Listener handbook

The market, in plain English

Every term below comes up on the show. No jargon defended with more jargon — just what it means and why it matters to your money. Bookmark it, then bring us the question the glossary does not answer.

Ticker symbol

The short code that identifies a stock or fund on an exchange.

AAPL is Apple, SPY is an S&P 500 index fund. When we take a listener question we ask for the ticker so everyone is looking at the same thing instead of the same company's nickname.

Index

A basket of stocks used as a scoreboard for a slice of the market.

The S&P 500 tracks 500 large US companies, the Nasdaq-100 leans technology, the Dow tracks 30 large names. "The market is up" usually means one of these indexes is up — which is why it tells you so little about what you own.

ETF (exchange-traded fund)

A fund that trades like a single stock.

Buying one share of an index ETF gets you a sliver of everything in that index. It is the simplest way to own a whole market instead of picking winners.

Volatility

How much and how fast prices move, in either direction.

High volatility means bigger daily swings, which raises both the reward and the risk of any position. It is a measure of movement, not of direction.

VIX

The index that tracks expected volatility on the S&P 500.

It is built from S&P 500 option prices and reflects how much movement traders are paying up for over the next 30 days. It usually spikes when stocks fall, which is why it gets called the fear gauge.

Option

A contract giving the right to buy or sell a stock at a set price by a set date.

A call is the right to buy, a put is the right to sell. Each contract normally covers 100 shares. Options can be used to speculate with less cash up front or to hedge shares you already own — and they can expire worthless.

Strike price

The price at which an option can be exercised.

A $200 call on a $190 stock only has intrinsic value if the stock climbs above $200 before expiration. The distance between price and strike is a big part of what the contract costs.

Expiration

The date an option contract stops existing.

Time is part of an option's price, so the same contract gets cheaper as expiration approaches if the stock does not move. Traders call that decay.

Options flow

The pattern of large option trades hitting the tape.

Unusually large or aggressive option orders can show where big money is positioning. It is a clue about sentiment, not a prediction.

Implied volatility

The amount of future movement baked into an option's price.

When implied volatility is high, options are expensive — often ahead of an earnings report or a Fed decision. Buying then means paying for movement that may already be priced in.

Earnings report

A company's quarterly update on revenue, profit and outlook.

Stocks frequently move more on the outlook than on the reported numbers. That is why a company can beat expectations and still fall.

Bull market / bear market

Sustained rising prices versus sustained falling prices.

The common shorthand for a bear market is a drop of about 20% from a recent high. The labels describe what already happened, not what happens next.

Support and resistance

Price areas where buying or selling has repeatedly shown up.

Support is where buyers have stepped in before, resistance is where sellers have. Traders use them as reference levels for entries and exits, not as guarantees.

Consumer spending

What households actually buy — the largest engine of the US economy.

Retail sales, foot traffic and what shoppers trade down to often reveal a shift before the headline economic numbers do. It is Georgia's beat on the show.

Interest rates

The cost of borrowing money, steered by the Federal Reserve.

Higher rates make loans and mortgages pricier and make safe savings more attractive, which usually pressures riskier assets. Lower rates tend to do the opposite.

Inflation

The rate at which prices rise over time.

It shapes what the Federal Reserve does with interest rates, which in turn moves nearly every market. Cooling inflation and falling prices are not the same thing.

Diversification

Spreading money across different holdings so one loss cannot sink you.

Owning ten technology stocks is far less diversified than it looks, because they tend to fall together. Real diversification mixes things that do not move in lockstep.

Risk management

Deciding in advance how much you can lose on a position.

Position size, stop levels and how much of the account any single idea gets. It is the least exciting part of trading and the part that keeps people in the game.

Educational only — nothing here is personalized investment advice.