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Index call option: The seller of an index call option foregoes some or all of the appreciation potential of an index investment in return for a known cash flow (the "premium"). If the index reaches the price specified on the option before its expiration date, the seller pays out the difference. If the price is not reached, the option expires. Regardless, the seller keeps the premium.
Index put option: The buyer of an index put option seeks to limit potential losses. The buyer receives cash if the index investment drops below the agreed-upon price by a specified date.
S&P 500 Index: A widely recognized measure of performance for the U.S. stock market. The S&P 500 represents the prices of a capitalization-weighted index of 500 common stocks and assumes reinvestment of all dividends.
Barclays Capital U.S. Aggregate Bond Index: Composed of approximately 6,000 publicly traded bonds including U.S. government, mortgage-backed, corporate and Yankee bonds with an average maturity of 10 years. The index is weighted by the market value of its bonds and represents asset classes that are subject to risk, including loss of principal.
The Citigroup One-Month Treasury Bill Index measures monthly return equivalents of yield averages that are not marked to market. The index consists of the last one-month issue. Returns for this index are calculated on a monthly basis only.
The Consumer Price Index is an index representing the rate of inflation of U.S. consumer prices as determined by the U.S. Bureau of Labor Statistics. It is determined through a monthly survey of various consumer goods and services including housing, food, fuel, transportation, electricity, etc. Not seasonally adjusted.
Standard Deviation is a statistical measure of risk reflecting the extent to which rates of return for an asset or portfolio may vary from period to period and guages the dispersion of returns around the average return. The larger the standard deviation, the greater the range of possible returns and, therefore, the more risky the asset or portfolio.
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