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This article is from the Investment Terms.

Investment Terms: P

• P&S (Purchase and Sale) Statement:
  A statement sent by a commission house to a customer when his futures or options on futures position has changed, showing the number of contracts bought or sold, the prices at which the contracts were bought or sold, the gross profit or loss, the commission charges, and the net profit or loss on the transactions.
  
  
• Par:
  The face value of a security. For example, a bond selling at par is worth the same dollar amount it was issued for or at which it will be redeemed at maturity.
  
  
• Payment-In-Kind (PIK) Program:
  A government program in which farmers who comply with a voluntary acreage-control program and set aside an additional percentage of acreage specified by the government receive certificates that can be redeemed for government-owned stocks of grain.
  
  
• Performance Bond Margin:
  The amount of money deposited by both a buyer and seller of a futures contract or an options seller to ensure performance of the term of the contract. Margin in commodities is not a payment of equity or down payment on the commodity itself, but rather it is a security deposit. See Customer Margin and Clearing Margin.
  
  
• Pit:
  The area on the trading floor where futures and options on futures contracts are bought and sold. Pits are usually raised octagonal platforms with steps descending on the inside that permit buyers and sellers of contracts to see each other.
  
  
• Point-and-Figure Charts:
  Charts that show price changes of a minimum amount regardless of the time period involved.
  
  
• Position:
  A market commitment. A buyer of a futures contract is said to have a long position and, conversely, a seller of futures contracts is said to have a short position.
  
  
• Position Day:
  According to the Chicago Board of Trade rules, the first day in the process of making or taking delivery of the actual commodity on a futures contract. The clearing firm representing the seller notifies the Board of Trade Clearing Corporation that its short customers want to deliver on a futures contract.
  
  
• Position Limit:
  The maximum number of speculative futures contracts one can hold as determined by the Commodity Futures Trading Commission and/or the exchange upon which the contract is traded. Also referred to as trading limit.
  
  
• Position Trader:
  An approach to trading in which the trader either buys or sells contracts and holds them for an extended period of time.
  
  
• Positive Yield Curve:
  See Yield Curve.
  
  
• Premium:
  (1) The additional payment allowed by exchange regulation for delivery of higher-than-required standards or grades of a commodity against a futures contract. (2) In speaking of price relationships between different delivery months of a given commodity, one is said to be ""trading at a premium" over another when its price is greater than that of the other. (3) In financial instruments, the dollar amount by which a security trades above its principal value. See Option Premium.
  
  
• Price Discovery:
  The generation of information about ""future'' cash market prices through the futures markets.
  
  
• Price Limit:
  The maximum advance or decline from the previous day's settlement price permitted for a contract in one trading session by the rules of the exchange. See also Variable Limit.
  
  
• Price Limit Order:
  A customer order that specifies the price at which a trade can be executed.
  
  
• Primary Dealer:
  A designation given by the Federal Reserve System to commercial banks or broker/dealers who meet specific criteria. Among the criteria are capital requirements and meaningful participation in the Treasury auctions.
  
  
• Primary Market:
  Market of new issues of securities.
  
  
• Prime Rate:
  Interest rate charged by major banks to their most creditworthy customers.
  
  
• Producer Price Index (PPI):
  An index that shows the cost of resources needed to produce manufactured goods during the previous month.
  
  
• Pulpit:
  A raised structure adjacent to, or in the center of, the pit or ring at a futures exchange where market reporters, employed by the exchange, record price changes as they occur in the trading pit.
  
  
• Purchasing Hedge (or Long Hedge):
  Buying futures contracts to protect against a possible price increase of cash commodities that will be purchased in the future. At the time the cash commodities are bought, the open futures position is closed by selling an equal number and type of futures contracts as those that were initially purchased. Also referred to as a buying hedge. See Hedging.
  
  
• Put Option:
  An option that gives the option buyer the right but not the obligation to sell (go "short'') the underlying futures contract at the strike price on or before the expiration date.
  
  

 

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