A fuller guide to this term is on the way. In the meantime, the related terms below explain the ideas around it.
Related MoneyPedia terms
- Call OptionA contract giving you the right to buy an investment at a set price before it expires.
- Put OptionA contract giving you the right to sell an investment at a set price before it expires.
- LeverageUsing borrowed money to increase the size of an investment, raising both potential returns and potential losses.
- VolatilityHow sharply and often an investment's price swings up and down over a given period.
- Strike PriceThe set price at which an option lets you buy or sell the underlying investment.
- Short SellingBetting an investment's price will fall by borrowing shares, selling them, and hoping to rebuy cheaper later.
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Plain-English education — not personalized legal, tax, or investment advice.