If you need the money soon, you may consider investing conservatively and focus on lower-risk investments like certificates of deposit (CDs) and short-term bonds. If you have longer, consider taking on more risk for greater potential growth with a mix of stocks and longer-term bonds.
The key is to choose an asset mix that aligns with your goals, time horizon, and tolerance for risk—and to stick with it. As your needs in life change, so may the help you require. At every turn, Fidelity is here to help you plan—from choosing investments to managing your portfolio.
- taxable gain
- withholding taxes for nonqualified stock options
- Alternative minimum tax (AMT) for incentive stock options
in the case of variable or step-rate securities, the addition or subtraction of a certain coupon rate differential over a benchmark
State | Abbreviation |
---|---|
Alabama | AL |
Alaska | AK |
Arizona | AZ |
Arkansas | AR |
California | CA |
Colorado | CO |
Connecticut | CT |
Delaware | DE |
District of Columbia | DC |
Florida | FL |
Georgia | GA |
Hawaii | HI |
Idaho | ID |
Illinois | IL |
Indiana | IN |
Iowa | IA |
Kansas | KS |
Kentucky | KY |
Louisiana | LA |
Maine | ME |
Maryland | MD |
Massachusetts | MA |
Michigan | MI |
Minnesota | MN |
Mississippi | MS |
Missouri | MO |
Montana | MT |
Nebraska | NE |
Nevada | NV |
New Hampshire | NH |
New Jersey | NJ |
New Mexico | NM |
New York | NY |
North Carolina | NC |
North Dakota | ND |
Ohio | OH |
Oklahoma | OK |
Oregon | OR |
Pennsylvania | PA |
Rhode Island | RI |
South Carolina | SC |
South Dakota | SD |
Tennessee | TN |
Texas | TX |
Utah | UT |
Vermont | VT |
Virginia | VA |
Washington | WA |
West Virginia | WV |
Wisconsin | WI |
Wyoming | WY |
Territory | Abbreviation |
American Samoa | AS |
Guam | GU |
Marshall Islands | MH |
Micronesia | FM |
Northern Mariana Islands | MP |
Palau | PW |
Puerto Rico | PR |
U.S. Virgin Islands | VI |
A butterfly spread is designed to profit from different levels of volatility with defined risk and profit. A long butterfly spread can help investors profit when volatility is low/decreasing and anticipate that the stock will remain close to the middle strikes during the life of the option. A long butterfly spread could be created by purchasing 1 at a lower strike price, purchasing 1 at a higher strike price, and selling 2 strike price in the middle (either all calls or all puts) or some multiple consistent with this ratio. A short butterfly spread could be created by selling 1 at a lower strike price, selling 1 at a higher strike price, and purchasing 2 of a strike price in the middle (either all calls or all puts) or some multiple consistent with this ratio which the trader's outlook would be for the underlying to exceed the outside strikes. The outside strikes (higher and lower strikes) are known as the wings and the middle strike is known as the body.
A calendar spread involves buying and selling the same type of option (either calls or puts) for the same underlying stock at the same strike price, but at different expiration dates. This type of strategy is also known as a time or horizontal spread due to the differing maturity dates.
The buyer of call options has the right, but not the obligation, to buy an underlying security at a specified strike price. Essentially, that means if you were to buy call options on XYZ stock, for example, you would have the right to buy XYZ stock at an agreed-upon price up, and until a specific date.
- been pre-refunded and the refund date is in the past
- called and the call date is in the past
- scheduled to be, or already been, fully redeemed by the issuer
trust designed to make payments to a charity for a set number of years or the duration of the grantor’s life; when the trust term ends, remaining assets are distributed to the donor and/or other beneficiaries
A collar is an options strategy that helps put a cap on both gains and losses for a stock position you own. There are 3 components to constructing a collar: Purchasing or having an existing stock position, selling a call (typically an out-of-the-money call), and buying a put (typically an out-of-the-money put).
A combination spread is a multi-leg options strategy involving either the purchase of a call and selling of a put, or the selling of a call and the purchase of a put.
The condor options strategy consists of 4 options, either all calls or all puts, and all typically have the same expiration date. The long condor is initiated at a debit and is constructed by buying the lowest strike, selling the lower middle strike, selling the higher middle strike, and buying the highest strike. An investor's outlook using a condor is that the price of the underlying will settle between the middle strikes and that implied volatility will decrease during your time horizon. The short condor is initiated at a credit and is constructed by selling the lowest strike, buying the lower middle strike, buying the higher middle strike, and selling the highest strike. An investor's outlook is that the price of the underlying will move outside the higher or lower strike. The outside legs (highest or lowest strikes) are referred to as the wings and the inside legs (two middle strikes) are referred to as the body.
bonds that contains a provision allowing the holder to exchange the bond for a specified number of shares of a different security (usually common stock) issued by the same company that issued the bond; terms of conversion are disclosed at the time the bond is issued
A covered call is an options strategy designed to generate income on stocks you own—and don't expect to rise in price anytime soon. A covered call involves owning shares of the underlying stock and selling a call (which grants the buyer the right, but not the obligation, to buy that stock at a set price until the option expires).
