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