Learning Center

Portfolio

Alpha

Excess return compared with a benchmark after accounting for risk.

Portfolio

Beta

Sensitivity of a security or portfolio to moves in the broader market.

Portfolio

Sharpe Ratio

Return earned per unit of total volatility.

Portfolio

Sortino Ratio

Return earned per unit of downside volatility.

Portfolio

Max Drawdown

Largest peak-to-trough decline over a period.

Risk

Volatility

How widely prices or returns move around their average.

Risk

Standard Deviation

Statistical measure often used to quantify volatility.

Portfolio

Correlation

Degree to which two assets move together.

Portfolio

Diversification

Spreading exposure across assets, sectors, or strategies.

Risk

Position Sizing

Choosing how much capital or risk to place in one trade.

Risk

Risk Reward Ratio

Comparison of potential loss to potential gain.

Risk

Expected Value

Average expected outcome after weighting scenarios by probability.

Risk

Kelly Criterion

Sizing formula that balances edge and odds.

Portfolio

Portfolio Weight

Percent of portfolio value allocated to a holding.

Portfolio

Rebalancing

Adjusting holdings back toward target weights.

Portfolio

Benchmark

Reference index or portfolio used for comparison.

Portfolio

Tracking Error

Volatility of returns relative to a benchmark.

Portfolio

Information Ratio

Active return divided by tracking error.

Risk

Drawdown Duration

Time spent below a previous equity high.

Risk

Value at Risk

Estimated loss threshold over a period at a confidence level.

Risk

Conditional VaR

Average loss beyond the value-at-risk threshold.

Valuation

Margin of Safety

Discount between estimated value and purchase price.

Fundamentals

Revenue

Total sales generated before expenses.

Fundamentals

Gross Profit

Revenue minus cost of goods sold.

Fundamentals

Operating Income

Profit after operating expenses before interest and taxes.

Fundamentals

EBITDA

Earnings before interest, taxes, depreciation, and amortization.

Fundamentals

EBIT

Earnings before interest and taxes.

Fundamentals

Net Income

Profit after all expenses, taxes, and interest.

Fundamentals

EPS

Net income divided by shares outstanding.

Fundamentals

Diluted EPS

EPS after accounting for potential share dilution.

Cash Flow

Free Cash Flow

Operating cash flow minus capital expenditures.

Cash Flow

Operating Cash Flow

Cash generated from normal business operations.

Cash Flow

Capital Expenditures

Cash spent on long-term assets.

Margins

Gross Margin

Gross profit divided by revenue.

Margins

Operating Margin

Operating income divided by revenue.

Margins

Net Margin

Net income divided by revenue.

Returns

Return on Equity

Net income divided by shareholder equity.

Returns

Return on Assets

Net income divided by total assets.

Returns

Return on Invested Capital

Operating profit after tax relative to invested capital.

Balance Sheet

Debt to Equity

Debt divided by shareholder equity.

Balance Sheet

Current Ratio

Current assets divided by current liabilities.

Balance Sheet

Quick Ratio

Liquid current assets divided by current liabilities.

Balance Sheet

Interest Coverage

Operating income relative to interest expense.

Cash Flow

Cash Conversion Cycle

Time needed to turn inventory and receivables into cash.

Balance Sheet

Working Capital

Current assets minus current liabilities.

Balance Sheet

Book Value

Shareholder equity on the balance sheet.

Balance Sheet

Tangible Book Value

Book value excluding intangible assets.

Valuation

Enterprise Value

Market cap plus debt and preferred equity minus cash.

Valuation

Market Capitalization

Share price multiplied by shares outstanding.

Valuation

PE Ratio

Price divided by earnings per share.

Valuation

Forward PE

Price divided by expected future earnings per share.

Valuation

PEG Ratio

PE ratio divided by expected earnings growth.

Valuation

Price to Sales

Market cap divided by revenue.

Valuation

Price to Book

Market cap divided by book value.

Valuation

EV to EBITDA

Enterprise value divided by EBITDA.

Valuation

EV to Sales

Enterprise value divided by revenue.

Dividends

Dividend Yield

Annual dividend divided by share price.

Dividends

Payout Ratio

Dividends paid as a percent of earnings.

Capital Return

Buyback Yield

Share repurchases as a percent of market cap.

Valuation

Earnings Yield

Earnings per share divided by price.

Valuation

Free Cash Flow Yield

Free cash flow divided by market cap or enterprise value.

Balance Sheet

Net Debt

Total debt minus cash and equivalents.

