Glossary

Every term, in plain English.

286 markets terms, defined without the jargon. Search or browse A–Z.

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A

Active investing: Trying to beat the market by picking stocks and timing trades — higher fees, and after costs most active funds underperform a cheap index.
American option: An option that can be exercised any time up to expiration — most US stock options. Contrast with European.
Appreciation: A currency strengthening — it takes more of another currency to buy one unit of it.
Arbitrage: A near risk-free profit from price differences in the same asset across markets — quickly erased as traders exploit it.
Ask: The lowest price a seller is currently willing to accept for an option or stock.
Asset allocation: How a portfolio is split across asset classes (stocks, bonds, cash) — the single biggest driver of its risk and return.
Asset location: Choosing which account holds each asset (tax-inefficient ones in sheltered accounts) to reduce tax drag and raise after-tax return — distinct from asset allocation.
Assignment: When the seller (writer) of an option is obligated to fulfil the contract — e.g. deliver shares on a short call.
At the money (ATM): When the underlying price is roughly equal to the option's strike price.
Auto-exercise: A broker automatically exercising an option that finishes in the money at expiration, so it isn't wasted.

B

Backwardation: When later-dated futures trade below the spot price — often a sign of tight near-term supply.
Backwardation: When later-dated futures cost less than near ones — typically signalling tight current supply. Rolling contracts in backwardation adds value (positive roll yield).
Balance sheet: A snapshot of what a company owns and owes at one moment: assets = liabilities + shareholders' equity.
Base currency: The first currency in an FX pair — the one being priced. In EUR/USD, the euro is the base.
Basis point: One hundredth of a percent (0.01%). A move from 4.00% to 4.25% is 25 basis points — the standard unit for talking about yields and spreads.
Basis risk: The risk that a hedge and the position it protects don't move in perfect lockstep, leaving some residual exposure.
Bear market: A sustained decline in prices, often defined as 20% or more off recent highs.
Behaviour gap: The tendency of investors to earn less than their own funds by buying high and selling low in response to greed and fear.
Beta: How much a stock tends to move relative to the broader market. A beta of 1.5 means ~1.5% per 1% market move.
Beta-weighting: Translating each position's delta into a common benchmark's terms, so a whole portfolio's directional risk is one number.
Bid: The highest price a buyer is currently willing to pay.
Bid-ask spread: The gap between the bid and ask. Wider spreads mean higher trading costs and less liquidity.
Bid/ask spread: The gap between the highest price a buyer will pay (bid) and the lowest a seller will accept (ask) — a hidden cost on every trade.
Bitcoin: The first and largest cryptocurrency (2009), with a supply capped at 21 million coins — the basis of the debated 'digital gold' narrative.
Black swan: An unpredictable, high-impact event that conventional models fail to anticipate.
Black-Scholes: A mathematical model for pricing European options from spot, strike, time, rate, and volatility.
Blockchain: A shared ledger copied across many computers, with transactions bundled into cryptographically linked 'blocks' that make past records extremely hard to alter.
Bond: A loan to a government or company that pays periodic interest (a coupon) and repays its face value at maturity.
Box spread: A bull call spread plus a bear put spread at the same strikes — a near risk-free position used to lend or borrow at a fixed rate.
Breakeven: The underlying price at which a position makes neither a profit nor a loss at expiry.
Brent / WTI: The two main crude oil benchmarks: Brent (global, North Sea) and West Texas Intermediate (US). They usually trade within a few dollars of each other.
Bull market: A sustained rise in prices and optimism. (The bull is our mascot for a reason.)
Business cycle: The economy's rough rhythm of expansion, peak, contraction, and recovery — different sectors tend to lead at different stages.
Butterfly spread: A neutral, defined-risk strategy combining a bull and bear spread to profit if price stays near a central strike.
Buying power: The amount of capital available to open new positions, after margin requirements.

