Glossary of Terms.

Payment Date
The date on which a declared stock, dividend or a bond interest payment is scheduled to be paid.

Pegging
Stabilizing a country's currency through its purchase or sale by the country's central bank.

Points
Points apply to security prices. In the case of shares, one point indicates $1.00 per share. For bonds and debentures, one point means 1% of par value. Par value is almost universally 100 for bonds.

Point Spread
The price movement required for a security to go from one "full point" level to another (i.e., stock goes up or down $1).

Position
The total of a trader's open contracts. The amount of a security either owned (a long position) or owed (a short position) by an individual or by a dealer. Dealers take long positions in specific securities to maintain inventories and thereby facilitate trading.

Position Delta
The sum of all positive and negative deltas in a hedged position.

Position Limit
The maximum number of open contracts in a single underlying instrument.

Preferred Stock or Share
An equity security that represents ownership in a corporation. It is issued with a stated dividend, which must be paid before dividends are paid to holders of common stock. It generally carries no voting rights. Such stock ranks ahead of common stock, and after the debenture holders, on the dissolution of a company. These kind of securities show ownership in a corporation and gives the holder a claim, prior to the claim of common stockholders, on earnings and also generally on assets in the event of liquidation. Most preferred stock pays a fixed dividend, stated in a dollar amount or as a percentage of par value.

Premium
1. The amount of cash that an option buyer pays to an option seller.
2. The difference between the higher price paid for a security and the security's face amount at issue.

Price
Price of a share of common stock on the date shown. Highs and lows are based on the highest and lowest intra-day trading price.

Price/Book Ratio
Compares a stock's market value to the value of total assets less total liabilities (book). Determined by dividing current price by common stockholders' equity per share (book value), adjusted for stock splits. Also called Market-to-Book.

Price/Earnings Ratio (P/E)
A tool for comparing the prices of different common stocks by assessing how much the market is willing to pay for a share of each corporation's earnings. It is calculated by dividing the current market price of a stock by the earnings per share.

Price/Earnings Ratio Equation
Assume XYZ Co. sells for $25.50 per share and has earned $2.55 per share this year: $25.50 = 10 times $2.55, therefore XYZ stock sells for 10 times earnings.

Price Patterns
Price Patterns are formations that appear on commodity and stock charts that have shown to have a certain degree of predictive value. Some of the most common patterns include: Head & Shoulders (bearish), Inverse Head & Shoulders (bullish), Double Top (bearish), Double Bottom (bullish), Triangles, Flags and Pennants (can be bullish or bearish depending on the prevailing trend).

Price/Sales Ratio
Determined by dividing stock's current price by revenue per share (adjusted for stock splits). Revenue per share for the P/S ratio is determined by dividing revenue for past 12 months by number of shares outstanding.

Profit
That which is left over for the owners of a business after all expenses have been deducted from the revenues of a firm. Gross profit is the profit before corporate income taxes. Net profit is the final profit of the firm after all deductions have been made.

Profit Margin
An indicator of profitability that is determined by dividing net income by revenue for the same 12-month period. Result is shown as a percentage. In long-term reference, a measure of a company's net profit margin in the latest reported quarter divided by profit margin in the fiscal year previous. In short-term reference, a measure of a company's net profit margin in the latest reported quarter divided by profit margin in the quarter immediately preceding.

Profit Taking
Selling securities to take a profit. The process of converting paper profits into cash.

Put
1. An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time.
2. The act of exercising a put option.

Rally
A brisk rise in the general price level of the market or in an individual stock.

Range
A security's low price and high price for a particular trading period, such as the close of a day's trading, the opening of a day's trading, or a day, month or year.

Rate of Change
Rate of Change is used to monitor momentum by making direct comparisons between current and past prices on a continual basis. The results can be used to determine the strength of price trends.
Note: This study is the same as the Momentum except that Momentum uses subtraction in its calculations while Rate of Change uses division. The resulting lines of these two studies operated over the same data will look exactly the same-only the scale values will differ.

Ratio
The relation that one quantity bears to another of the same kind, with respect to magnitude or numerical value.

Ratio Spread
A delta neutral spread where the number of long contract and short contracts do not equal.

Ratio Backspread
A delta neutral spread where an uneven amount of contracts are bought and sold with a ratio of less than 2 to 3. Optimally no net credit or net debit occurs.

Ratio Call Spread
A bearish or stable strategy in which a trader buys 2 higher strike calls and sells1 lower strike call. This strategy offers limited risk and unlimited profit potential.

Ratio Put Spread
A bullish or stable strategy in which a trader buys 1 higher strike put and sells two lower strike puts. This strategy offers limited risk and unlimited profit potential.

Relative Strength
A stock's price movement over the past year as compared to a market index (the S&P 500). Value below 1.0 means the stock shows relative weakness in price movement (under performed the market); a value above 1.0 means the stock shows relative strength over the 1-year period.

Return on Equity (ROE)
Indicator of profitability. Determined by dividing net income for the past 12 months by common stockholders' equity (adjusted for stock splits). The result is shown as a percentage.

Return on Investment (ROI)
Calculated by dividing the corporation's net profit after taxes by total assets, or by multiplying net profit margin by total asset turnover. In the United States the division is usually made before taxes. Return on Investment (ROI) is sometimes referred to as the return on total assets.

Revenue
The total income a business firm or government receives from all sources.

Reverse Split
A reduction in the number of a corporation's shares outstanding that increases the par value of its stock or its earnings per share. The market value of the total number of shares remains the same.

Rights Offering
Issuance of "rights" to current shareholders allowing them to purchase additional shares, usually at a discount to market price. Shareholders who do not exercise these rights are usually diluted by the offering. Rights are often transferable, allowing the holder to sell them on the open market to others who may wish to exercise them. Rights offerings are particularly common to closed end funds, which cannot otherwise issue additional common stock.

Risk
The potential financial loss inherent in an investment.

Risk (Implied)
In which the formula produces the percentage overbought/oversold for a contract using the price, a moving average and the option's implied volatility.