Trading Basics
Alpha
This is a measure of price performance vs a benchmark.
If a trader makes 10% per annum and the index makes 7% the trader has an alpha of 3%.
Other Trading Basics
American Option
An option that can get exercised at any time during its life.
European options can only be exercised at the end.
Bid
Traders can go short at the bid price.
The terminology is from the broker point of view, they are bidding to buy from you.
Annuity
A guaranteed income for the rest of someones life.
Historically purchased with pension lump sums.
The buyer is swaping cash now for future income.
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