C

Calendar spread: Sell a near-dated option and buy a longer-dated one at the same strike, profiting from faster decay on the short leg.
Call: An option giving the right to buy the underlying at the strike price before expiry.
Callable bond: A bond the issuer can repay early, typically when rates fall so it can refinance more cheaply — bad for holders, who are paid a higher yield in return (negative convexity).
Cap rate: Capitalisation rate — a property's income yield: net operating income ÷ price (ignoring financing). A high cap rate means more yield but usually more risk; a low one signals a prime, safe property.
Capital expenditure (capex): Cash spent on long-term assets like equipment or property to maintain or grow the business.
Carry trade: Borrowing a low-interest-rate currency to hold a higher-yielding one, earning the rate gap — until the exchange rate reverses.
Cash flow statement: A statement tracking actual cash moving in and out, split into operating, investing, and financing — reconciling profit with cash.
Central bank: The institution that manages a country's money and sets its benchmark interest rate (e.g. the Fed, ECB, Bank of England), balancing low inflation with growth and jobs.
Charm: A second-order Greek: how delta changes as time passes (delta decay). Matters near expiry.
Clearing house: An institution that stands between the two sides of an exchange-traded derivative, guaranteeing both and collecting margin daily to reduce counterparty risk.
Clearinghouse: An institution that sits between buyer and seller in exchange-traded markets, guaranteeing the trade and managing risk with margin.
Collar: Holding stock while buying a protective put and selling a covered call — caps both downside and upside, often cheaply.
Commodity: A basic raw material — metal, energy, or crop — that is fungible (one standard unit equals any other), so it trades on price and grade rather than brand or earnings.
Compounding: When investment returns earn their own returns, so growth accelerates over time — the core engine of building wealth.
Contango: When later-dated futures trade above the spot price — normal for storable goods, reflecting the cost of carry.
Contango: When later-dated futures cost more than the spot or near contracts — typically reflecting storage and carrying costs. Rolling contracts in contango loses value (negative roll yield).
Contract multiplier: How many units of the underlying one contract controls — typically 100 shares for equity options.
Conversion: Long stock combined with synthetic short stock (short call + long put) to lock in an arbitrage when parity is violated.
Convexity: The curvature in a bond's price/yield relationship that duration (a straight-line estimate) misses — it matters for large rate moves. Positive convexity slightly favours the holder.
Cost of carry: The net cost of holding a position over time — financing costs minus any income like dividends.
Counterparty: The other side of a trade. Counterparty risk is the chance they fail to meet their obligation.
Counterparty risk: The risk that the other party to a contract fails to meet its obligations. Exchange-traded futures largely remove it via a clearinghouse.
Coupon: The fixed interest a bond pays, usually quoted as an annual rate of the face value.
Covered call: Selling a call against shares you already own to collect premium income.
CPI: Consumer Price Index — the most-watched measure of inflation, tracking the price of a representative basket of goods and services.
Credit rating: A grade (e.g. AAA to D) from agencies like Moody's or S&P estimating how likely a bond issuer is to repay.
Credit spread: The extra yield a risky bond pays over a comparable safe government bond, compensating for default risk. Spreads narrow in calm times and widen in downturns.
Cross rate: An exchange rate derived from two pairs that share a common currency — e.g. EUR/GBP from EUR/USD and GBP/USD.
Cryptocurrency: Digital money recorded on a decentralised network rather than controlled by a bank or government. Most aren't backed by anything and are highly volatile.
Currency pair: An FX quote showing how much of one currency buys another, e.g. EUR/USD = 1.08. Buying a pair buys the first currency and sells the second.
Currency peg: An exchange rate fixed to another currency (often the US dollar) and defended by the central bank using its reserves.
Currency swap: An agreement to exchange principal and interest payments in one currency for those in another, usually over several years.
Current yield: A bond's annual coupon divided by its current market price.
Cyclical: A sector or stock whose earnings swing with the economy — booming in good times, slumping in bad (e.g. carmakers, travel).

