Plain-English definitions of the terms you'll see around Closing Bell Picks. For education only, not investment advice.
64 terms
Every contest gives each player the same virtual budget, set by the commissioner (for example, $50,000). You decide how to spread it across your picks. It isn't real money, can't be deposited or withdrawn, and has no cash value.
Also: budget, play money
The commissioner sets how many stocks each player picks (the roster size). More picks spread your budget across more companies, so any single stock moves your total less; fewer picks make each one count more.
Also: roster, roster size, picks
This contest rule caps how much of the budget one pick can use (for example, 40%). It keeps portfolios spread across several stocks, which is the idea behind diversification. The limit is checked when you pick or swap, not as prices move afterward.
Also: max position, position limit
You set a dollar amount for each pick. At the contest's opening bell, it buys as many whole shares as that amount covers at the official opening price. If $1,000 is set for a $300 stock, you get 3 shares ($900) and $100 stays as cash, which earns nothing. If the stock opens higher than when you picked, you may get one share fewer.
Also: shares, fractional shares
The U.S. stock market's regular session opens at 9:30 AM Eastern Time and closes at 4:00 PM (the closing bell). Contests start at an opening bell: picks lock, and each pick buys shares at that day's official opening price.
Also: open, market open, closing bell
A swap sells one holding and buys a different stock with the proceeds. It goes through at the next regular-session price after you ask for it. The commissioner decides whether swaps are allowed and how many you get.
With sector slots on, each pick fills a slot for a specific sector (or a Wildcard slot for any sector). It pushes players to build portfolios across different parts of the economy instead of picking several similar companies.
Also: slots, wildcard
When head starts (handicaps) are on, the commissioner can give a player a small percentage added to their final return, up to a limit set for the contest. It's a way to keep leagues fun when experience levels differ.
Also: handicap
Contests rank players by total return: the portfolio's ending value (stocks plus cash, including any dividends received) compared with the starting budget. A $50,000 portfolio worth $52,000 at the end has a total return of +4%. Only regular-session prices count.
Also: return, performance
Owning a share of stock means owning a small piece of a company. Shares trade on exchanges, and the price changes all day as buyers and sellers agree on trades. Over time a stock's price tends to reflect how investors view the company's earnings and prospects, but it can move for many reasons.
Also: share, equity
Every listed stock or fund has a ticker symbol of a few letters. In league chat, typing a $ before a ticker (like $NVDA) turns it into a tap-able price chip.
Also: symbol, ticker
An ETF holds a basket of investments, often following an index or a sector, and trades on an exchange like a stock. SPY, for example, tracks the S&P 500. The app shows indexes and sectors through the ETFs that track them.
Also: fund, exchange-traded fund
An index tracks the combined performance of a set of stocks. The S&P 500 covers 500 large U.S. companies; the Nasdaq-100 covers 100 large companies on the Nasdaq exchange; the Dow Jones Industrial Average follows 30 large companies; the Russell 2000 covers smaller companies. People use indexes as a quick read on the overall market.
Also: S&P 500, Nasdaq, Dow, Russell 2000, indexes
Companies are grouped into 11 sectors (the GICS system): communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. Stocks in the same sector often move together because they're affected by similar news.
Also: sectors, industry
Market capitalization is the share price multiplied by all the shares outstanding. It's the usual measure of a company's size: large caps are worth more than about $10 billion, mid caps roughly $2–10 billion, and small caps less. Contests only allow stocks worth at least $300 million.
Also: market capitalization, market value, large cap, small cap
A diversified portfolio holds companies that don't all react to the same news the same way. If one stock or sector falls, others may hold up. Diversification doesn't prevent losses, but it lowers the chance that a single event sinks the whole portfolio.
A volatile stock makes bigger moves in both directions. Higher volatility means larger possible gains and larger possible losses over a short contest. The Markets page's price surprises list compares today's move with a stock's typical daily move.
Also: typical move, price surprise
Stocks also trade before the open and after the close (extended hours), when fewer people trade and prices can jump around. Contest scoring uses only regular-session prices; extended-hours prices are shown for information only.
Also: market hours, extended hours, pre-market, after hours
The previous close is the last regular-session price from the prior trading day. A stock's change today (in dollars and percent) is measured against it. On intraday charts, the dashed line marks the previous close.
Also: close, closing price
Under the current market data plan, prices arrive about 15 minutes after the fact, and the app labels them that way. Contest results use official prices once they're available, so the delay doesn't affect scoring.
Also: delayed, real-time
Volume counts the shares that changed hands. Heavy volume means a lot of interest in the stock that day, often because of news or earnings.
