Strike price
The price an option lets you buy or sell at.
Where it is explained in full
Covered calls: the whole position, not just the premium. Selling a call against stock you own puts money in your pocket today and gives something up tomorrow. Look at both halves, or the premium will look like free money when it is not.
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Words beside it
- Consumer Price Index
A number the government publishes that tracks how much everyday things like food and gas cost over time. When that number goes up it means your money buys a little less than it used to.
- Price to earnings (P/E)
Share price divided by earnings per share. What you pay for a dollar of profit.
- seesaw analogy for rates and prices
When interest rates go up, the price of a bond goes down, and when rates go down, the price goes up, kind of like opposite ends of a seesaw. This happens because older bonds paying lower interest become less attractive when newer ones pay more.
- Strike
The price at which an option's owner may buy (call) or sell (put) the underlying.
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