976 Glossary 
Treasury debt issue, underlies that option contract. See also Equity Option, Index 
Option. 
Portfolio Insurance: a method of selling index futures or buying index put options 
to protect a portfolio of stocks. 
Position: as a noun, specific securities in an account or strategy. A covered call writ­
ing position might be long 1,000 XYZ and short 10 XYZ January 30 calls. As a verb, 
to facilitate; to buy or sell-generally a block of securities-thereby establishing a 
position. See also Facilitation, Strategy. 
Position Limit: the maximum number of put or call contracts on the same side of 
the market that can be held in any one account or group of related accounts. Short 
puts and long calls are on the same side of the market. Short calls and long puts 
are on the same side of the market. 
Premium: for options, the total price of an option contract. The sum of the intrinsic 
value and the time value premium. For futures, the difference between the 
futures price and the cash price of the underlying index or commodity. 
Present Worth: a mathematical computation that determines how much money 
would have to be invested today, at a specified rate, in order to produce a desig­
nated amount at some time in the future. For example, at 10% for one year, the 
present worth of $ll0 is $100. 
Price-Weighted Index: a stock index that is computed by adding the prices of each 
stock in the index, and then dividing by the divisor. See also Capitalization­
Weighted Index, Divisor. 
Profit Graph: a graphical representation of the potential outcomes of a strategy. 
Dollars of profit or loss are graphed on the vertical axis, and various stock prices 
are graphed on the horizontal axis. Results may be depicted at any point in time, 
although the graph usually depicts the results at expiration of the options involved 
in the strategy. 
Profit Range: the range within which a particular position makes a profit. Generally 
used in reference to strategies that have two break-even points-an upside break­
even and a downside break-even. The price range between the two break-even 
points would be the profit range. See also Break-Even Point. 
Profit Table: a table of results of a particular strategy at some point in time. This is 
usually a tabular compilation of the data drawn on a profit graph. See also Profit 
Graph.