| Pairs trading | |
| a strategy of taking out two spread bets to maximise the return from one share (or index) outperforming the other. For example, you buy (go long of) the share (or index) you think will perform better and sell (go short of) the share or index you think will perform worse. The trades are placed on the two assets simultaneously. The advantage of this strategy is that is doesn't matter which way the overall market moves - as long as you're right about the pair, you make a profit. | |
| Par | |
| The nominal value of a stock or share. When a company is first setup a certain number of shares are authorised and assigned a par value. A percentage of the authorised shares are then offered to the public and these are referred to as 'issued' or 'called-up shares'. When shares start trading they are given an issue price, which can be at a level equal or above, but not below the par value. Apart from this, the par value doesn't really carry any weight; it just represents the nominal claim of stock holders in the event of bankruptcy. | |
| Partial closing | |
| closing a portion of an open trade by making an opposite bet. This has the effect of locking a profit or loss while leaving some of the original position open. For example, if you have an existing position of buy 10 Dec Lloyds and you sell 5 Dec Lloyds then you are left with an open position of buy 5 Dec Lloyds (half of your original trade). As opposed to cut and reverse. | |
| Parity | |
| when futures are trading at the same level as the spot. | |
| Part Close | |
| when you decide to close part of your bet but leave a percentage still open. | |
| PEG | |
| PEG stands for 'price earnings growth' and relates the PE ratio of a company to its growth rate. It is worked out by dividing the forecast PE by the expected percentage points growth in earnings per share (EPS). PEGs were invented by British investment guru Jim Slater with the aim of giving an indication as to whether or not the price you are paying for the potential growth of a company is reasonable. The PEGs work on a 0-1 scale, and the lower the PEG ratio, the cheaper the share is relative to the expected growth of the company. PEGs can be useful for comparing growth companies but are all but useless for those which are loss making or experiencing falling profits. | |
| Partly paid | |
| Shares which have been only partly paid for and on which further payment or payments are due. | |
| Par Value | |
| Original, or nominal value of a share and bears no relation to the actual value of the share. | |
| PEG | |
| Investing ratio designed to uncover growth stock. Measures relationship between price earnings ratio and earnings growth. | |
| Penny Shares | |
| Refers to small-cap shares of a very low price - but definitely not valued at a penny. A new issue is exactly what it says, ie. a share in a company which is about to be, or has just been issued, on the stock market. There are not so many new, popular issues now as there were during the 1980's heyday with the many privatisations but still a good many, many of which are too minor to be heard about in the press. Some financial bookmakers take bets on these shares, either before, during or just after they have been launched. | |
| Per Point/Pip/Tick | |
| a term meaning how much. A term used by spread betting companies to clarify the bets placed. For instance, a bet per point on British Railways is for each penny movement in the British Airways share price. A bet per point on the FTSE is for each point move in the relevant FTSE contract, e.g. a 100 point movement from 5,100 to 5,200 on a Daily FTSE contract would therefore incorporate a win or loss of £100 per £1 placed as a bet. | |
| Personal Equity Plans (PEP) | |
| Tax shelter for private investors, with limits on how much can be ploughed in every year. | |
| Penny Shares | |
| Penny shares are shares with a market value of less than £1. In theory they're a good way of making money, as a 1p increase in value is still an impressive percentage increase. In practice, however, they are an equally good way of losing money. | |
| PIGS | |
| PIGS refers to the following countries whose economies have being falling in recent years - Portugal Ireland Greece Spain. | |
| Pip | |
| A pip (also known as a tick or a point) is the smallest unit of movement in a spread bet. Typically a when spread trading shares a pip is the equivalent of 1 cent (however it for very cheap shares it can be pips can be measured in parts of a cent). Each 1 pip movement will result in either an increase or decrease on your open profit or loss on the trade depending on the direction of the movement. | |
| Pit | |
| The pit is the name used to refer to the trading floor of any of the major exchanges (e.g. NYSE, NASDAQ). It is where traders make prices and buy and sell shares on the market. During times of extreme volatility trading can be frantic amoung the traders as they try to make deals as fast as possible at the best prices available and hence the pit gets its name. | |
| Placing | |
| The sale of a large number of shares in one company by arrangement direct to institutions and others without going through the market. | |
| Plc Public Limited Company (previously Ltd) | |
| Private limited companies are still Ltd so you can now tell the difference. Some Plc companies are not quoted on the Stock Exchange. | |
| Point | |
| A point (also known as a tick or a pip) is the smallest unit of movement in a spread bet. A point is the unit of a contract/bet, sometimes referred to as a Pip or Tick. In other words this is a single movement up or down on a chosen instrument. For example, UK shares one point equals one penny, for US shares one point equals one cent. Typically a when spread trading shares a pip is the equivalent of 1 cent (however it for very cheap shares it can be pips can be measured in parts of a cent). Each 1 pip movement will result in either an increase or decrease on your open profit or loss on the trade depending on the direction of the movement. | |
| Portfolio | |
