Glossary
A snarky survival guide to the market buzzwords everyone pretends to understand.
A
After-tax Yield
What your yield looks like after the IRS takes its cut. It is the real number you can spend without getting surprise bills in April.
1099-DIV
The tax form that shows dividends, qualified dividends, and capital gain distributions from stocks and funds. It is the love letter your broker sends to both you and the IRS.
0DTE (Zero Days to Expiration)
Options contracts that expire the same trading day. They move fast, pay fast, and can torch a risk plan in a single afternoon.
B
Bear Market
Wall Street's version of seasonal depression. Everyone's portfolio goes into hibernation while CNBC pundits explain how you should've sold three months ago.
Boomer Candy
Fancy ETFs that promise safety and monthly income by trading away upside. Basically dessert for retirees: sweet, predictable, and liable to rot your portfolio's teeth if you overdo it.
BDC (Business Development Company)
A public company that lends to or invests in smaller, private businesses and passes most of the income to shareholders. Example: owning a BDC can mean chunky dividends funded by private credit deals.
Bull Market
The financial equivalent of a conga line. Nobody knows where it's going, but everyone's convinced it'll last forever. Spoiler: it won't.
C
Call Overwriting
Selling call options against a stock or fund you already own to collect option premium. You trade some upside for steady income, like renting out your spare room and losing privacy.
Calmar Ratio
A risk metric that compares annualized return to maximum drawdown. Higher means you earned more for the worst gut punch your portfolio took.
Capital Gains
The profit when you sell an investment for more than you paid. The IRS cares whether you held it long enough to earn the cheaper long-term rate.
Cash Flow Investing
Building a portfolio with the main goal of steady distributions instead of pure price growth. It is less adrenaline, more direct deposit vibes.
Covered Call
Selling a call option while owning the underlying shares. You get paid today and agree to sell tomorrow if the price rips higher.
Covered Call ETF
An ETF that holds stocks and sells calls on them for income. It can smooth cash flow, but the upside cap is real and so is the tax bill.
Compound Interest
The closest thing to legal sorcery. You do nothing, your money makes more money, and eventually you can brag about "letting time work for you" while still eating store-brand cereal.
CUSIP (Committee on Uniform Securities Identification Procedures)
A CUSIP is a unique 9-character alphanumeric identifier assigned to securities traded in the United States and Canada. It is used to precisely identify financial instruments such as stocks, ETFs, mutual funds, and bonds for clearing, settlement, and record-keeping purposes.
Think of it as a security's fingerprint. No two should match, and paperwork sleeps better because of it.
D
Delta
The option Greek that estimates how much an option price moves when the stock moves $1. It is the speedometer for how sensitive the option feels.
Dividend Yield
The annual dividend divided by the share price. It is a quick snapshot of income, not a guarantee the checks keep coming.
Dividend Aristocrats
S&P 500 companies that have increased their dividend for at least 25 straight years. Example: these are the boring-but-consistent payers that keep hiking even in rough markets.
Diamond Hands
Slang for investors who refuse to sell through gut-wrenching volatility, keeping their grip thanks to long-run conviction. The phrase grew in online trading circles and pairs with the HODL mindset, but it can also mean riding a bad bet far too long.
Dividend Sustainability
Whether a company or fund can keep paying its dividend without raiding the couch cushions. Look at cash flow, payout ratios, and whether the business is melting.
Downside Protection
Anything meant to soften losses when markets drop, such as hedges, cash buffers, or less aggressive positioning. It is a seatbelt, not a force field.
Diversification
Putting your eggs in different baskets so when one gets stolen, at least the omelet still happens. The financial world's way of saying "don't be stupid."
Dividend Reinvestment Plan. When you're so committed to compounding that you turn every payout into more shares instead of pocket money. Click through if you actually want to learn how to run that flywheel.
E
ETF Tax Treatment
How an ETF's distributions are taxed based on what it owns and how it operates. Most issue 1099s, but some strategies can kick out ordinary income or capital gains.
Ex-Dividend Date
The cutoff day for dividend eligibility. Buy on or after this date and you miss the upcoming payout. Example: buy the day before ex-date, and you still collect the next dividend.
ETF
An investment burrito stuffed with random securities. Sometimes delicious, sometimes it gives you indigestion, but hey, at least it's portable.
H
HODL
Crypto slang that turned into a buy-and-hold battle cry. It pushes long-term conviction during wild price swings and shrugs off panic selling, for better or for worse.
I
Income Investing
Focusing on assets that pay you regularly, like dividends, interest, or option income. The goal is more cash flow and fewer sweaty palms.
