Price-to-Earnings Ratio (P/E Ratio)
Definition
A valuation ratio measuring a company’s current share price relative to its per-share earnings. Lower P/E may indicate undervaluation; higher may indicate growth expectations.
Formula / Rules
$ \text{P/E} = \frac{\text{Market Price Per Share}}{\text{Earnings Per Share (EPS)}} $
Example
A stock trading at $50 with $5 EPS has a P/E of 10.
Frequently Asked Question
What is Price-to-Earnings Ratio (P/E Ratio) in trading?
A valuation ratio measuring a company’s current share price relative to its per-share earnings. Lower P/E may indicate undervaluation; higher may indicate growth expectations.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.