- Not Applicable
- Registered Only
- Book Entry Only
- Coupon Entry Only
- Registered as to Principal Only
- Fully Interchangeable
- Coupon or Registered as to Principal
- Coupon or Registered
- Registered or Registered as to Principal
Delta is the sensitivity of an options price to the change in the price of the underlying asset.
A diagonal spread involves buying one option and selling another option for the same underlying stock, but with different strike prices and different expiration dates.
- for incentive stock options (ISOs): o1 year from the date of exercise or 2 years from the date the stock options were granted
- for qualified employee stock purchase plans (ESPPs): 1 year from the purchase date and more than 2 years from the offering period
durable power of attorney
- prior business day's close
- average high and low for the day
- real-time price
- today's close
An independent agency of the federal government, created in 1933, charged with preserving and promoting public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions up to applicable limits; by identifying, monitoring, and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails.
Further information on the FDIC and FDIC coverage may be found at http://www.fdic.gov.
- Tax Exempt: include only bonds that are not federally taxable in the search
- Taxable: include only bonds that are federally taxable in the search
- All: include both Federally tax exempt and taxable bonds in the search
On the search results screens the table titled "Your Key Search Criteria" will show that the bonds have taken this criteria into account. "Federally Taxable" displays if the bond's income is subject to Federal income taxes. "Federally Tax Exempt" displays if not.
Even though some bond's income are federal income tax exempt, they may be subject to the alternative minimum tax.
Generally have a stated maturity, although some are perpetual, offer attractive yields, and usually pay monthly or quarterly interest or dividends that are fully taxable.
Tend to have higher yields than corporate bonds because they are subordinate in right of payment to all senior debt of the issuer. Issued as shares, with one share being issued at an amount generally lower than the typical $1000 face value for corporate bonds, such as $10 or $25.Generally, the minimum quantity for fixed rate capital securities is 100 shares, with additional investments available in 1-share increments.
it can also indicate the percentage or dollar amount of your portfolio or one or more selected accounts that is invested in securities outside the U.S. Portfolio and account analysis shows the foreign exposure for your current holdings. This only applies to holdings that are classified as equities.
Gamma is directly related to delta. Whereas delta will change based on a price move in the underlying asset, gamma is the rate of change, or sensitivity, to a price change in the underlying for delta. Basically, gamma measures how much delta will change based on a $1 move in the underlying position.
Implied volatility, also known as IV, is a measure of what the market expects volatility to be in the future for a given stock.
ISOs meet the IRS requirements for special tax treatment; with ISOs, you do not have to pay regular income taxes at the time you exercise your stock options if you hold your shares the later of 1 year from the date of exercise or 2 years from the date the stock options were granted (the waiting period)
- if you decide to sell your stock option shares after the waiting period, you will be subject to a capital gains tax on the difference between the sale price and the grant price
- if you sell your shares prior to or on the 1‑year anniversary of the date on which the shares were granted, the shares you sell are subject to a disqualifying disposition, which means that, generally, you will be required to pay income tax on the difference between the fair market value at the time you exercise the stock options and the grant price
- if you exercise the stock options prior to the 2-year anniversary of the date on which the stock options were granted, hold them, and then sell them between the 1-year and 2-year anniversary on which the stock options were granted, you pay short-term capital gains on the difference between the fair market value on the date you sold the shares and the grant price
Major stock market indexes include (where the text in parenthesis is the trading symbol for the index):
S&P 500 (.SPX) – Standard and Poor's 500
DJIA (.DJI) – Dow Jones Industrial Average
NASDAQ (.IXIC) – NASDAQ Composite Index
Russell 2000 (.RUT) – Russell 2000 Index
Technology (.XCI) – AMEX Computer Technology Index
Internet (.IIX) – AMEX Internet Index
Broker/Dealers (.XBD) – AMEX Securities Broker/Dealer
Oil & Gas (.XIO) – AMEX Oil Index
Gold & Silver (.XAU) – Phlx Gold Silver Index
Utilities (.DJU) – Dow Jones Utilities Average
Transportation (.DJT) – Dow Jones Transportation Average
Airlines (.XAL) – AMEX Airlines Index
In a chart, you can select an index and compare the change in its value against the changes in value for a particular security.
