Archives

Price Gap

A price gap describes the situation where a stock opens at a price either higher or lower than the closing price the day before. This usually happens when some news affecting the value of the stock is announced after the market closes, e.g., positive or negative earnings, a buy-out, etc. Stocks that gap at the open often move back toward the previous close before moving again, but not always. Strong news such as projected higher earnings from the company tend to drive the stock without the pull back.

Preferred Shares

These are a type of stock issued by a company. Preferred shares give such shareholders a fixed dividend from the company’s earnings. Preferred shareholders also get paid before common shareholders.

Preferred Stock

Debt instruments. Preferred shareholders are paid ahead of common stock holders in the event the corporation is liquidated. Convertible preferred shares can be converted into common stock according to predetermined conditions.

PEG

Price to earnings ratio divided by the forecast annual earnings growth rate. Traditionally, stocks were said to be fairly valued when the p/e and the forecast growth rate were equal.

Percent to Double

We use this with respect to options trades in determining if we like an option enough to buy it or if we are in an option, if we want to stay in it. This calculation tells you how far the underlying stock must move before the option will double in value. We prefer a 7%-10% value, less if we can get it. This does not mean we will not buy an option, but it does give us insight as to how long we will hold it. Percent to double is a Smith Barney proprietary calculation.

Portfolio

Holdings of securities by an individual or institution. A portfolio may include various types of securities representing different companies and industry sectors.