Financial terms, explained from first principles.

Excess return over a benchmark, after adjusting for risk.

Average True Range - a measure of recent price volatility.

Sensitivity of a security's returns to overall market movement.

A company repurchasing its own shares from the open market.

Income earned from holding a position over time.

A trading halt triggered by extreme price moves to allow markets to absorb information.

The curvature of a bond's price-yield relationship.

Discounted Cash Flow - valuation by discounting projected cash flows to present.

Decentralized Finance - financial applications running on blockchains.

How much an option's price changes per $1 move in the underlying.

When new share issuance reduces existing shareholders' ownership percentage.

Annual dividend per share divided by current share price.

Peak-to-trough decline in portfolio value.

Bond price sensitivity to interest rate changes.

Difference between actual earnings and analyst consensus.

Earnings per share divided by price - the inverse of P/E.

Earnings Before Interest, Taxes, Depreciation and Amortization.

The excess expected return of equities over the risk-free rate.

Exchange-Traded Fund - a basket of securities trading like a single stock.

Building portfolios based on systematic risk premiums (value, momentum, etc.).

The overnight rate at which U.S. banks lend reserves to each other.

The Federal Open Market Committee - the Fed's rate-setting body.

Fear Of Missing Out - buying because others are profiting.

Cash generated after maintenance capex; the actual money the business throws off.

The rate of change of delta - the option's curvature.

Company-issued forecasts of future financial performance.

Bitcoin's pre-programmed 50% reduction in mining rewards every ~4 years.

The market's forecast of future volatility, extracted from option prices.

The rate at which prices rise across an economy.

Initial Public Offering - a company's first public sale of stock.

An ETF that aims to deliver 2x or 3x daily returns of an underlying index.

Moving Average Convergence Divergence - a trend/momentum indicator.

The strike price at which the most options expire worthless.

A stock whose price is driven primarily by social media-fueled speculation.

A sustainable competitive advantage that protects long-term returns on capital.

The empirical fact that winners keep winning over the medium term.

Average price over a defined period; smooths noise to show trend.

The idea that contagious stories drive markets, not just fundamentals.

The total number of outstanding option or futures contracts.

Price divided by earnings per share. The most-quoted valuation metric.

Mass selling driven by fear, often at the worst possible time.

Deciding how much capital to allocate to a given trade or position.

When market prices feed back into the underlying fundamentals they're supposed to reflect.

Return on Invested Capital - operating profit relative to capital employed.

Bond returns earned as time passes and the bond rolls down a positively-sloped yield curve.

Relative Strength Index - momentum oscillator on a 0-100 scale.

Risk-adjusted return - excess return per unit of volatility.

Cyclically Adjusted P/E - price divided by 10-year average earnings, inflation-adjusted.

Rapid price rise forcing short sellers to buy back, accelerating the move.

A cryptocurrency designed to maintain a stable value, typically pegged to the US dollar.

An automatic order to exit a position at a predefined adverse price.

Price levels where buying or selling has historically clustered.

Time decay - how much an option loses per day, all else equal.

Total Value Locked - the dollar value of assets deposited in a DeFi protocol.

Buying assets trading below their intrinsic value.

Sensitivity of an option's price to a 1-percentage-point change in implied volatility.

The 30-day implied volatility of S&P 500 options. The 'fear gauge.'

Weighted Average Cost of Capital - blended cost of debt and equity financing.

Borrowing in low-yielding yen to buy higher-yielding assets globally.

Plot of bond yields across maturities.