Glossary of Derivatives Terms – P

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An option is said to be pinned when at expiry the asset price is exactly the same as an options strike price.

Each and every option, future and underlying holding of a specific asset.

The price of an options contract, determined in the competitive marketplace, which the buyer of the option pays to the option writer.

Profit Graph or Payoff Diagram
A graphical representation of the potential outcomes of a strategy. Profit or loss is graphed on the vertical axis, and various underlying asset prices are graphed on the horizontal axis. The graph usually depicts the P&L at expiration of the options involved in the strategy.

Profit Range
The range within which a particular position makes a profit. Generally used in reference to strategies that have two break-even points – an upside break-even and a downside break-even. The price range between the two break-even points would be the profit range (which may be negative!).  See also Break-Even Point.

Profit Table
A table of results of a particular strategy at some point in time. This is usually a tabular compilation of the data drawn on a profit graph.


See Digital Put












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