D

Days to expiry (DTE): How many calendar days remain until an option expires — a key input to time decay and pricing.
Defensive: A sector or stock selling essentials people buy in any economy (utilities, staples, healthcare), so it holds up better in downturns.
DeFi: Decentralised finance — lending, trading, and earning yield through smart contracts instead of banks. Innovative, but a hotspot for hacks and scams.
Deflation: A sustained fall in the general price level. It can be dangerous: people delay spending in expectation of lower prices, choking growth.
Delta: How much an option's price moves per $1 move in the underlying. Roughly the chance of finishing in the money.
Delta hedging: Trading the underlying to offset an option's directional risk, keeping the position delta-neutral.
Depreciation: A currency weakening — it takes less of another currency to buy one unit of it.
Derivative: A contract whose value derives from an underlying asset, rate, or index. Options, forwards, futures, and swaps are all derivatives.
Diagonal spread: Like a calendar spread, but the two options also have different strikes.
Discount rate: The rate used to shrink future cash to present value in a DCF, reflecting time and risk — a higher rate means a lower valuation.
Discounted cash flow (DCF): Valuing a company as the sum of its future free cash flows, each discounted back to its worth in today's money.
Diversification: Spreading money across many companies, sectors, and asset classes so no single failure can sink you — the closest thing to a free lunch in investing.
Dividend: A cash payment some companies make to shareholders out of profits, usually quarterly.
Dividend risk: The risk that a short call is assigned early, just before an ex-dividend date, so the holder captures the dividend.
Dividend yield: A stock's annual dividend divided by its share price, shown as a percentage.
Dollar-cost averaging: Investing a fixed amount at regular intervals regardless of price, automatically buying more shares when prices are low and fewer when high.
Drawdown: The peak-to-trough decline in an account or strategy — a key measure of pain and risk.
Duration: A measure of how much a bond's price moves when interest rates change; longer-dated bonds have higher duration.

E

Early exercise: Exercising an American option before expiry — occasionally worthwhile, e.g. to capture a dividend.
Earnings per share (EPS): A company's profit divided by its number of shares — profit attributable to each share.
Economic moat: A durable competitive advantage — brand, network effects, switching costs, or scale — that protects a company's profits from rivals.
Equity: Ownership in a company. Stocks are equity — a claim on assets and profits — as opposed to debt.
ETF: Exchange-traded fund — a basket of assets (often an index) that trades like a single stock.
Ethereum: A programmable blockchain that runs smart contracts; its coin is Ether (ETH). It underpins DeFi, tokens, and NFTs.
European option: An option that can only be exercised at expiration — most index options. Contrast with American.
EV/EBITDA: Enterprise value over earnings before interest, tax, depreciation and amortisation — a multiple that accounts for debt.
Ex-dividend date: The cutoff date for owning a stock to receive its next dividend; option holders may exercise early to capture it.
Exchange rate: The price of one currency in terms of another — e.g. EUR/USD 1.08 means $1.08 buys €1.
Exercise: Using your right to buy (call) or sell (put) the underlying at the strike price.
Exotic pair: A major currency paired with a smaller, emerging-market one (e.g. USD/TRY) — thin liquidity, wide spreads, jumpy prices.
Expected move: The market-implied size of a likely move by expiry, derived from option prices (roughly the at-the-money straddle price).
Expense ratio: A fund's annual fee as a percentage of assets. Small numbers that compound into a large drag on long-run returns.
Expiration: The date after which the option ceases to exist. Unexercised options expire worthless.
Extrinsic value: The part of an option's premium beyond intrinsic value — the price of time and volatility. Decays to zero by expiry.

F

Face value: The amount a bond repays at maturity and on which its coupon is based — often $1,000. Also called par value.
Fill: The execution of an order. A partial fill means only some of the requested quantity traded.
Fiscal policy: A government's use of taxing and spending to steer the economy — powerful and targeted, but slower and more political than monetary policy.
Floating exchange rate: A currency whose value is set by market supply and demand, rather than fixed by the government. Most major currencies float.
Forex: The foreign-exchange market, where currencies are traded — the largest market in the world. Also written FX.
Forward contract: A private agreement to buy or sell an asset at a future date and price — like a future, but customised and not exchange-traded.
Free cash flow: Operating cash flow minus capital expenditure — the cash a business generates after sustaining itself, available to reward owners.
Funds from operations (FFO): A REIT's net income with depreciation added back — a truer measure of the cash it generates and the safety of its dividend than reported earnings.
Futures contract: A standardised, exchange-traded agreement to buy or sell an asset at a set price on a future date.
FX forward: An agreement made now to exchange currency at a set rate on a future date — the main tool for hedging known future currency needs.
FX swap: A pair of legs that buys a currency now (spot) and sells it back later (forward), or the reverse — a way to hold a currency for a period.

G

Gamma: How fast delta changes as the underlying moves. Highest for at-the-money options near expiry.
Gamma squeeze: A feedback loop where market makers hedging short calls must buy stock as it rises, pushing the price up further.
GDP: Gross domestic product — the total value of all goods and services an economy produces in a period. Its real growth rate is the headline gauge of economic health.
Glide path: A plan to gradually shift a portfolio from stocks toward bonds as the investor ages; target-date funds automate it.
Gross margin: Gross profit (revenue minus the direct cost of goods sold) as a percentage of revenue.
Growth investing: Buying fast-growing companies and paying a higher multiple, betting future earnings justify the price.

