Investing 101

## TL;DR

- Type of contract that gives the holder the right, but not obligation, to transact an asset in the future at a specified price and time. 
- Types of options: calls and puts 

## What is an option? 

An option is a contract between two parties.

This contract gives the holder the right to buy and sell an asset at a specific price by a specific date. Each contract consists of 100 shares of the underlying asset. However, the holder of the contract is not obligated to exercise their contract but has the right to whenever after they purchase the contract. The date chosen for the contract is the expiration date before the option gets exercised and the chosen price is the price you plan to exercise your contract at. Since options grant holders the right to transact but not obligation to trade their contracts, they must pay a premium for these rights. Based on the risk connected with your specific expiration date and strike price, the premium will fluctuate. As the price of a contract goes up or down, so does the premium associated with the contract. There are 2 types of options: calls and puts. However, there are different types of option orders which can be made. Let’s break down the basics first. 


An option is a contract between two parties (and a method of making/losing a lot of money) 

What are Options?

Types of Assets

## TL;DR

- Instrument used to track a basket of securities covering the overall market or a specific industry 
- Popular broad equity-based indexes: S&P500, Dow Jones Industrial Average, Nasdaq Composite 

## What is an index? 

An index is used to measure the performance of a basket of securities, mimicking the performance of an entire market or a specific industry. For example, the Standards and Poors 500 (S&P500) index is used to measure the performance of the US equities market as it encompasses all the largest capitalization assets trading on the US market. Indexes are used as a benchmark for investors to track how their portfolio performs in comparison to the overall market. 

A popular investment strategy called “indexing” involves an investor replicating an index (like the S&P) so that they don’t have to constantly monitor their investments and try to outperform the market. An investor may also replicate the performance of the overall bond market by investing in bonds similar to those in the Bloomberg Barclays US Aggregate Bond Index. Through indexing, portfolio management is minimal but returns are also smaller over the short term. 



What is an Equity Index?

TL;DR

What is an index?

What are Options?