What Is a Handle? Definition and Examples in Price Quotes

The term “handle” refers to the whole number part of a price quote and is commonly used in the context of futures and equities markets. For example, if a stock is trading at $256.75, the handle would be $256.

What Constitutes the Handle?

A handle is formed by the integer component of a price, excluding any decimals. In financial markets, this term is crucial for traders as it quickly conveys the primary price level of a security without concern for smaller, potentially more volatile price changes.

Why Use a Handle?

Handles simplify communication among traders by allowing them to reference a price level clearly and succinctly. This practice can be particularly useful in fast-paced trading environments, where precision and speed are paramount.

Examples of Handles

To better illustrate the concept, let’s consider two distinct scenarios:

• Stock Market Example:

  • If Google stock is trading at $1,482.34, the handle is $1,482.
  • If Apple stock is trading at $212.56, the handle is $212.

• Futures Market Example:

  • If a Gold futures contract is trading at $1,750.50, the handle is $1,750.
  • If a Crude Oil futures contract is trading at $45.20, the handle is $45.

Origin of the Term ‘Handle’

The term “handle” has a rich history rooted in the practice of simplifying price references on trading floors. Historically, floor traders needed a quick way to communicate prices, especially amidst noise and time constraints. The whole number (handle) was ideal for this purpose.

Related Terms

• Tick: A tick is the smallest unit of movement in the price of a security. It varies based on the security and the market in which it is traded.
• Basis Point: A basis point is one-hundredth of a percentage point (0.01%). It is used to express changes in interest rates, bond yields, and other financial percentages.

FAQs

Q1: Is the handle used in all financial markets?

• Yes, handles are widely used in most financial markets, including stocks, futures, and forex, to convey price levels quickly.

Q2: Do handles change with shifts in price?

• Yes, handles will change as the price of the security changes, reflecting the current whole number part of the quote.