Knowledge Base

Options are financial instruments whose value is derived from the price of an underlying asset of various kinds (real as in the case of commodities such as…

Traders define options as "in the money" (ITM) or "out of the money" (OTM) by the strike price's position relative to the market value of the underlying asset…

Also known as the Black-Scholes-Merton or BSM model, it's a differential equation that's widely used to calculate the theoretical value of an option. It has…

The numerical indicators that express the different components that determine the price of an option are called "greeks" (because letters from the Greek…

The Intrinsic value of both call and put options is the difference between the underlying stock's price and the strike price. Intrinsic value only measures the…

The Put/Call Ratio is a financial indicator that measures the ratio between the trading volume of put options and call options in a specific market or on a…

Delta hedging is a sophisticated risk management strategy that allows traders and portfolio managers to neutralize directional price risk in portfolios…

A statistical distribution is a mathematical description of how the values of a variable are distributed within a data set and thus represents the frequency…

Linear Regression is a statistical technique used to model the relationship between a dependent variable and one or more independent variables. In financial…

Volatility quantifies significant price fluctuations of an asset or financial instrument. Higher volatility increases the likelihood of either very high or…

Historical volatility (HV) is a fundamental statistical concept in financial markets that measures the degree of variation in an asset's trading price over a…

Mean reversion is a fundamental concept in finance suggesting that some asset prices tend to return to their long-term average over time. This principle…

Skewness is the property of an observed distribution that indicates absence of specularity with respect to any vertical axis. When the data are evenly…

Correlation measures the statistic relationship between two assets, indicating whether and how much they tend to vary together. Correlation is expressed in…

Cointegration occurs when two or more nonstationary time series have a linear combination that is stationary. In simpler terms, although the prices of two…

Cycle Analysis is a method used to identify recurring patterns in financial markets. It's based on the premise that market movements follow repetitive cycles…

Monte Carlo simulation is a computational algorithm that relies on repeated random sampling to obtain numerical results. In finance, it is used to model the…

It is a statistical test used to test whether a sample of data comes from a normal distribution. It is based on the measure of skewness and kurtosis of the…

It is a statistical test used to test whether a sample of data comes from a particular theoretical distribution (such as the normal). In essence, it compares…

It is a statistical test used to test whether a sample of data comes from a particular theoretical distribution. Unlike the Kolmogorov-Smirnov test, the…

Technical analysis was born around 1900 from the studies of Charles Dow, creator of the Dow Jones index, through the study of graphs relating to historical…

It is an average of a certain amount of data that only considers the latest data in chronological order. This tool is, in fact, defined as "moving" because the…

It is an indicator formed by three distinct lines on the chart that indicate price ranges: the central line represents the moving average of the price (by…

It is one of the most widely used technical analysis oscillator ever. The purpose of the RSI is to provide an indication of the strength of the trend. RSI…

It is a Momentum indicator that measures the percentage change in price over the reference period. It is calculated by comparing the current price with the…

It is a type of technical oscillator that uses price and volume data simultaneously to determine, like RSI, whether an asset is overbought or oversold. Another…

It is an oscillator with a complex construction, but which has the advantage of limiting the subjectivity of the analyst in his study. MACD essentially serves…

The ATR measures the volatility of a market in a specific period. It considers price gaps that can form between one day and the next. NATR can be more useful…

The Accumulation/Distribution Line measures the flow of money entering and exiting the market, highlighting whether investors tend to "accumulate" through…

The CMF is an indicator created by Marc Chaikin that compares buying pressure with selling pressure, revealing the interest of buyers and sellers for a…

The CMO is an indicator created by Tushar Chande to identify changes in a security's trend. It measures the rate of change of prices on a daily or periodic…

The Disparity Index is a momentum indicator that shows the direction of an asset's movement relative to a moving average. Similar to the Rate of Change (ROC)…

Invented by Japanese journalist Goichi Hosada in 1969, the IKH shows price trend levels and support and resistance areas in an innovative way, using various…

The OBV is designed to measure the flow of volumes in and out of a financial instrument. It measures the total positive or negative volume of a session by…

Pivot points are useful indicators for identifying potential intraday support and resistance areas, valid for the next session. The interpretation is simple…

The PPO is one of the most widely used trading indicators, considered by many experts to be the evolution of the MACD. It measures the percentage difference…

The Stochastic Oscillator is a momentum indicator that analyzes the strength and speed of an ongoing trend. It is based on the understanding of the strength of…

The Williams %R oscillator is very similar to the stochastic, but while the latter uses the difference between close and lowest of lows, Williams %R is based…

The Zig Zag indicator is a technical analysis tool used to determine support and resistance levels. It connects some points of the chart with straight lines…

It represents the average price of a security, adjusted for trading volume, over a specific period. This metric offers insights into the price levels where the…

It is an analysis tool that shows the distribution of volumes traded at specific price levels over a given time period. It is a visual approach that highlights…

They are based on the same fundamental data, price and volume. Both seek to explain the relationship between price movements and volumes traded. Both provide…

It is a technical indicator used to measure the volume of buying versus selling over time. It is commonly used to understand the upward or downward pressure on…

DMI consists of three fundamental elements: 1) ADX: this is the main variable, the one already operating in the initial version of the indicator. Its purpose…

The WMA is a technical indicator that traders use to generate trading direction and make buy or sell decisions. It assigns greater weight to recent data and…

The DEMA is a measurement of a security's moving average that gives greater weight to recent price data. Like the exponential moving average (EMA), it reacts…

The calculation principle of the TEMA is similar to the Double Exponential Moving Average (DEMA). The name "Triple Exponential Moving Average" does not…

The ATR primarily measures the volatility of a market in a specific period. Unlike Standard Deviation, the innovation introduced by Wilder is the measure of…

The momentum indicator is a technical analysis tool used to identify ongoing trends and their remaining strength. It graphically represents the strength of a…

Fibonacci analysis, named after the famous Italian mathematician Leonardo da Pisa, known as Fibonacci, are based on a unique numerical sequence where each…

Valuing a business as the present value of the free cash flows it is expected to generate: approaches, terminal value, and the reverse DCF.

