Trading Glossary

Pairs trading is a market-neutral trading strategy that matches a long position with a short position in a pair of highly correlated instruments. The strategy’s profit is derived from the difference in price change between the two instruments, rather than from the direction in which each moves.

A citizen of any country (other than a citizen of Bangladesh or Pakistan) is deemed to be a Person Of Indian Origin (PIO), if, I. He, at any time, held an Indian passport, or II. He or either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution of India or Citizenship Act, 1955, or III. A spouse (not being a citizen of Bangladesh or Pakistan or Sri Lanka) of an Indian citizen or of a person of Indian origin is also deemed to be PIO.

Portfolio Investment Scheme (PIS) is a scheme of the Reserve Bank of India (RBI) (defined in Schedule 3 of Foreign Exchange Management Act 2000) through which NRIs and PIOs can purchase and sell shares and convertible debentures of Indian companies on a recognized stock exchange in India by routing all such purchase/sale transactions through their account held with a Designated Bank Branch.

A put option is a right to sell or take a short position in a given asset at a fixed price on or before a specified date.