A 2 Z TERMINOLOGY

Guys today I am continuing with A 2 Z terminology….

Operational range

The price range for a security on a trading day such that buy orders outside the Maximum of the range and sell orders outside the Minimum of the range causes a price freeze and are sent to the Exchange for approval. It is calculated as a percentage of the Base price.

Order

A buy or a sell offer/bid for any of the Capital Market securities entered by the dealer in the system. The system generates a unique order number for each order entry.

Order Quantity Freeze percentage

A percentage of the outstanding quantity of a security is ascertained. An order with quantity exceeding this percentage causes a freeze and is sent to the Exchange for approval.

One For One

This is meant to denote that in a bonus issue declared a bonus share has been given for every share held. In effect the share capital of the company doubles. Other terms commonly used to denote the proportion of bonus shares issued are two for three, three for five and the like.

Options

The holder of an option contract has the right but not the obligation to buy (call option) or sell (put option) a specific quantity of a given asset at a specified price at or before a specified date in the future. The purchaser pays a non-refundable, one time fee (option premium) to the seller (writer) to acquire this right. If the holder chooses to exercise the right to buy or sell the asset, the writer of the option has to deliver or take delivery of the asset. The potential loss to the option writer is therefore unlimited.

Over The Counter (OTC)Trading

A secondary market in which shares are bought and sold to the general public by jobbers and brokers outside an organised market place. Generally, the OTC market consists of geographically diffused dealers.

Oversubscribed

A company may offer for sale a certain number of shares. If applications are received for shares in excess of the number offered, the issue is termed as oversubscribed.

Panic Selling

A condition of the stock market in which not only inexperienced investors, but also sturdy bulls, take fright and start selling. It may be caused by sudden unfavourable news or rumour, or a Random Walk by shares downwards, or simply, in bear market conditions, the absence of financial institutions from the market.

Passed Dividend

A company is termed to have "passed dividend" if it has not declared its usual annual dividend. P/E Ratio or Price-Earnings Ratio: An indicator of how highly a share is valued in the market. Arrived at by dividing the price or a share by the earnings per share (EPS).

Premium

The price of an option (call or put) contract, determined in the competitive market place, which the buyer (holder) of the option pays to its seller (writer) for the rights granted to the former by the option contract.

Pre-Open

A time period in the trading day for the Normal market. Trading members are allowed to enter orders during this period. These orders in the system take part in the algorithm for the calculation of the opening price during this period.

Price Time Priority

All orders received on the system are sorted with the best priced order getting the first priority for matching i.e. the best buy order matches the best sell order. Within similar priced orders, they are sorted on time i.e. the one that came in early gets priority over the later one.

Pay-in

Pay-in day is the designated day on which the securities or funds are paid in by the members to the clearing house of the Exchange.

Pay-out

Pay-out day is the designated day on which securities and funds are paid out to the members by the clearing house of the Exchange.

Price band

Price bands set te upper and lower limit within which a security price can fluctuate on a given day/settlement. In case of intra-day, the price band is determined over the closing price of the previous day and in the case of intra-settlement, the price bands are determined over the closing price of the last day of the previous settlement cycle. Orders outside these price bands will not be executed by the system.

Price rigging
When persons acting In concert with each other collude to artificially increase or decrease the prices of a security, that process is called price rigging.

Portfolio
The group name for the entire collection of investments belonging to an investor or held by a financial organization such as a bank, pension fund or investment trust.The idea of a portfolio is that you should invest in a diversifed selection of investments. Don't have all your eggs in one basket

Price sensitive information
Price sensitive information is information about a company's trading or other affairs which would, if generally known, be expected to have an influence on its share price.

Primary market
a place where money is raised by companies to pay for expansion or pay off existing investors.In the futures markets, the primary market is the main underlying market for the financial instrument on which the futures contract is based.

P/E Ratio or Price-Earnings Ratio:

An indicator of how highly a share is valued in the market. Arrived at by dividing the price or a share by the earnings per share (EPS).

Put Option
The right to sell stock at an agreed price at or before a stated future time. Contrast this will call options.

Price risk

It arises from the variability of prices of shares in the market. The share prices can move either way and are extremely volatile. The risk arising from the fact that your portfolio value may decrease or increase is the price risk.