| A collection of investments (equities, bonds, commodities, property) grouped together are referred to as a portfolio. An investor, bank or fund manager's total holding of shares, bonds and other investments. Also, the sale of a large number of shares in one company by arrangement direct to institutions and others without going through the market. | |
| Position | |
| An open spread trade (either long or short) is referred to as a position. | |
| Pounds per points | |
| The usual way of describing the size of a bet; for instance with UK shares one point equals one penny so if you bet one pound per point you gain or lose one pound for every penny the share moves. | |
| Preference share | |
| Classed as debt, they carry a fixed dividend, but unlike ordinary shares, bring with them no voting rights. A share giving a fixed rate of dividend. The dividend ranks ahead of ordinary shares, but below debentures and loan stock. A perference share in a company pays a higher dividend than an ordinary share. Also, in the case of liquidation preference shares are redeemed before all other loans and shares. Preference shares trade at a premium to ordindary shares. | |
| Pre-market | |
| Spread trading providers will make a market on certain markets even before they have opened in the exchange. For example the LSE opens at 8am but some spread betting companies will normally quote prices on the biggest and most popular markets from 7am. | |
| Preliminary Results | |
| Also referred to as final, or annual results, they are the unaudited annual figures for the company.. | |
| Premium | |
| 1. the amount by which a price for one instrument is higher than that of a similar instrument. As opposed to discount. 2. the difference between the futures price and the spot price when the future is trading above the spot. | |
| Premium to Cash | |
| the amount by which a future exceeds the actual current market price. For example, current DOW market (CASH) is 7150 but the December future is trading at 7180 so the premium to cash is 30 points. | |
| Pre-Tax Profit | |
| Main performance indicator for most companies. | |
| Price earnings (P/E) ratio | |
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The P/E ratio provides an insight into how the market rates an individual share. The higher the ratio, the more highly valued the share. It is calculated by dividing the company's share price by its EPS figure. So, a retail stock valued at 300p with an EPS of 30p would be on a P/E ratio of 10. (It could be said to be 'on a multiple of 10' or to sell at '10 times earnings'). A more simplistic definition of the P/E (but meaning the same): this is calculated by taking the current earnings (profits after certain deductions) of the company and dividing them by the number of shares issued. This gives the earnings by share figure. It is then divided into the current share price which gives the P/E ratio. See also Earnings per share. |
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| Price Gapping | |
| This is the variation in the price when you closed out a deal and the money you actually due to conditions between the time the markets closed and re-opened. | |
| Price to book value (P/BV) | |
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Book value - also known as net asset value (NAV) - is calculated by dividing shareholders' equity in the balance sheet by the number of shares in issue. This is literally the net worth of the company's assets today. This NAV figure is then divided into the share price. Any figure below 1 suggests a company is looking cheap. A common valuation measure that compares the share price to the book value of assets.. Price to book value = Share price / Total assets - (Intangible assets + Total liabilities). This ratio is only useful for valuing companies that derive their profits from a large asset base.Note: Price to book value is also called the 'price to book ratio' and 'price to net tangible assets ratio' (P/NTA). |
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| Price to cash flow ratio) | |
| A valuation metric that compares the share price to cash flow per share. | |
| Price to earnings growth (PEG) | |
| Compares a company's share price to its earnings per share. It's commonly used to value a stock. To calculate this, divide the PE by the stock's EPS growth rate. Price to earnings ratio = Share price / Earnings per share A PEG between 0 and 1 generally suggests a share is cheap relative to its growth prospects, and a PEG above 1 suggests a share is pretty fully valued. Note: Price to earnings ratio is also called a 'P/E' and a 'PER'. | |
| Price to sales ratio | |
| A useful valuation metric to use when companies have negative earnings due a loss. It compares the share price to sales per share. | |
| Price Earnings Ratio | |
| A popular financial ratio used to value companies, the Price Earnings (PE) Ratio is calculated by diving a company's current share price by its Earnings Per Share (EPS). See Earnings Per Share. | |
| Profit & Loss Account | |
| Part of a companies annual financial filings, a Profit and Loss (P&L) Account is a summary of earnings, expenses and calculated net profit. | |
| Proshare | |
| Advocate of investment clubs, it is backed by the government to promote private investment. | |
| Prospectus | |
| Official brochure issued by a company that wants to join the stock market. An independently audited document detailing a company's financial history and current situation and published ahead of a new share issue. | |
| Provisions | |
| Funds set aside to meet future, sometimes unknown, liabilities. | |
| Proxy | |
| Someone who votes on your behalf if you cannot attend a shareholders' meeting. You can tell your proxy how to vote or let him make up his own mind. | |
| Pump and Dump | |
| A form of fraud whereby falsely optimistic rumours about a company's earnings are circulated ahead of their official publication with a view to pushing up the share price. | |
| Put / Call Ratio | |
| The ratio of the number of options to sell traded in relation to the number of options traded to buy. The number is viewed as a gauge of market sentiment. | |
| Put Option | |
| the right, but not the obligation, to sell a market at a specified price (the strike price) on a particular date in the future. | |
