P&S (Purchase and Sale Statement) - A statement sent by a commission house to a customer when any part of a futures position is offset, showing the number of contracts involved, the prices at which the contracts were bought or sold, the gross profit or loss, the commission charges, the net profit or loss on the transactions, and the balance.

Paper Profit or Loss - The profit or loss that would be realized if open contracts were liquidated as of a certain time or at a certain price.

Par - (1) Refers to the standard delivery point(s) and/or quality of a commodity that is deliverable on a futures contract at contract price. Serves as a benchmark upon which to base discounts or premiums for varying quality and delivery locations. (2) In bond markets, an index (usually 100) represents the face value of a bond.

Path Dependent Option - An option whose valuation and payoff depends on the realized price path of the underlying asset, such as an Asian option or a Lookback option.

Pay/Collect - A shorthand method of referring to the payment of a loss (pay) and receipt of a gain (collect) by a clearing member to or from a clearing organization that occurs after a futures position has been marked-to-market. See Variation Margin.

Pegged Price - The price at which a commodity has been fixed by agreement.

Pegging - Effecting commodity transactions to prevent a decline in the price of the commodity so that previously written put options will expire worthless, thus protecting premiums previously received.

Pit - A specially constructed arena on the trading floor of some exchanges where trading in a futures contract is conducted. On other exchanges the term "ring" designates the trading area for a commodity. See Ring.

Pit Brokers - See Floor Broker.

Point - A measure of price change equal to 1/100 of one cent in most futures traded in decimal units. In grains, it is 1/4 of one cent; in T-bonds, it is one percent of par. See Tick.

Point-And-Figure - A method of charting which uses prices to form patterns of movement without regard to time. It defines a price trend as a continued movement in one direction until a reversal of a predetermined criterion is met.

Point Balance - A statement prepared by futures commission merchants to show profit or loss on all open contracts by computing them to an official closing or settlement price, usually at calendar month end.

Pork Bellies - One of the major Cuts of the hog carcass that, when cured, becomes bacon.

Portfolio Insurance - A trading strategy which attempts to alter the nature of price changes in a portfolio to substantially reduce the likelihood of returns below some predetermined level for an established period of time. This can be achieved by moving assets among stocks, cash and fixed-income securities or, with the advent of stock index futures contracts, by hedging a stock-only portfolio by selling stock index futures in a declining market or purchasing

futures in a rising market.. The objective is to create an exposure similar to that of a stock portfolio with a protective purchased put option.

Position - An interest in the market, either long or short, in the form of one or more open contracts. Also, "in position" refers to a commodity located where it can readily be moved to another point or delivered on a futures contract. Commodities not so situated are "out of position." 

Position Limit - The maximum position, either net long or net short, in one commodity future (or option) or in all futures (or options) of one commodity combined which may be held or controlled by one person as prescribed by an exchange and/or by the regulator.

Position Trader - A commodity trader who either buys or sells contracts and holds them for an extended period of time, as distinguished from the day trader, who will normally initiate and offset a futures position within a single trading session.

Positive Carry - The cost of financing a financial instrument (the short-term rate of interest), where the cost is less than the current return of the financial instrument. See also Carrying Charges and Negative Carry.

Posted Price - An announced or advertised price indicating what a firm will pay for a commodity or the price at which the firm will sell it.

Premium - (1) The amount a price would be increased to purchase a better quality commodity; (2) refers to a futures delivery month selling at a higher price than another, as "July is at a premium over May"; (3) cash prices that are above the futures price, such as in foreign exchanges. If the forward rate for Italian lira is at a premium to spot lira, it is selling above the spot price. See Contango, Discount; (4) the money, securities or property the buyer pays to the writer for granting an option contract.

Price Basing - A situation where producers, processors, merchants or consumers of a commodity establish commercial transaction prices based on the futures prices for that or a related commodity (e.g., an offer to sell corn at 5 cents over the December futures price). This phenomenon is commonly observed in grain and metal markets.

Price Discovery - The process of determining the price level for a commodity based on supply and demand factors.

Price Manipulation - Any planned operation, transaction or practice calculated to cause or maintain an artificial price.

Price Movement Limit - See Limit (Up or Down).

Primary Market - (1) For producers, their major purchaser of commodities; (2) in commercial marketing channels, an important center at which spot commodities are concentrated for shipment to terminal markets; and (3) to processors, the market that is the major supplier of their commodity needs.

Principals' Market - A market where the ring dealing members act as principals for the transactions they conclude across the ring and with their clients.

Privileges - See Option.

Program Trading - The purchase (or sale) of a large number of stocks contained in or comprising a portfolio. Originally called "program" trading when index funds and other institutional investors began to embark on large-scale buying or selling campaigns or "programs" to invest in a manner which replicated a target stock index, the term now also commonly includes computer aided stock market buying or selling programs portfolio insurance, and index arbitrage.

Prompt Date -The date on which the buyer of an option will buy or sell the underlying commodity (or futures contract) if the option is exercised.

Public - In trade parlance, non-professional speculators as distinguished from hedgers and professional speculators or traders.

Public Elevators -Grain elevators in which bulk storage of grain is provided for the public for a fee. Grain of the same grade but owned by different persons is usually mixed or commingled as opposed to storing it "identity preserve". Some elevators are approved by exchanges as "regular" for delivery on futures contracts.

Purchase and Sale Statement - See P&S.

Put Option - An option to sell a specified amount of a commodity at an agreed price and time at any time until the expiration of the option. A put option is purchased to protect against a fall in price. The buyer pays a premium to the seller/grantor of this option. The buyer has the right to sell the commodity or enter into a short position in the futures market if the option is exercised. Also see Call Option.

Pyramiding - The use of profits on existing positions as margin to increase the size of the position, normally in successively smaller increments.