H

Hard commodity: A commodity that is mined or extracted, such as metals, oil, and natural gas (as opposed to grown 'soft' commodities).
Hedge: A position taken to offset risk in another — e.g. buying puts to protect long stock.
Hedging: Using a derivative to reduce an unwanted risk — locking in a price to remove uncertainty, like insurance. Trades away potential upside for certainty.
High-yield bond: A lower-rated, riskier bond (also called 'junk') that pays a higher yield to compensate for default risk.
Historical volatility: Another name for realized volatility: the standard deviation of past price returns, annualised.
Hyperinflation: Extreme, runaway inflation — prices rising so fast that money rapidly becomes worthless, often wrecking an economy.

I

Implied volatility (IV): The market's expectation of future volatility, baked into an option's price. Higher IV means richer premiums.
In the money (ITM): An option with intrinsic value: a call below the price, a put above it.
Income statement: A financial statement showing profit over a period: revenue at the top, costs subtracted step by step, down to net income at the bottom.
Index: A measure of a slice of the market, e.g. the S&P 500 tracks ~500 large US companies.
Index fund: A fund that holds an entire market index rather than picking winners, giving instant diversification and the market's return at very low cost.
Inflation: A sustained rise in the general level of prices, eroding money's purchasing power. Measured by indexes like the CPI; central banks target it low and stable.
Inflation-linked bond: A bond whose principal and coupons rise with an inflation index (e.g. TIPS), protecting the holder's real return in exchange for a lower starting yield.
Interest-rate swap: A swap exchanging fixed-rate interest payments for floating-rate ones on the same notional; only the net difference changes hands.
Intervention: A central bank buying or selling its own currency to steer the exchange rate or defend a peg.
Intrinsic value: How deep in the money an option is right now — never below zero.
Inverted yield curve: When short-term yields sit above long-term ones, signalling expected rate cuts and a weakening economy — a closely-watched (if imperfect) recession indicator.
Investment grade: Bonds rated relatively safe (around BBB-/Baa3 and above) — lower default risk and lower yield.
IPO: Initial public offering — when a company first sells its shares to the public.
Iron butterfly: A neutral, defined-risk strategy: sell an at-the-money straddle and buy wings for protection.
Iron condor: A neutral, defined-risk strategy selling an out-of-the-money call spread and put spread together.

J

Jade lizard: A short put plus a short call spread, structured so there's no risk to the upside while collecting premium.

L

Lambda: Also called omega — the percentage change in an option's price per 1% change in the underlying. A measure of leverage.
LEAPS: Long-dated options with expirations a year or more away.
Leg: One individual option (or stock) position within a multi-part strategy.
Leverage: Controlling a large position with a small amount of capital. Options are inherently leveraged.
Liabilities: What a company owes — bills, loans, and other obligations, split into current (within a year) and long-term.
Limit order: An order to trade only at a chosen price or better — price control, but it may never fill.
Liquidity: How easily an asset trades without moving its price. Tight bid-ask spreads signal high liquidity.
Long: Owning an option or asset — you've bought it and benefit if it gains value.
Long position: A position that profits when the underlying's price rises.
Long straddle: Buying a call and a put at the same strike — profits from a big move in either direction; loses if the stock sits still.

M

Maintenance margin: The minimum equity you must keep in a margin account to hold a position open.
Major pair: One of the most-traded currency pairs, all involving the US dollar (EUR/USD, USD/JPY, GBP/USD…) — deepest liquidity, tightest spreads.
Margin: Collateral a broker requires to hold certain (often short) options positions.
Margin (brokerage): Borrowing from your broker to buy more than your cash allows. Leverage amplifies both gains and losses.
Margin call: A broker's demand to add funds (or close positions) when account equity falls below the maintenance requirement.
Mark to market: Revaluing a position at current prices, so gains and losses are recognised continuously.
Market capitalization: A company's total market value: share price × shares outstanding.
Market efficiency: The idea that prices quickly reflect available information, so public news is usually already 'priced in'.
Market order: An order to trade immediately at the best price currently available — speed over price control.
Maturity: The date a bond repays its face value and stops paying coupons.
Max pain: The price at which the most options (by open interest) expire worthless — sometimes watched as a magnet near expiry.
Mid price: The midpoint between the bid and the ask — a fair-value reference and a good target for limit orders.
Minor pair: A pair of major currencies that does not include the US dollar (a 'cross'), such as EUR/GBP.
Modified duration: The version of duration that estimates the percentage change in a bond's price for a 1% change in its yield.
Monetary policy: A central bank's management of interest rates and the money supply to control inflation and support growth — fast and independent of day-to-day politics.
Moneyness: Where the strike sits versus the current price — in, at, or out of the money.
Mortgage: A loan used to buy property, secured against it. Because buyers put down only a fraction of the price, property is a leveraged investment that magnifies gains and losses.
Municipal bond: A bond issued by a local or state government, often to fund public projects.

