Financial Glossary
Search for definitions of important investment concepts, tax forms, and options strategies.
1
1042-S
IRS form issued to foreign investors showing US-source income and taxes withheld
A
Assignment
The obligation to buy (put) or sell (call) shares when an options contract is exercised
C
Cash-Secured Put (CSP)
Selling a put option while holding enough cash to buy the shares if assigned
Covered Call (CC)
Selling a call option on shares you already own
D
Delta
The rate of change in an option's price relative to a $1 move in the underlying
Dollar-Cost Averaging (DCA)
Investing a fixed amount at regular intervals regardless of price
DTE
Days To Expiration, the number of days remaining until an options contract expires
F
Foreign Tax Credit
A tax credit for taxes paid to a foreign government, reducing home country tax liability
I
Iron Condor
An options strategy selling both an OTM put spread and OTM call spread simultaneously
IV Percentile (IVP)
The percentage of days in the past year where IV was lower than today
IV Rank (IVR)
A measure of where current implied volatility sits relative to its 52-week range (0-100)
P
PFIC
Passive Foreign Investment Company, a US tax classification relevant to international investors
R
Return of Capital (ROC)
A distribution that returns part of your original investment rather than income
T
The 4% Rule
A retirement guideline suggesting withdrawing 4% of portfolio value annually
The Wheel Strategy
A cyclic options income strategy combining cash-secured puts and covered calls
Theta Decay
The daily erosion of an option's time value as expiration approaches
TQQQ
ProShares UltraPro QQQ, a 3x leveraged ETF tracking the Nasdaq-100
V
VIX
CBOE Volatility Index, a real-time measure of S&P 500 implied volatility
Volatility Decay
The structural drag on leveraged ETF returns caused by daily rebalancing in volatile markets
W
W-8BEN
IRS form certifying foreign investor status, required to claim reduced dividend withholding rates
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