Working
Capital
A financial calculation that is equal to a corporation's current assets
minus its current liabilities. Working capital finances a business's cash
conversion cycle--period needed to convert raw materials into finished goods,
finished goods into sales, and accounts receivable into cash. Sources of
working capital include retained earnings, short-term loans and trade credit.
See: Accounts Receivable;
Current Assets; Current
Liabilities; Current Ratio;
Retained Earnings
Working Control
Effective control of a corporation exerted through ownership, whether
individually or by a group acting in concert, of less than 51% voting
interest.
See: Majority Shareholder;
Minority Interest
Workout Market
A price range where a broker-dealer feels that a buy or sell may be transacted.
For example, a client wishes to sell a block of stock and asks the broker-dealer
to estimate the sale price. The broker-dealer's reply would be, "It
is 30 to 32, workout." The estimation is that the block can be sold
somewhere between $30 and $32 per share.
Write-Off
The act of charging an asset amount to expense or loss to reduce or eliminate
the value of the asset, which reduces profits. Write-offs are taken in
accordance with allowable tax depreciation of a fixed asset, and with
the amortization of certain other assets.
See: Amortization; Depreciation;
Fixed Assets
Writer
Sellers of option contracts who obligate themselves to the performance
agreed upon in the contract: to sell (if a call was written) or to buy
(if a put was written) the underlying security at the predetermined price
by a specific date if the option is exercised. In return for the sellers'
obligation, they collect a premium.
See: Call Option; Naked
Option; Option Premium; Option
Writer; Put Option; Writing
Naked
Writing Naked
Strategy used by Option sellers (writers) in which they do not own the
underlying security. This strategy can lead to profits if the stock moves
in the anticipated direction. However, large losses can be incurred if
the stock moves in the opposite direction. The writer will have to go
into the open market to purchase the stock to effect delivery to the option
buyer.
See: Naked Option; Options;
Option Writer; Underlying
Security
Writing
Puts To Acquire Stock
An option writer, who believes a stock's price is going to decline, will
write a put option exercisable at the price in which the purchase of the
stock represents a good investment. If the stock goes down and the option
is exercised, the writer has bought the stock at the price that was decided
represents a good investment. In addition, the writer has the premium
income. If the stock goes up, the option will not be exercised and the
writer is ahead by the premium amount received.
See: Option Premium; Options;
Option Writer; Put
Option
WT (Warrant)
A certificate that gives a shareholder the right to purchase a security
at a specified price within a predetermined time period or perpetually.
Warrants are issued by corporations directly and are sometimes offered
along with a security as incentive to buy. The abbreviation "WT"
is used in newspaper stock listings.
See: Ex-Warrants; Subscription
Warrant; With Warrants
W/Tax (Withholding Tax)
The Internal Revenue Service (IRS) requires financial institutions to
report all client's social security numbers, interest and dividend payments
and sale proceeds. This practice applies to all US citizens and resident
aliens. Those clients who have not furnished a W-9 or W-8 form to the
institution are subject to withholding tax--also known as "backup
withholding".
WW (With Warrants)
A security that trades with warrants as a part of the issue. The abbreviation
"WW" is used in newspaper stock listings.
See: Warrant
