Glossary¶

A quick reference for the terms that show up across the modules. Each entry points you to the lesson where the concept is implemented.

Markets & instruments¶

Bid / Ask: The best price a buyer will pay (bid) and a seller will accept (ask). The gap between them is the spread. See Market Microstructure.
Derivative: A contract whose value derives from an underlying asset (e.g. an option on a stock). See Black-Scholes Option Pricing.
Greeks: Sensitivities of an option's price — Delta, Gamma, Theta, Vega, Rho. See Finance - Greeks Calculator.
Implied Volatility: The volatility that, fed into a pricing model, reproduces the market price of an option. See Finance - Implied Volatility Surface.

VaR (Value at Risk): The loss not expected to be exceeded over a horizon at a given confidence level. See Value at Risk (VaR).
Expected Shortfall / CVaR: The average loss given that the VaR threshold is breached — a coherent tail-risk measure. See Finance - Expected Shortfall.
Drawdown: The peak-to-trough decline of an equity curve. See Risk Metrics - Drawdown Analysis.
Sharpe Ratio: Excess return per unit of total volatility. See Sharpe and Sortino Ratio.

Stationarity: A series whose statistical properties do not change over time — a prerequisite for many time-series methods. See Quantitative Methods - Statistics.
Cointegration: Two non-stationary series whose linear combination is stationary — the basis of pairs trading. See Quantitative Methods - Cointegration.
GARCH: A model for time-varying volatility that captures volatility clustering. See Quantitative Methods - GARCH.
Monte Carlo: Estimating outcomes by simulating many random paths. See Monte Carlo Portfolio Simulator.

Efficient Frontier: The set of portfolios with the best return for each level of risk. See Portfolio Optimizer.
Risk Parity: Allocating so each asset contributes equally to portfolio risk. See Portfolio Management - Risk Parity.
Beta: Sensitivity of an asset's return to the market. See CAPM and Finance - Beta Calculator.

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