Relative volume divides today's shares traded by the average over the last 20 sessions. A reading well above 1× means unusual activity, which often happens around news. The lists show it under the volume, in bold at 1.5× or more.
Also: rel volume, × avg
A gap up means the opening price is above the previous close; a gap down means it's below. Gaps usually follow news that came out while the market was closed, such as earnings. The Markets page lists the day's biggest gaps.
Also: gap up, gap down
The 52-week range shows where a stock has traded over the last year. A price near the top of its range has risen a lot this year; near the bottom, it has fallen. The lists draw it as a bar with a dot at today's price.
Also: 52-week high, 52-week low, range
Earnings per share spreads a company's profit across its shares. Trailing EPS (TTM) uses the last twelve months of reported results. Negative EPS means the company lost money over that period.
Also: earnings, trailing twelve months, TTM
The price-to-earnings ratio compares the share price with the last twelve months' earnings per share. A P/E of 25 means the stock costs 25 times its yearly earnings per share. A high P/E can reflect expectations of fast growth, or simply a pricey stock; a low P/E can reflect slow growth or problems, or a bargain. It's shown as "—" for companies with losses. P/E is most useful compared with similar companies.
Also: P/E, PE, price to earnings, valuation
Analysts at banks and research firms study companies and publish a rating on a five-step scale from most to least favorable, using words like Buy, Hold, and Sell (some firms say Overweight, Neutral, or Underweight instead). Counting how many analysts give each rating shows how they're leaning overall. Ratings are opinions that change over time and are often wrong; Closing Bell Picks shows them as reported by a licensed data provider and adds no rating of its own.
Also: analyst ratings, recommendation, consensus, buy rating
Firms revisit their ratings as news comes in. An upgrade moves the rating up (for example, Hold to Buy); a downgrade moves it down; reiterated means the firm repeated its rating; initiated means it began covering the stock. Rating changes can move a stock's price on the day they're announced, but they're one firm's opinion.
Also: upgrade, downgrade, reiterated, initiated coverage
Along with a rating, many analysts publish a price target: where they think the stock could trade in roughly 12 months. Looking at the lowest, average, and highest targets shows how much analysts disagree. A target is an estimate, not a forecast you can count on; stocks regularly end up far from them.
Also: price targets, target price, analyst target
Before each earnings report, analysts publish estimates of the company's earnings per share (EPS) and revenue. The average of those estimates is the number a report is compared with: beating it means the company earned more than expected, missing means less. Estimates change as the report gets closer.
Also: estimates, EPS estimate, consensus estimate, expected earnings
Forward P/E divides the price by expected earnings per share over the coming year. Because it relies on estimates, it can change as forecasts change. (Coming once the app adds an analyst-estimates data source.)
Dividends are a share of profits paid out to owners of the stock. In contests, dividends a holding pays during the contest count toward total return, though over a week or a month they're usually small.
Also: dividends, dividend yield, yield
Public companies report results every quarter, usually before the market opens or after it closes. The numbers (and how they compare with expectations) can cause big price moves. The lists show the next report date when it's within a week.
Also: earnings, earnings date, quarterly results
Revenue is a company's total sales. Revenue growth compares it with the same period a year earlier, as a percentage. Steady growth is generally a sign of rising demand; shrinking revenue means the company is selling less.
Also: sales growth, revenue, sales
Earnings growth compares earnings per share with the same period a year earlier. Companies whose profits grow steadily are generally considered healthier than those with flat or falling profits.
Also: EPS growth, profit growth
Net profit margin divides profit by revenue. A 15% margin means 15 cents of profit for every dollar of sales. Normal margins differ by industry: grocers run thin margins, software companies wide ones, so compare within a sector.
Also: net margin, margin, margins
Debt-to-equity divides total debt by shareholders' equity (assets minus liabilities). Below 1 means more equity than debt. Banks, utilities, and real estate companies normally carry much more debt than other sectors.
Also: leverage, debt, D/E
The current ratio compares what a company can turn into cash within a year with what it owes within a year. Above 1 means short-term assets cover short-term debts.
Also: liquidity
Free cash flow is cash from operations minus capital spending (equipment, buildings). It's the cash available to pay down debt, pay dividends, or reinvest. Profits on paper and cash in the bank can differ, so many investors look at both.
Also: FCF, cash flow
Return on equity (ROE) divides net profit by shareholders' equity. Higher means more profit from each dollar owners have in the business. Heavy borrowing can push ROE up, so it's usually read alongside debt.
Also: ROE
Each candle covers one period (a day, an hour, a few minutes). The thick body runs from the open to the close; the thin lines (wicks or shadows) reach the high and low. In this app, hollow candles closed higher than they opened and filled candles closed lower.
