The lost chance to use resources in another way due to the decision to allocate them in another way. So the opportunity cost of choosing to hold onto a stock position in which you have a loss would be the cost of forgoing another investment. Another example would be the opportunity cost of failing to add to your IRA due to a decision to buy a new plasma TV instead.
"Opportunity cost is a term used in economics, to mean the cost of something in terms of an opportunity foregone (and the benefits that could be received from that opportunity), or the most valuable foregone alternative. For example, if a city decides to build a hospital on vacant land that it owns, the opportunity cost is some other thing that might have been done with the land and construction funds instead. In building the hospital, the city has forgone the opportunity to build a sporting center on that land, or a parking lot, or the ability to sell the land to reduce the city's debt, and so on. In more personal terms, the opportunity cost of spending a Friday night drinking with your friends could be the amount of money you could have earned if you had devoted that time to working overtime. This does not always mean something of monetary value, just anything that is of any value to the subject in question.
The consideration of opportunity costs is one of the key differences between the concepts of economic cost and accounting cost. In the case where the costs of a course of action are not immediately apparent because there is no explicit accounting or monetary cost (price) attached, there may even be an illusion that its benefits cost nothing at all; this is a hidden cost." From Wikipedia Jan 2005.
Online Resources:Investment Dictionary: Business Risk, Capital Gain, Interest Rate Risk, Roth IRA
diversification, derivatives, breakout, industry groups, Foreign Trade balance (and current account balance), market share, naked options, trading, technical analysis, cash flow, hedge funds, rollup, tax deferral, value investing, working capital.