Valuation

Fair Value

Estimated intrinsic value based on assumptions.

Valuation

Discounted Cash Flow

Valuation method that discounts future cash flows to today.

Valuation

Weighted Average Cost of Capital

Blended required return for debt and equity capital.

Valuation

Terminal Value

Estimated value of cash flows beyond an explicit forecast period.

Valuation

Beta Adjusted Discount Rate

Discount rate adjusted for market sensitivity.

Valuation

Comparable Companies

Valuation based on similar publicly traded companies.

Valuation

Multiple Expansion

Increase in valuation multiple over time.

Valuation

Multiple Compression

Decrease in valuation multiple over time.

Fundamentals

Revenue Growth

Rate at which sales increase over a period.

Fundamentals

Same Store Sales

Sales growth from existing locations.

Fundamentals

ARPU

Average revenue per user.

Fundamentals

Churn

Rate at which customers stop using a product.

Fundamentals

Retention

Rate at which customers remain active.

Fundamentals

Gross Merchandise Value

Total transaction value on a marketplace.

Fundamentals

Take Rate

Platform revenue as a percent of transaction volume.

Fundamentals

Monthly Active Users

Unique users active during a month.

Balance Sheet

Deferred Revenue

Cash collected before revenue is recognized.

Fundamentals

Rule of 40

Software metric combining growth rate and profit margin.

Fundamentals

Unit Economics

Revenue and cost profile of one customer or unit.

Margins

Contribution Margin

Revenue remaining after variable costs.

Fundamentals

Customer Acquisition Cost

Cost to acquire a customer.

Fundamentals

Lifetime Value

Estimated gross profit from a customer over time.

Fundamentals

Backlog

Contracted work or orders not yet recognized as revenue.

Forecast

Guidance

Company-provided outlook for future results.

Forecast

Earnings Surprise

Difference between reported earnings and consensus estimates.

Forecast

Consensus Estimate

Average forecast from analysts.

Forecast

Analyst Rating

Analyst opinion such as buy, hold, or sell.

Forecast

Price Target

Analyst estimate of future share price.

Forecast

Upgrade

Analyst raises a rating.

Forecast

Downgrade

Analyst lowers a rating.

Forecast

Revision

Change to an analyst estimate or rating.

Ownership

13F Filing

Quarterly institutional holdings filing.

Ownership

Institutional Ownership

Shares held by institutions.

Ownership

Insider Buying

Company insiders purchasing shares.

Ownership

Insider Selling

Company insiders selling shares.

Market Structure

Float

Shares available for public trading.

Market Structure

Shares Outstanding

Total shares issued and outstanding.

Market Structure

Short Interest

Shares sold short and not yet covered.

Market Structure

Days to Cover

Short interest divided by average daily volume.

Market Structure

Borrow Fee

Cost to borrow shares for short selling.

Market Structure

Fail to Deliver

Failure to deliver shares by settlement.

Filings

Form 4

SEC filing for insider transactions.

Filings

10-K

Annual company report filed with the SEC.

Filings

10-Q

Quarterly company report filed with the SEC.

Filings

8-K

Current event report filed with the SEC.

Filings

Prospectus

Offering document describing securities and risks.

Filings

S-1

Registration statement for an initial public offering.

Corporate Actions

IPO

Initial public offering of shares.

Corporate Actions

Secondary Offering

Additional share sale after an IPO.

Corporate Actions

Split

Increase in share count with proportional price adjustment.

Corporate Actions

Reverse Split

Decrease in share count with proportional price adjustment.

Dividends

Dividend

Cash or stock distribution to shareholders.

Dividends

Ex Dividend Date

Date after which buyers do not receive the next dividend.

Dividends

Record Date

Date used to determine eligible dividend holders.

Dividends

Payment Date

Date the dividend is paid.

Dividends

Special Dividend

One-time dividend outside the regular schedule.

Corporate Actions

Spin Off

Creation of a separate public company from an existing business.

Corporate Actions

Merger

Combination of companies into one entity.

Corporate Actions

Acquisition

Purchase of one company by another.

Corporate Actions

Tender Offer

Offer to buy shares directly from shareholders.

Options

Option Contract

Derivative contract tied to an underlying asset.

Options

Call Option

Contract that benefits from upside in the underlying.

Options

Put Option

Contract that benefits from downside in the underlying.

Options

Strike Price

Price where an option can be exercised.

Options

Expiration Date

Date when an option contract expires.

Options

Premium

Price paid or received for an option.

Options

Intrinsic Value

Value an option would have if exercised now.