Also: candles, candlestick chart, OHLC, wick, shadow
Traders have named common candle shapes for centuries, such as the doji, hammer, and engulfing patterns. They describe what prices did; they don't predict what happens next. The stock chart can mark patterns, color-coded by their traditional reading (green bullish, red bearish, gray neutral).
Also: patterns, bullish, bearish
A moving average smooths out daily ups and downs to show the general direction. "vs 50-day" shows how far today's price is above (+) or below (−) its 50-day average. A price above its average has generally been rising lately; below, falling.
Also: 50-day, vs 50-day, SMA, EMA, trend
RSI compares the size of recent gains with recent losses. Readings near 100 mean gains have dominated lately; near 0, losses. Traditionally, above 70 is called overbought and below 30 oversold, but a stock can stay at those levels for a long time, so RSI describes momentum rather than predicting a turn.
Also: relative strength, momentum, overbought, oversold
MACD (moving average convergence divergence) subtracts a 26-day average from a 12-day average, then compares that line with its own 9-day average (the signal line). It's usually drawn as lines and a histogram on a chart.
Open and close almost equal: the session ended about where it began. Traditionally read as neutral (shown in gray). Like all candlestick patterns, it describes past prices and doesn't predict what happens next.
After a decline, a small body near the top with a long lower shadow: prices fell during the session, then recovered most of the drop. Traditionally read as bullish (shown in green). Like all candlestick patterns, it describes past prices and doesn't predict what happens next.
After a decline, a small body near the bottom with a long upper shadow: prices rose during the session, then gave most of it back. Traditionally read as bullish (shown in green). Like all candlestick patterns, it describes past prices and doesn't predict what happens next.
After a rise, a small body near the top with a long lower shadow (the hammer's shape, after gains). Traditionally read as bearish (shown in red). Like all candlestick patterns, it describes past prices and doesn't predict what happens next.
After a rise, a small body near the bottom with a long upper shadow: an early rally that faded by the close. Traditionally read as bearish (shown in red). Like all candlestick patterns, it describes past prices and doesn't predict what happens next.
A down session followed by an up session whose body completely covers the previous body. Traditionally read as bullish (shown in green). Like all candlestick patterns, it describes past prices and doesn't predict what happens next.
An up session followed by a down session whose body completely covers the previous body. Traditionally read as bearish (shown in red). Like all candlestick patterns, it describes past prices and doesn't predict what happens next.
Three sessions: a long down candle, a small-bodied session, then an up candle closing past the middle of the first. Traditionally read as bullish (shown in green). Like all candlestick patterns, it describes past prices and doesn't predict what happens next.
Three sessions: a long up candle, a small-bodied session, then a down candle closing past the middle of the first. Traditionally read as bearish (shown in red). Like all candlestick patterns, it describes past prices and doesn't predict what happens next.
Delta estimates the change in an option's price for a $1 move in the underlying stock. A call's delta runs from 0 to 1 and a put's from 0 to −1; an option near its strike has a delta around 0.5 (or −0.5). It changes as the stock moves and time passes.
Also: Greeks
Gamma estimates how much delta changes for a $1 move in the stock. It's largest for options near the strike and close to expiration, which is when an option's price can swing fastest.
Also: Greeks
Theta estimates the change in an option's price from one day passing, with nothing else changing. It's negative for an option you own, and usually grows larger in the last weeks before expiration.
Also: Time decay, Greeks
Vega estimates the change in an option's price for a one-point change in implied volatility. Options with more time left have more vega, so they react more when the market expects bigger or smaller swings.
Also: Greeks, Volatility
An option is a contract tied to a stock (the underlying). Each standard contract covers 100 shares. Buyers pay a price (the premium) for the right; if the option isn't worth using by expiration, it can expire worthless and the premium is lost. Options contests use play money, and only positions whose loss is capped (bought calls and puts, and vertical spreads).
Also: options, contract
A call gains value when the stock rises above the strike price. If the stock stays below the strike through expiration, the call expires worthless.
Also: call, calls
A put gains value when the stock falls below the strike price. If the stock stays above the strike through expiration, the put expires worthless.
Also: put, puts
The strike price is fixed when the option is created. Whether an option has value at expiration depends on where the stock is relative to the strike: above it for calls, below it for puts.
Also: strike, in the money, out of the money
Every option has an expiration date. As it approaches, the part of the option's price that reflects time and uncertainty shrinks, so options tend to lose value as time passes if the stock doesn't move.
Also: expiry, time decay
The premium is quoted per share, so a $2.00 premium on a standard contract costs $200 (100 shares). It depends on the stock's price, the strike, the time left, and how volatile the stock is expected to be.
Also: option price, implied volatility
