Futures and Forex Glossary Dictionary P3

Price gap

When the price of a security jumps to a higher or lower level without any overlapping trading.

Price limit

The high and low prices that an option or commodity is allowed to reach during a trading session. When the price limit is reached, no more trading will take place for the rest of the trading day.

Price Transparency

When all agents in a market are able to trade at the same prices. Price transparency is vital to maintain a free and fair market.

Principal Value

The original amount invested in a trade.

Principals

The original amount borrowed on a loan or the outstanding amount on a loan, not counting interest.

Producer price index (PPI)

Main economic indicator that measures the monthly price change in the price of output from producers. PPI is used as an inflation and price level indicator.

Profit Taking

Closing an open position when it's profitable to do so. See Also: Take Profit

Purchase And Sale Statement (P&S) 

The statement sent to the holder of a futures or options contract by a futures commission merchant  after the contract has been offset or liquidated. It includes information about profits or losses, number of contracts, commission charges and more.

Purchasing Power Parity

A method of measuring the strength of a currency against another by comparing how many units of currency is needed to purchase a common good in each country (or region).

Put Option

An option where the buyer of the option has the right  (but not obligation) to sell the underlying asset at a predetermined price  (strike price) to the seller of the option. The seller/writer of the option is then obligated to buy the underlying asset at the strike price. See Also: Options

Put Writer

The individual or institution that sells a put option. See Also: Options

Pyramiding

A method of increasing the size of a position by using more margin as the value of the security appreciates.