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
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Glossary
