Iron Butterfly
An iron butterfly is an advanced trading strategy that is created by buying a lower strike out-of-the-money put, selling a middle strike at-the-money put, selling a middle strike at-the-money call, and buying a higher strike out-of-the-money call. Similar to an Iron Condor, the Iron Butterfly is a limited risk strategy that has a higher probability More...
Index fund or Index ETF
An index fund is a passively managed type of mutual fund or ETF that is put together so that its performance mirrors or tracks the performance of a specific market index, such as the S&P 500 or other indexes More...
At-the-money
This occurs when the strike price matches the price of the underlying security. The call and put options both will be at-the-money. Such a situation means that although the at-the-money option has no intrinsic value, More...
Undervalued
The opposite of overvalued, an undervalued stock price is not justified by its anticipated earnings, does not coincide with price/earnings (P/E) ratio and is below the stocks’ true value. By utilizing a wide variety More...
Overvalued
A stock that is overvalued means its current stock price is not justified by its anticipated earnings, it does not coincide with its price/earnings (P/E) ratio, and is expected to drop in price. Many factors such More...
Option Contract
This is a type of contract that protects an investor from the seller’s ability to revoke the contract before an agreed upon time for a specified amount. An example of such an option is an investor (an offeree) More...
Plain Vanilla Option
A plain vanilla option is the simplest type of a basic option that is traded on an exchange, with no extra contract restrictions or features involved. They are the opposite of exotic options, which are more complex More...
Binary Option
Usually a European style option, a binary option has only two outcomes: where the payoff is either some fixed amount of some asset or nothing at all. Two versions of this include the cash-or-nothing, which pays More...
Capital Requirements Directive
Developed by the Basel Committee on Banking Supervision to help resolve part of the global financial crisis, Basel III provisions came into force in the European Economic Area (EEA) in January 2013 following the More...
Market Volatility
The volatility of a market is the measure of uncertainty associated with the price movement of an underlying financial asset. Volatile markets will see vigorous price movements regularly while asset prices in More...