In fixed income investing, an index is referenced in the context of a Structured Product’s. The Structured Product tracks the rise and fall of a particular index and offers a return that is some percentage of the index's appreciation as outlined in the Structured Product's prospectus.
for secondary market fixed-income offerings (e.g., bonds), this is generally the date the last coupon interest payment was paid
For a new issue offering, this is generally the expected date on which the security will be allocated to those participating in the offering.
Issuer Events reflect information that pertains to Corporate bonds and Agencies/GSEs (For Municipal Bonds see Material Events). They are designed to bring the investor's attention to key changes of the status of a particular issue or underlying issuer. Examples of Issuer Events include:
Issuer upgrades and downgrades from major credit ratings agencies.
Bond placed on or removed from credit watch by major ratings agencies.
Bond has matured or been called.
Fidelity makes these events available to its customers for informational purposes only. The information has been sourced from third parties and Fidelity has made no independent evaluation of the information or its accuracy, completeness, or timeliness.
On the Secondary Corporate or Agency Bond Search Results Table, "IE" displays in the Attributes column if there are Issuer Events for an issue and would not display if there were none. Available Issuer Events can be viewed. Select "IE" or the issuer name to access Issuer Events.
Issuer Events are also available as part of Fidelity's Event Alerts services. Holders of corporate and agency bonds can elect to receive an event alert to be sent to them electronically whenever an Issuer Event is generated on one of their holdings.
Fidelity makes these events available to its customers for informational purposes only. The information has been sourced from third parties and Fidelity has made no independent evaluation of the information or its accuracy, completeness, or timeliness.
On the Secondary Municipal Bond Search Results Table, "ME" displays in the Attributes column if there are Material Events for an issue and would not display if there were none. Available Material Events can be viewed. Select "ME" to access Material Events. Material Events are also available as part of Fidelity's Event Alerts services. Holders of municipal bonds can elect to receive an event alert to be sent to them electronically whenever a Material Event is generated on one of their holdings.
Fidelity requires a Medallion Signature Guarantee when it is essential to ensure the authenticity of the signature. A signature guarantee is a widely accepted way to protect customers and investment companies from the legal repercussions resulting from invalid or illegal endorsem*nts.
You should be able to obtain a signature guarantee from a bank, a broker, a dealer, a credit union (if authorized under state law), a securities exchange or association, a clearing agency, or a savings association.
A notary public cannot provide a signature guarantee. We cannot accept a notarization instead of a signature guarantee.
Moody's® is a registered trademark of Moody's Investors Service, Inc.
Moody's ratings ("Ratings") are proprietary to Moody's or its affiliates and are protected by copyright and other intellectual property laws. Ratings are licensed to Licensee by Moody's. RATINGS MAY NOT BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
A naked call involves the seller of a call (who does not own the underlying shares) having the obligation to sell the underlying shares of stock at the strike price of the call. The seller of naked calls has unlimited risk, because the stock price can rise indefinitely. The profit potential is limited to the premium received when the call was sold.
A naked put involves the seller of a put having the obligation to buy the underlying stock at the strike price at any time until the expiration date, without setting aside the full cash amount to fund the purchase if the option is exercised. Although not unlimited, the risk is substantial because the price of the underlying stock can fall to zero. The profit potential is limited to the premium received when the put was sold.
NSOs do not meet certain IRS requirements that allow you special tax treatment; with NSOs, you are taxed when you exercise the stock options; you pay ordinary income taxes on the difference between the fair market value at exercise and the grant price (net value)
- Volatility: Municipal Bonds: 8.00; Corporate/Agency Bonds: 14.00
- Mean Reversion for all bond types: 0.00
An option chain is the list of all the options available for an underlying stock, usually sorted by expiration date.
Tier | Strategies |
---|---|
tier 1 | tier 1 includes
|
IRAs only: Spreads on IRA | tier 1 strategies, plus
|
tier 2 | tier 1 strategies, plus
|
tier 3 | tier 1 and 2 strategies, plus
|
An options expiration date is the specific date and time that the contract expires.
for the term 'price' in the Basic Analytics section of the Price & Performance tab on the bond details page, please see 'recent trades'.
- taxable gain
- withholding taxes for nonqualified stock options
- alternative minimum tax (AMT) for incentive stock options
The buyer of put options has the right, but not the obligation, to sell an underlying security at a specified strike price. Essentially, that means if you were to buy put options on XYZ stock, for example, you would have the right to sell XYZ stock at an agreed-upon price, up and until a specific date.
for the term 'quantity' in the Basic Analytics section of the Price & Performance tab on the bond details page, please see 'recent trades'.