N

Naked option: A short option with no offsetting position, carrying undefined (potentially large) risk.
Net income: The 'bottom line' — profit left after every cost, including interest and tax, is subtracted from revenue.
Net operating income (NOI): A property's annual rental income after running costs, but before mortgage payments — the numerator of the cap rate.
NFT: A non-fungible token — a blockchain record of ownership of a unique digital item.
Notional: The full value of the underlying a derivative controls — usually far larger than the cash (margin) posted to enter it. Gains and losses ride on the notional.
Notional value: The total value an option controls — the underlying price × shares per contract (100) — versus the smaller premium paid.

O

OPEC / OPEC+: A group of major oil producers that coordinate output. Cutting production tightens global supply (prices tend to rise); raising it loosens supply (prices tend to fall).
Open interest: The total number of outstanding option contracts that haven't been closed or exercised.
Operating income: Profit left after subtracting operating expenses (salaries, rent, R&D, marketing) from gross profit — before interest and tax.
Operating margin: Operating income as a percentage of revenue — how much profit the core business makes before interest and tax.
Option: A contract giving the right, not the obligation, to buy or sell an asset at a set price by a set date.
Order book: The live list of resting buy and sell orders at each price, showing market depth.
Out of the money (OTM): An option with no intrinsic value — its premium is entirely time and volatility value.
Over-the-counter: A trade made privately between two parties rather than on an exchange (also called OTC). Such contracts are customisable but carry counterparty risk.
Over-the-counter (OTC): A derivative arranged privately between two parties rather than on an exchange — customisable, but with more counterparty risk (a key theme of the 2008 crisis).

P

Passive investing: Tracking a market index cheaply and accepting its return, rather than trying to beat it — the sensible default for most investors.
Pin risk: Uncertainty near expiry when the price sits right at the strike, leaving assignment unclear.
Pip: The smallest standard move in a currency pair — usually the fourth decimal place (0.0001), or the second for JPY pairs.
Poor man's covered call: A long deep-ITM LEAPS call with a short near-dated call against it — mimics a covered call for far less capital.
Position sizing: Choosing how much to risk on a trade — typically a small, fixed fraction of the account to survive losing streaks.
Premium: The price paid to buy an option, or received to sell it. The cost of the choice.
Price-to-book (P/B): Share price divided by book value (shareholders' equity) per share — handy for asset-heavy businesses like banks.
Price-to-earnings ratio (P/E): Share price divided by earnings per share — how much you pay per $1 of annual earnings.
Price-to-sales (P/S): Share price divided by revenue per share — a valuation yardstick useful for fast-growing or unprofitable companies.
Primary market: Where securities are first issued (e.g. an IPO), with the money going to the company.
Private key: The secret code that proves ownership of crypto and lets you spend it. Whoever holds it controls the coins — hence 'not your keys, not your coins'.
Proof of stake: A consensus mechanism (used by Ethereum) where validators lock up ('stake') coins for the right to add blocks — far more energy-efficient than proof of work.
Proof of work: A consensus mechanism (used by Bitcoin) where 'miners' race to solve hard puzzles to add the next block — secure but very energy-intensive.
Protective put: Buying a put on stock you own as insurance against a fall, while keeping the upside.
Purchasing power parity: The long-run idea that exchange rates should settle where the same basket of goods costs the same across countries; the intuition behind the Big Mac index.
Put: An option giving the right to sell the underlying at the strike price before expiry.

Q

Quote currency: The second currency in an FX pair — what the base is priced in. In EUR/USD, the US dollar is the quote.