Macroeconomics studies the behavior and performance of entire economies, analyzing aggregate indicators like gross domestic product (GDP), inflation rates…

Microeconomics examines the behavior of individual economic units such as consumers, firms, and industries, focusing on how they make decisions regarding the…

The Buffett Indicator (also known as Buffett Index or Buffett Ratio) represents the ratio of the total United States stock market capitalization to GDP. This…

In economics, inflation refers to a generalized and continuous increase in prices over time. It is a crucial indicator because the price level influences…

An index, in finance, is a statistical measure that tracks the performance of a group of assets. It serves as a benchmark or proxy for a particular market…

Commodities are standardized, interchangeable physical goods that serve as inputs in the production of other goods or services. They represent the foundation…

Central banks are the cornerstone institutions of modern monetary systems, responsible for managing national monetary policy to maintain price stability…

Exchange-Traded Funds (ETFs) are investment funds that trade on stock exchanges like individual stocks, offering investors instant diversification at low…

Bonds are debt securities issued by governments, municipalities, or corporations to raise capital, representing a loan made by investors to these entities. In…

The yield curve represents the relationship between interest rates and time to maturity for bonds of similar credit quality, typically government securities…

The COT Report is a weekly report published by the U.S. Commodity Futures Trading Commission (CFTC) that provides information on traders' positions on futures…

GICS is an industry analysis framework that helps investors understand the key business activities for companies around the world. MSCI and S&P Dow Jones…

Energy sector includes companies that operate in the production and distribution of energy, both from fossil and renewable sources. It is a strategic and…

Utilities, or utility companies, are companies specialized in providing essential services for society, such as electricity, gas, water, and waste collection…

The consumer staples sector includes non-cyclical companies that produce or sell goods or services that are always in demand. It is characterized by consistent…

Consumer discretionary includes companies that offer non-essential goods and services, whose demand varies with the economic cycle. It is a sector very…

This sector includes companies that provide content, data, communication and entertainment services. It is a sector that has undergone profound transformation…

The industrial sector includes enterprises and companies that operate in the production of capital goods and machinery used for the production of other goods…

Sector that includes banks, insurance companies, wealth management firms and other financial services. It is the heart of the economic system. Main…

The health care sector includes companies that operate in healthcare, from pharmaceutical production to management of healthcare facilities. Main sub-sectors…

The IT sector includes companies that develop digital technologies, software, hardware and IT services. It is the engine of global innovation. Main…

Includes companies that produce raw materials used in construction, industry and manufacturing. Main sub-sectors: basic and specialty chemicals, metals and…

Includes companies that own, develop or manage real estate. Often structured as REITs, they offer stable returns and dividends. Main sub-sectors: Ooffices and…

The foreign exchange market, or forex, is an international, over-the-counter, or decentralized market for currency exchange. The currency market is by far the…

OPEC is the acronym for Organization of the Petroleum Exporting Countries, and refers to the organization of countries that produce and export oil worldwide…

The Anglo-Saxon acronym M&A stands for mergers and acquisitions, in Italian fusioni e acquisizioni. These are extraordinary operations that involve the…

The U.S. Securities and Exchange Commission (SEC) is an independent federal government agency responsible for protecting investors, maintaining fair, orderly…

The Return on Equity (ROE), defined as Net Income / Shareholders Equity, reflects the yield obtained on the capital invested by the owners. Liquidity ratios…

Also known as Modern Portfolio Theory (MPT), it's a mathematical framework for assembling a portfolio of assets that maximizes expected return for a given…

The Capital Asset Pricing Model (CAPM) is a fundamental framework used to determine the theoretically appropriate required rate of return of an asset. It…

Beta measures an asset's volatility in relation to the overall market benchmark. A Beta of 1.0 indicates that the asset's price moves in lockstep with the…

Jensen's Alpha is a risk-adjusted performance measure that represents the average return on an investment above or below what was predicted by its risk level…

Developed by William F. Sharpe, this ratio is the industry standard for calculating risk-adjusted return. It measures the excess return (reward) per unit of…

The Treynor Ratio is similar to the Sharpe Ratio, but with one key difference: it uses Beta (market risk) as the measure of risk instead of total volatility…

Behavioral finance challenges the traditional assumption that investors are rational actors who process information objectively and make optimal decisions…

The VIX (Volatility Index), known as the fear gauge, measures implied volatility of S&P 500 options and serves as a key indicator of market sentiment and…

Initially developed by Merrill Lynch, the MOVE index serves as the bond market's equivalent of the VIX. The MOVE index measures volatility in options traded on…