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Finance GlossaryEarnings Per Share
Earnings Per Share
Definition of Earnings Per Share
Earnings Per Share or EPS refers to the amount of profit that a company generates per outstanding share it has in the stock market. It is calculated by dividing the net income of a company by its shares outstanding.
Formula to calculate Earnings Per Share: Net Income / Number of Outsanding Shares
Generally, dividends distributed to preferred shareholders are deducted from the net income for EPS calculations. The EPS of a company can thus indicate whether or not it is generating enough profit. It can also be used as a valuation metric.
Formula to calculate Earnings Per Share: Net Income / Number of Outsanding Shares
Generally, dividends distributed to preferred shareholders are deducted from the net income for EPS calculations. The EPS of a company can thus indicate whether or not it is generating enough profit. It can also be used as a valuation metric.
Related Terms
India VIX
India VIX is an index that measures volatility and market sentiment. The term VIX stands for Volatility Index and thus, the full form of India VIX is Indian Volatility Index.
A higher India VIX means higher volatility whereas India VIX would be lower due periods of low volatility. In fact, there are absolute values that help understand volatility via India VIX.
India VIX typically moves between 15 to 30, which represents a range that is considered “normal” as far as volatility is concerned.
However, India VIX has touched 90 during the 2008 financial crisis and trended near the value once again when the pandemic broke out in 2020.
A higher India VIX means higher volatility whereas India VIX would be lower due periods of low volatility. In fact, there are absolute values that help understand volatility via India VIX.
India VIX typically moves between 15 to 30, which represents a range that is considered “normal” as far as volatility is concerned.
However, India VIX has touched 90 during the 2008 financial crisis and trended near the value once again when the pandemic broke out in 2020.
Implied Volatility In Options
Implied volatility in options is a measure of the expected volatility of the underlying stock over the period of the options tenure. You could say that an option’s premium is related to the implied volatility - the change in the underlying share’s value over time affects the share price. In fact, the implied volatility rises when the options premium rises.
Narrow Market
A narrow market describes a situation where only a few stocks or sectors influence market movement, while the majority of stocks have low trading volume. It has few active participants on either the buy or sell side of the market. This limited participation suggests that the market trend is not broadly supported across the entire market.
Derivatives Market
The derivatives market is a place where financial contracts like futures, options, forwards, and swaps are traded. It is a complex market that is a subset of the stock market, commodity market, currency market, and others depending on the underlying asset that’s a part of the derivative contract.
Capped Style Option
Capital is the total amount of money that a trader can use to buy and sell securities. There are variations of the term, the most common one is “starting capital”. This is the amount of money a trader starts their journey with.
Long-Term Stocks
Long-term stocks are shares of companies that investors hold for three years or more with the intention of getting lucrative returns combined with solid future prospects. Long-term stocks are typically chosen based on fundamental analysis, including factors such as the company's financial health, growth potential, competitive advantage, and industry trends.
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