Stocks, Bonds, Dividends & Options

Another word for stocks, representing shares of ownership in a company. When you own equities, you hold a small piece of that business and may benefit from its growth through rising share prices or dividends. They historically offer higher long-term return potential than bonds or cash, but come with greater volatility and risk, since their value rises and falls with company performance and market conditions.

A financial ratio showing how much a company pays in annual dividends relative to its share price, expressed as a percentage and calculated as annual dividends per share divided by price per share. For example, a stock paying $2 a year at a $50 price has a 4% yield. Because price sits in the denominator, a falling share price can push the yield up, so an unusually high yield can sometimes signal trouble rather than a bargain.

A financial contract that gives the buyer the right, but not the obligation, to sell a specific asset at a set price (the strike price) before a certain expiration date. Investors buy puts to profit from or protect against a falling price, since the option gains value as the asset drops. It’s the opposite of a call option, which is a bet that the price will rise.

A financial contract that gives the buyer the right, but not the obligation, to buy a specific asset at a set price (the strike price) before a certain expiration date. Investors buy calls to profit from or position for a rising price, since the option gains value as the asset climbs above the strike price. It’s the opposite of a put option, which is a bet that the price will fall.

A short-term trading strategy of buying and selling financial assets within the same day, aiming to profit from small price movements and closing all positions before the market closes. It relies on technical analysis, charts, and rapid decision-making rather than long-term fundamentals. It’s high-risk and demanding, since frequent trades, leverage, and volatility can lead to significant losses, and most day traders don’t consistently outperform the market.