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Glossary of Futures Trading Terms

Terms beginning with 0-9 Terms beginning with A Terms beginning with B Terms beginning with C Terms beginning with D Terms beginning with E Terms beginning with F Terms beginning with G Terms beginning with H Terms beginning with I Terms beginning with J Terms beginning with K Terms beginning with L Terms beginning with M Terms beginning with N Terms beginning with O Terms beginning with P Terms beginning with Q Terms beginning with R Terms beginning with S Terms beginning with T Terms beginning with U Terms beginning with V Terms beginning with W X Terms beginning with Y Z

Glossary terms beginning with P

Partnership
A form of business organization in which two or more individuals or entities manage a business and are equally and personally liable for its debts and liabilities.
Pair Trading
Another term for Spread Trading but more specifically to securities (stocks in particular) rather than commodities. Commonly refers to buying one stock and selling another related stock against it. An example would be spreading Coke SSF against Pepsi SSF. See also Spread Trade.
Performance Bond (Margin)
Funds that must be deposited as a performance bond by a customer with his or her broker, by a broker with a clearing member, or by a clearing member, with the Clearing House. The performance bond helps to ensure the financial integrity of brokers, clearing members and the Exchange as a whole. (See also Initial Margin and Maintenance Margin).
Physical Delivery
The transfer of the underlying commodity from the seller of a futures contract to the buyer of a futures contract. Each futures exchange has specific procedures for delivery of a physical commodity. Some futures contracts, such as stock index contracts, are cash settled.
Pivot
Price level established as being significant by market's failure to penetrate or as being significant when a sudden increase in volume accompanies the move through the price level.
PVT
Pivot Level
Pattern
The daily and interday market pattern as described in Toby Crabel’s book, “Day Trading with Short Term Price patterns and Opening Range Breakout.”
PB
Low is below the low of the preceding and following day.
PDH
Prior day high.
PDL
Prior day low.
Pit
A specially constructed arena on the trading floor of some exchanges where trading is conducted by open outcry. On other exchanges, the term “ring” designates the trading area.
Point
The minimum fluctuation in prices or options premiums. Also called ticks.
Position Limit
The maximum number of futures contracts that one can hold in certain regulated commodities, according to the provisions of the CFTC.
Position Trader
A trader who either buys or sells financial instruments and holds them for an extended period of time, as distinguished from the day trader, who will normally initiate and liquidate positions within a single trading session.
Position
A market commitment. For example, a buyer of futures contracts is said to have a long position and, conversely, a seller of futures contracts is said to have a short position.
Price Limit
Maximum price advance or decline from the previous day settlement price permitted for a futures in one trading session by the rules of the exchange.
PT
High is above the high of the preceding and following day.
Put (option)
An option that gives the option buyer the right, but not the obligation, to sell the underlying financial instrument at a particular price on or before a particular date. e.g., the right but not an obligation to sell foreign currency at a certain rate.
Put Spread
The selling of a put(s) at a lower strike price to pay for a put(s) at a higher strike.
Pacific Exchange PCX
Located in San Francisco, an exchange that trades equities and options.
Parity
The term used to describe an in-the-money option with a price that is the same as its intrinsic value. For example, with a stock at $50, a 40 call trading at $10 would be trading at parity because its price does not include any extrinsic or time value. In contrast, a 40 call trading at 10.25 would not be considered at parity because it includes a .25 of time value.
Partial Fill
A partial fill is when part of a limit order has been filled. A partial fill may be completed in the same day and then subsequently cancelled or the remainder may be filled. A day limit order that is partially filled will have the remainder cancelled at the end of the day if it has not been entirely filled. A partial fill on a GTC order may be carried over to the next market day until it is cancelled or filled in its entirety.
Price-to-earnings ratio (P/E)
The share price of a stock, divided by its per-share earnings over the past year.
P/E (Forward)
Price/earnings ratio, using earnings estimates for the next four quarters.
PEG Ratio
A stock's price/earnings ratio divided by its year-over-year earnings growth rate.
Pending Purchases
The current market costs and any potential margin requirements, based on real-time data, for the orders you have open. This sum includes OCO ("one cancels other") orders; it does not include open contingent orders.
Philadelphia Stock Exchange (PHLX)
The Philadelphia Stock Exchange (PHLX) was founded in 1790. The PHLX trades stocks, equity options, index options and currencies.
Pin Risk
When an underlying security settles at the option's strike price. The risk results from short option holders not knowing if they will be assigned.
Pips
Slang forex reference to digits added to or subtracted from the fourth decimal place in a quoted currency rate, i.e. 0.0001. See also Points.
Premium
The extent to which an option price exceeds its intrinsic value. 2) the total price of an option including both intrinsic and extrinsic or time value.
Price to Book Ratio
A stock's capitalization divided by its book value.
Price to Cash Flow Ratio
A stock's capitalization divided by its cash flow for the latest fiscal year.
Price to Sales Ratio
A stock's capitalization divided by its sales over the trailing 12 months.
Primary Market
In cases where the same contract is traded on multiple exchanges, the exchange that handles the most volume is considered the primary market. This can change day to day.
Profit Sharing Plan Trust
A Trust in which a defined portion or percentage of the account profits are shared with the trustee(s) on a defined basis.
Purchase and Sale Statement (P&S)
A statement sent by a Futures Commission Merchant to a customer when a futures or options position has been liquidated or offset. The statement shows 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 transaction. Sometimes combined with a Confirmation Statement.
Put/Call ratio
A ratio of the trading volume of put options to call options. It is used to gauge investor sentiment. For example, a high volume of puts compared to calls indicates a bearish sentiment in the market.
Pyramiding
The practice of using accrued paper profits to margin additional trades.

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

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