A ratio spread is a multi-leg option trade of either all calls or all puts whereby the number of long options to short options is something other than 1:1. Typically, to manage risk, the number of short options is lower than the number of long options (i.e. 1 short call: 2long calls).
- taxable gain
- withholding taxes for nonqualified stock options
- alternative minimum tax (AMT) for incentive stock options
Those trades listed include all trading activity occurring in that CUSIP across the US bond markets. In other words, they are not only Fidelity's most recent trades (if at all), or exclusively the trades of Fidelity's customers.
The Buy/Sell row will display one of the following acronyms
- CB = Customer Buy
- CS = Customer Sell
- DD = Dealer to Dealer
- NMAB = Non-Member Affiliate Buy
- NMAS = Non-Member Affiliate Sell
For additional information, view the Buy/Sell term in the Recent Trades page.
Additional amounts of a previously-issued security re-auctioned, or "reopened," during a Treasury auction. Reopened securities have the same maturity date and interest rate as the original securities, but a different issue date, and usually, a different price. The price of a reopened security is determined at auction. If the price of the reopened security is greater than its face value, the purchaser has to pay a premium.
Regardless of the reopened security's price, purchases may have to pay accrued interest, the interest the security earned from its original issue date or most recent coupon date until the second auction date. Accrued interest is paid back to the investor in their first semiannual interest payment.
mandatory, minimum yearly withdrawals that generally must be taken starting in the year the accountholder turns 72, upon retirement, or at death
Rho describes an option's sensitivity to a change in interest rates.
In the S&P Rating field on some search results screens fixed income secondary market offerings (e.g., bond), this field displays the rating or NR, not rated, if Standard and Poor's Corporation has not rated the security.
S&P is a registered service mark of The McGraw-Hill Companies, Inc.
A sinking fund is a requirement included with certain bond issues, for part of the issue to be repaid on a regular basis before the stated maturity date of the bond. The issuer typically buys back a stated amount of the issue on a specified date—often having the flexibility to buy back from bond holders at the pre-specified price (usually par) or at the prevailing market price, whichever is cheaper.
Like a call feature, sinking fund payments might begin soon after the bond has been issued or they may be deferred for 10 or more years from the date of issue. Consult the sinking fund schedule for this information. Unlike a call feature, however, if an issue has a sinking fund provision, it is a requirement, not an option, for the issuer to buy back the increments of the issue as stated.
If you are considering the purchase of a bond with sinking fund features, be sure to consider (but don't rely on), the fact that a portion of the bonds issued may be returned before the maturity date. For example, even if the issuer has a commitment to buy back 5% of a given issue on a certain date, there is no guarantee that every investor will have 5% of their investment redeemed. The issuer may either purchase the required amount from a small number of institutions or purchase them on the open market.
In some situations, the presence of a sinking fund could be regarded as a positive feature of a bond. It could be perceived as an additional solvency hurdle for the issuer because the issuer must find the necessary funds to return some of the debt issue's principal before the stated maturity date of the bond. Yet for this very reason sinking funds are frequently found on long-dated, lower quality issues. The presence of a sinking fund is not an added guarantee of an investment. In extreme circ*mstances a bond may be falling in price and the issuer will be able to meet all of its sinking fund commitments by purchasing on the open market. The weaker an issuer becomes, the more likely the bond's price is to fall and the more likely sinking fund commitments can be met by open market purchases.
Sinking Fund Protection refers to a bond that does not have a sinking fund as part of its structure. On the Search Secondary Offerings page, the search criterion for Sinking Fund Protection defaults to Yes, which excludes bonds with a sinking fund feature. Selecting All will include bonds with sinking funds in your search returns.
A spread involves buying one option and selling another (either both calls or both puts). The payoff is based on the difference between the exercise prices. Types of spreads include bull call, bull put, bear call, and bear put. Spreads are limited risk, limited reward options strategies.
The straddle options strategy involves either buying a call and a put or selling a call and a put at the same strike sharing the same expiration date. A long straddle is the purchase of a call and a put for a debit. An investor's outlook is that the options market has underpriced the movement from the underlying, but the risk is limited to the debit paid. The short straddle is the sale of a call and a put for a credit. An investor's outlook is that the option market has efficiently priced the movement and the underlying will not exceed the credit received through that time period, and implied volatility will fall during your time horizon. Risk is unlimited to the upside and substantial to the downside.