Options

Extrinsic Value

Option value beyond intrinsic value.

Options

Implied Volatility

Market-implied expectation of future volatility.

Options

Historical Volatility

Realized volatility over a past period.

Options Greeks

Delta

Expected option price change for a one-point underlying move.

Options Greeks

Gamma

Rate of change in delta.

Options Greeks

Theta

Expected option value decay from time passing.

Options Greeks

Vega

Expected option price change for a volatility move.

Options Greeks

Rho

Expected option price change for an interest-rate move.

Options

Open Interest

Number of outstanding option contracts.

Options

Option Volume

Contracts traded during a period.

Options

Put Call Ratio

Put volume or open interest relative to calls.

Options

Max Pain

Price where options buyers would lose the most at expiration.

Options

Expected Move

Market-implied price range for a period.

Options

Moneyness

Relationship between underlying price and strike price.

Options

In the Money

Option has intrinsic value.

Options

At the Money

Strike price is near the underlying price.

Options

Out of the Money

Option has no intrinsic value.

Options Strategies

Covered Call

Short call backed by long stock.

Options Strategies

Protective Put

Long put used to hedge long stock.

Options Strategies

Debit Spread

Spread entered for a net debit.

Options Strategies

Credit Spread

Spread entered for a net credit.

Options Strategies

Iron Condor

Neutral defined-risk strategy using call and put spreads.

Options Strategies

Straddle

Long call and put at the same strike.

Options Strategies

Strangle

Long call and put at different strikes.

Options Strategies

Butterfly Spread

Limited-risk strategy centered on a target strike.

Options Strategies

Calendar Spread

Options spread using different expirations.

Options

Assignment

Obligation created when a short option is exercised.

Options

Exercise

Using the right granted by an option contract.

Order Flow

Dark Pool

Private trading venue away from public order books.

Order Flow

Block Trade

Large trade often negotiated or routed separately.

Order Flow

Sweep Order

Order routed across venues to fill quickly.

Trading

Market Order

Order intended to execute immediately at available prices.

Trading

Limit Order

Order with a maximum buy price or minimum sell price.

Trading

Stop Order

Order triggered after price reaches a stop level.

Trading

Stop Limit Order

Stop order that becomes a limit order.

Trading

Bid Ask Spread

Difference between best bid and best ask.

Trading

Liquidity

Ease of trading without moving price.

Trading

Slippage

Difference between expected and executed price.

Trading

Volume

Shares or contracts traded during a period.

Trading

Relative Volume

Current volume compared with normal volume.

Technicals

VWAP

Volume-weighted average price.

Technicals

Support

Price zone where demand has appeared.

Technicals

Resistance

Price zone where supply has appeared.

Technicals

Moving Average

Average price over a rolling period.

Technicals

RSI

Momentum oscillator measuring recent gains versus losses.

Technicals

MACD

Trend and momentum indicator based on moving averages.

Technicals

Bollinger Bands

Volatility bands around a moving average.

Technicals

ATR

Average true range used to estimate price movement.

Technicals

Breakout

Move above a defined resistance area.

Technicals

Breakdown

Move below a defined support area.

Technicals

Trend

Persistent directional price movement.

Technicals

Mean Reversion

Tendency for price to move back toward an average.

Technicals

Momentum

Persistence of price strength or weakness.

Events

Catalyst

Event that can change expectations or price.

Macro

Economic Calendar

Schedule of economic releases and policy events.

Macro

CPI

Consumer price index, a common inflation measure.

Macro

PPI

Producer price index, a measure of producer-level inflation.

Macro

FOMC

Federal Open Market Committee that sets US monetary policy.

Macro

Treasury Yield

Interest rate on US Treasury securities.

Macro

Yield Curve

Relationship between short-term and long-term yields.

Macro

Credit Spread

Yield difference between risky and safer debt.

Macro

Recession

Broad contraction in economic activity.

Macro

Inflation

General increase in prices over time.

Macro

GDP

Gross domestic product, a measure of economic output.

Macro

Unemployment Rate

Percent of labor force without work and seeking jobs.

Macro

Consumer Sentiment

Survey measure of consumer confidence.

Macro

Risk On

Market environment favoring higher-risk assets.

Macro

Risk Off

Market environment favoring lower-risk or defensive assets.

Market Structure

Sector Rotation

Capital shifting between market sectors.

Market Structure

Market Breadth

Participation across stocks in a market move.

Market Structure

Advance Decline Line

Cumulative measure of advancing minus declining stocks.