K
K-1
If it pumps, processes, pressurizes, or pipes hydrocarbons, it probably hands you a K-1. It's a tax form partnerships send instead of a standard 1099, stuffed with allocations and passive loss trivia your software never guesses right. Translation: extra waiting, extra clicks, and extra chances to get cozy with the IRS instructions.
L
Liquidity
How fast you can turn an asset into cash without looking like you're pawning grandma's heirlooms.
M
M2 Money Supply
A broad measure of money that includes cash, checking deposits, and easily accessible savings instruments. Think of it as the economy's wallet plus the couch cushions—full until someone remembers all those impulse buys.
MLP (Master Limited Partnership)
A publicly traded partnership, often in energy infrastructure, that passes through most of its cash flow to investors. Example: MLPs can pay high distributions but usually send a K-1 at tax time.
An ETF designed to distribute income every month. It is for people who want a regular paycheck cadence instead of waiting for quarterly surprises.
N
NAV (Net Asset Value)
The value of a fund's holdings divided by its shares outstanding. It is the fund's report card, not the price you can always trade at.
NAV Erosion
When a fund's net asset value drifts lower over time, often because distributions exceed true earnings. It is the slow leak that makes yield look better than reality.
NAV Trend
The directional pattern of a fund's net asset value over time. A steady climb means the engine is healthy, while a slide hints the payouts are eating the chassis.
O
Option Premium
The cash you receive for selling an option. It feels like found money until you remember you sold someone a promise.
Omega Ratio
A performance measure that compares gains above a target return to losses below it. The higher it is, the more upside you got relative to the downside drama.
Ordinary Income
Income taxed at your regular rate, like interest or many option distributions. It is the opposite of the fancy lower tax brackets.
P
Passive Income (Investing Context)
Money you earn without clocking in, like dividends or interest. It is passive only after you do the active work of picking the right assets.
Paper Hands
Trading slang for someone who bails at the first whiff of red, locking in losses out of fear. It is often used in crypto and meme-stock chatter to call out shaky conviction and missed rebounds.
Q
Qualified Dividends
Dividends that meet IRS rules and get taxed at lower long-term capital gain rates. They are the polite, well-dressed dividends that behave.
R
Reverse Split
When a company or fund combines shares to raise the price per share. It fixes the look, not the underlying problem.
REIT (Real Estate Investment Trust)
A company that owns or finances income-producing real estate and distributes most of its earnings. Example: a REIT can pay steady dividends funded by rent checks.
Retirement
The last stop before Valhalla, where you move to Florida and become a shuffleboard champion the likes of which the SeaShell Villages have never seen. Also known as: "When your boss finally becomes someone else's problem."
Risk-adjusted Return
The return you get after accounting for how wild the ride was. It is the reason a boring strategy can beat a rollercoaster on a quality-of-life basis.
A distribution that gives you your own money back dressed up like income. It feels fancy until tax time reminds you it's basically a slow-motion refund. Dive deeper in the Learning Lab before you start celebrating.
S
The danger that the order of investment gains and losses hurts long-term results, especially when you're withdrawing money. It's like eating your fries before the burger only to realize the burger's burnt—you're stuck with the aftertaste.
Sharpe Ratio
A risk-adjusted return score that compares excess return to volatility. Higher means you got paid more for the stress.
Sortino Ratio
Like Sharpe, but it only counts downside volatility. It rewards strategies that keep the bad days quiet while still delivering returns.
T
Tax Drag
The performance loss from paying taxes along the way. High turnover strategies can feel like running with a parachute.
Selling investments at a loss to offset taxable gains, then reinvesting to stay allocated. It is the portfolio version of turning lemons into a tax break.
Tax-efficient Investing
Choosing assets and strategies that minimize taxes so more of your return stays yours. It is the difference between gross and actually getting paid.
U
Upside Cap
The maximum gain you can earn in a strategy like covered calls. You take the premium and agree to stop winning after a certain point.
Ulcer Index
A risk measure that focuses on depth and duration of drawdowns, not just volatility. Lower is better because your portfolio spent less time in pain.
V
Volatility
How much prices swing around. High volatility means bigger moves, higher drama, and more potential for both profits and ulcers.
Volatility Harvesting
Strategies that try to monetize price swings, often by selling options. It is paid for absorbing other people's chaos.
W
An ETF structured to pay distributions every week. It is for investors who want income faster than the calendar usually allows.
Y
Yield Trap
A sky-high yield that lures you in right before the dividend gets cut or the price falls. It is the financial version of a too-good-to-be-true deal.
Yield on Cost
Dividend yield based on what you paid, not today's price. Example: a stock bought at $50 paying a $3 dividend has a 6% yield on cost, even if it trades at $75 now.