R

Real GDP: GDP adjusted to strip out inflation, showing genuine growth in output (as opposed to nominal GDP, which includes price rises).
Realized volatility: How much the underlying actually moved over a past period — contrast with implied volatility.
Rebalancing: Periodically restoring a portfolio to its target allocation by trimming what's grown and topping up what's lagged — controlling risk and enforcing sell-high/buy-low.
Recession: A sustained fall in economic output (a common rule of thumb is two consecutive quarters of falling GDP), with rising unemployment and falling spending.
REIT: A real estate investment trust — a company that owns income-producing property and trades like a share, giving accessible, liquid, diversified real-estate exposure. Must distribute most income as dividends.
Rental yield: Annual rent as a percentage of a property's price — the income return on real estate, comparable to a dividend yield.
Return on invested capital (ROIC): The profit a company earns per dollar of capital invested — persistently high ROIC signals a quality business with a real moat.
Revenue: The total value of everything a company sold in a period — the 'top line' of the income statement.
Reversal: The opposite of a conversion: short stock plus synthetic long stock, capturing a parity mispricing.
Rho: How sensitive an option's price is to changes in interest rates. Usually the smallest Greek.
Risk reversal: Selling a put to help fund buying a call (or vice versa) — a leveraged directional bet that also expresses a view on skew.
Risk tolerance: How much risk suits you — a mix of capacity (time until you need the money) and temperament (whether you can hold through a big drop).
Roll: Closing one option position and opening a similar one at a different strike or expiry.
Roll yield: The gain or loss a futures-based fund earns when it rolls expiring contracts into later ones. Negative in contango, positive in backwardation — it can cause an ETF to lag the spot price.
Rug pull: A crypto scam where developers hype a token, attract money, then vanish with the funds — one of the many frauds common in the space.

S

Safe-haven currency: A currency investors flock to in a panic (historically the US dollar, Swiss franc, and yen), so it tends to strengthen when risk appetite falls.
Secondary market: Where investors trade existing shares with each other, e.g. a stock exchange.
Sequence-of-returns risk: The danger that the order of good and bad years hurts you — a crash early in retirement, while you're withdrawing, is far more damaging than a late one.
Settlement: Fulfilling a contract at expiry — delivering the asset (physical) or exchanging cash (cash settlement).
Share: A single unit of ownership in a company; owning shares makes you a part-owner (shareholder).
Shareholder: Someone who owns shares in a company and therefore holds a fractional claim on it.
Shareholders' equity: What would be left for owners after selling all assets and paying off all liabilities — the company's net worth on the books.
Shares outstanding: The total number of a company's shares currently held by all investors.
Sharpe ratio: Risk-adjusted return: excess return divided by volatility. Higher means more return per unit of risk.
Short: Selling (writing) an option or asset — you collect premium but take on obligations.
Short position: A position that profits when the underlying's price falls — easy to take with derivatives.
Short selling: Borrowing and selling a stock to rebuy it later at a lower price. Profit is capped but the potential loss is unlimited.
Short straddle: Selling a call and a put at the same strike — collects premium and profits if the stock barely moves. Undefined risk.
Short strangle: Selling an out-of-the-money call and put — a wider, higher-probability version of a short straddle. Undefined risk.
Slippage: The difference between a trade's expected price and the price it actually fills at.
Smart contract: Self-executing code stored on a blockchain that runs automatically when its conditions are met — powerful, but bugs in the code can be exploited irreversibly.
SOFR: The Secured Overnight Financing Rate, a common floating benchmark interest rate used in swaps; it replaced LIBOR.
Soft commodity: A commodity that is grown rather than extracted — grains, softs (coffee, sugar, cotton), and livestock.
Speculation: Using a derivative to profit from a price view, with no underlying business to protect. Speculators take on the risk hedgers shed and add liquidity.
Spot price: The current market price of the underlying asset, right now.
Spot price: The price for immediate delivery of a commodity, as opposed to a futures price for delivery at a later date.
Spot rate: The exchange rate for an FX trade that settles almost immediately (within a day or two).
Spread: A position combining multiple options of the same type to define risk and reduce cost.
Stablecoin: A cryptocurrency designed to hold a steady value, usually pegged 1:1 to a currency like the US dollar. The peg can break (TerraUSD collapsed to near zero in 2022).
Standard deviation: A statistical measure of dispersion; in options it frames the expected range of a move (e.g. a 1-sigma move).
Stop order: An order that becomes a market order once a trigger price is hit — used to cap losses or enter on momentum.
Stop-limit order: Like a stop order, but converts to a limit (not market) order at the trigger — avoids terrible fills, may not fill at all.
Store of value: An asset expected to hold its purchasing power over time. Gold is the classic example — valued for scarcity and trust rather than any income it pays.
Straddle: Buying a call and a put at the same strike — a bet on a big move in either direction.
Strangle: Buying an out-of-the-money call and put — a cheaper bet on a big move than a straddle.
Strike price: The fixed price at which an option can be exercised.
Swap: A derivative where two parties exchange cash flows — e.g. trading a fixed interest rate for a floating one.
Synthetic position: Recreating one instrument's payoff using others — e.g. long call + short put mimics long stock.

