  We present a Gaussian state description of squeezed light generated in an
optical parametric oscillator. Using the Gaussian state description we describe
the dynamics of the system conditioned on homodyne detection on the output
field. Our theory shows that the output field is squeezed only if observed for
long enough times or by a detector with finite bandwidth. As an application of
the present approach we consider the use of finite bandwidth squeezed light
together with a sample of spin-polarized atoms to estimate a magnetic field.
