P
Parity
Describing an in-the-money option trading for its intrinsic value; that is, an option trading at parity with the underlying stock. Also used as a point of...
Payoff Diagram
See Profit Graph.
Physical Option
An option whose underlying security is a physical commodity that is not stock or futures. The physical commodity itself (a currency, treasury debt issue, c...
Position
As a noun, specific securities in an account or strategy. (A covered call writing position might be long 1,000 XYZ and short 10 XYZ January 30 calls). As a...
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...
Premium
The price of an option contract, determined in the competitive marketplace, which the buyer of the option pays to the option writer for the rights conveyed...
Price-Weighted Index
A stock index which is computed by adding the prices of each stock in the index, and then dividing by the divisor. See also Capitalization-weighted index,...
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 ar...
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-ev...
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 Prof...
Protected Strategy
A position that has limited risk. A protected short sale (short stock, long call) has limited risk, as does a protected straddle write (short straddle, lon...
Public Book (of orders)
The orders to buy or sell, entered by the public, that are generally away from the current market. The order book official or specialist keeps the public b...
Put
An option contract that gives the holder the right to sell the underlying security at a specified price for a certain fixed period of time. See also Call.
Put Call Parity
When pricing options, puts and calls that are equally in or out of the money will theoretically have the same price. Puts and calls that do do trade with p...
Put Option
The right, but not the obligation, to sell a security at a fixed price.