T

Tail risk: The risk of rare, extreme moves in the far tails of the distribution — small probability, large impact.
Target-date fund: A single fund that automatically follows a glide path, getting more conservative over the decades toward a chosen retirement year.
Tax-advantaged account: A special account (often for retirement) where investments grow with tax deferred or removed, boosting long-run compounding. Specific rules vary by country.
Tax-loss harvesting: Selling an investment that's down to realise a loss that offsets taxable gains, while reinvesting in something similar to stay in the market. Rules vary by country.
Term premium: The extra yield investors demand for holding a longer-dated bond rather than rolling short ones — a key driver of the yield curve's steepness.
Term structure: How implied volatility varies across expiration dates for the same underlying.
Terminal value: In a DCF, a single figure standing in for all the cash flows beyond the explicit forecast period.
The 4% rule: A historical rule of thumb that withdrawing ~4% of a portfolio in year one (then adjusting for inflation) has tended to last about 30 years — a reference, not a guarantee.
The wheel: A cycle of selling cash-secured puts until assigned, then selling covered calls until called away — collecting premium throughout.
Theta: How much an option loses in value per day from time decay, all else equal.
Tick: The smallest price increment an instrument can move in.
Time decay: The erosion of an option's extrinsic value as expiration approaches — measured by theta.
Time horizon: How long until you need your money. A longer horizon lets you take more risk, since you can ride out and recover from downturns.
Total return: An investment's full return: price change (capital gain) plus any dividends received.
Treasury: A bond issued by a national government, such as a US Treasury — usually the lowest-risk bond in its currency.
Triangular arbitrage: Profiting from a mispricing among three related currency pairs by trading around the loop — which pushes the rates back into line.

U

Underlying: The asset an option is based on, such as a stock, ETF, or index.
Unemployment rate: The share of people who want a job but can't find one — a gauge of economic strength and, when very low, a driver of wage and price inflation.

V

Value investing: Buying solid companies trading below their estimated worth, seeking a margin of safety.
Value trap: A stock that looks cheap on its multiples but is cheap for a reason — a declining business that keeps falling.
Vanna: A second-order Greek: how delta changes with implied volatility (or vega with spot).
Vega: How much an option's price changes per 1% change in implied volatility.
Vertical spread: Buying and selling options of the same type and expiry but different strikes.
VIX: The market's best-known volatility index, tracking 30-day implied volatility on the S&P 500 — the 'fear gauge'.
Volatility: How much the underlying's price fluctuates. More volatility means pricier options.
Volatility skew: When options at different strikes trade at different implied volatilities — often higher for downside puts.
Volatility smile: A u-shaped pattern where in- and out-of-the-money options carry higher implied volatility than at-the-money ones.
Volatility surface: A 3-D map of implied volatility across both strikes (skew) and expirations (term structure).
Volume: The number of contracts traded over a period — a gauge of activity and liquidity.
Vomma: A second-order Greek: how vega changes as implied volatility changes — vega's convexity.

W

Warrant: A company-issued security similar to a long-dated call, giving the right to buy its shares at a set price.
Weeklys: Options that expire every week rather than monthly, offering more expiration choices and faster decay.
Writer: The seller of an option, who receives the premium and takes on the obligation.

Y

Yield: The return a bond gives at its current price. Yields move opposite to bond prices.
Yield curve: Yields plotted across maturities. An inverted curve (long yields below short) is watched as a possible recession signal.
Yield to maturity (YTM): A bond's total annualised return if held to maturity, accounting for its price, coupons, and repaid principal.