An outright option is an option that is bought or sold individually. This option is not part of a spread trade or other types of options strategy where multiple different options are purchased. Key Takeaways An outright option is one that is purchased individually and is not part of a
What is an Outside Director An outside director is a member of a company’s board of directors who is not an employee or stakeholder in the company. Outside directors are paid an annual retainer fee in the form of cash, benefits and/or stock options. Corporate governance standards require public companies to have a certain number
What Are Outside Sales? Outside sales refer to the sales of products or services by sales personnel that physically go out into the field to meet with prospective customers. Outside sales professionals tend to work autonomously outside of a formal office setting or a formal team environment. They often travel to meet customers face-to-face, as