The strangle options strategy involves either buying a call and a put or selling a call and a put with the same expiration date, but at different strike prices. The long strangle involves purchasing a call and a put, usually both out of the money at a debit. An investor's outlook is that the underlying is going to exceed the break-even for either prior to or by the expiration date. The risk is the debit paid. The short strangle strategy involves the sale of a call and a put, usually both out of the money at a credit. An investor's outlook is that the underlying will not exceed the break-even by expiration, and implied volatility will decrease. The risk is unlimited to the upside and is substantial to the downside.
The strike is the price per share for which the underlying security may be purchased (in the case of a call) or sold (in the case of a put) by the option holder upon exercise of the option contract.
Tax-loss harvesting is the practice of selling one or more tax lots (investments in a stock or bond) at a loss to offset capital gains elsewhere in your account. This strategy may also potentially help reduce your tax liability on ordinary income and may improve your after-tax performance.
Note: Given the nature of the modeled pricing provided, it is not accurate to characterize such pricing as a "closing price" or to suggest that the price was based on specific recent (prior day's end of day) trading activity
Fidelity may source bonds directly from national and regional broker dealers or use national and regional broker dealers that are affiliated with Tradeweb (FKA as BondDesk), KCG BondPoint, and The MuniCenter offering platforms.
Note that Fidelity’s combined inventory will generally not represent the universe of outstanding securities of a given bond type.
a time limitation that indicates how long an order will remain open
Day | Cancels at market close if not executed. |
Good 'til canceled | Cancels after 180 days if not executed. |
Fill or kill | Fills completely or cancels. |
Immediate or cancel | Fills as many shares as possible and cancels remainder. |
On the open | Fills only at the opening price. Accepted between 4:15 p.m. and 9:28 a.m. ET. |
On the close | Fills only at the closing price. Accepted between 9:30 a.m. and 3:40 p.m. ET. |
- taxable gain
- withholding taxes for nonqualified stock options
- alternative minimum tax (AMT) for incentive stock options
- day—this limitation has a default expiration time of 4:00 p.m. Eastern time (ET). You may select your own order expiration time between 10:00 a.m. ET and 4:00 p.m. ET in 30-minute increments (e.g., 10:00 a.m., 10:30 a.m., 11:00 a.m., etc.); if all or part of your order is not executed by the time you've selected for expiration, your order will be canceled
- good 'til canceled—for orders placed on Fidelity.com, this limitation has a default order expiration date of 180 calendar days from the order entry date at 4:00 p.m. ET; you may select your own order expiration date and/or time, up to 180 calendar days from the order entry date; if all or part of your order is not executed by the date and/or time you've selected for expiration, any open portions of your order will be canceled
- fill or kill—requires that the order is immediately completed in its entirety or canceled; fill or kill is used only under very special circ*mstances; if you do not fully understand how to use fill or kill, talk with a Fidelity representative before placing this limitation on an order
- immediate or cancel—requires that a broker immediately enter a bid or offer at a limit price you specify; all or a portion of the order can be executed; any portion of the order not immediately completed is canceled
- on the open—requires that the order is executed as close as possible to the opening price for a security; all or any part of the order that cannot be executed at the opening price is canceled
- on the close—requires that the order is executed as close as possible to the closing price for a security; all or any part of the order that cannot be executed at the closing price is canceled
It is important to recognize if implied volatility is relatively high or low, because it helps determine the price of the options contract (known as the premium). Knowing if the premium is expensive or cheap is an important factor when deciding on what options strategy makes the most sense for your outlook. If the options are relatively cheap, it may be better to look at debit strategies, whereas if the options are relatively expensive you may be better served looking for credit strategies.
Vega is a measure of an option price's sensitivity for a given change in implied volatility. An increase in the implied volatility (i.e. the expected volatility) of an option will increase the value of both call and put options, and falling implied volatility decreases the value of both types of options.
A vertical spread is the simultaneous purchase and sale of options of the same class (i.e. either both puts or both calls) on the same underlying stock with the same expirations, but with different strike prices. A vertical spread involves a tradeoff between sacrificing some reward for reducing risk.
Rule 144 applies to the resale of restricted securities as well as to restricted and nonrestricted securities sold by control persons; to sell the security, some or all of these requirements must be met:
- the issuer must be in compliance with SEC reporting requirements
- a holding period of 1 year must be met by the shareholder; however, a control person may sell unrestricted securities without regard to the holding period; volume restrictions still apply
- the amount of stock sold in any 3-month period cannot exceed the volume limitations, which are the greater of 1% of the outstanding shares or the average weekly trading volume for the 4 calendar weeks preceding the filing of a Form 144 notice; a Form 144 notice must be filed in certain transactions
- the stock must be sold in a broker's transaction or a transaction with a market maker; solicitation of purchasers is prohibited