📋 Investing & Options Cheat Sheet

All the key formulas, rules of thumb, account comparisons, and quick references you need — on a single page. Bookmark this and come back often.

⚠️ Important Disclaimer

This site is for educational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always do your own research and consider consulting a qualified financial advisor before making investment decisions.

🧮 Core Formulas

Compound Growth

A = P × (1 + r)ⁿ

A = Future value
P = Principal (starting amount)
r = Annual return rate (as decimal)
n = Number of years

💡 Rule of 72: Divide 72 by your annual return rate to estimate years to double. 72 ÷ 8% = 9 years to double.

Key Valuation Metrics

P/E Ratio	Price ÷ EPS
EPS	Net Income ÷ Shares Outstanding
Market Cap	Share Price × Shares Outstanding
Dividend Yield	Annual Dividend ÷ Stock Price
P/B Ratio	Price ÷ Book Value per Share
Debt-to-Equity	Total Liabilities ÷ Shareholders' Equity

🏦 Account Types at a Glance

Investment Account Comparison

Account	Tax on Contributions	Tax on Growth	Tax on Withdrawals	Contribution Limit (2025)
Brokerage	After-tax	Taxed (capital gains)	Taxed	None
Traditional IRA	Pre-tax (deductible)	Tax-deferred	Taxed as income	$7,000 ($8,000 if 50+)
Roth IRA	After-tax	Tax-free	Tax-free*	$7,000 ($8,000 if 50+)
401(k)	Pre-tax	Tax-deferred	Taxed as income	$23,500 ($31,000 if 50+)
HSA	Pre-tax	Tax-free	Tax-free (medical)	$4,300 ind / $8,550 family

* Roth withdrawals are tax-free if the account is at least 5 years old and you're 59½+. Limits subject to change — verify with IRS.gov.

📝 Order Types

Common Order Types

Order Type	How It Works	Best For
Market	Buy/sell immediately at best available price	Speed; highly liquid stocks
Limit	Buy/sell only at your specified price or better	Price control; less liquid stocks
Stop	Triggers a market order when price hits your stop level	Limiting losses; protecting gains
Stop-Limit	Triggers a limit order when price hits your stop level	Loss limits with price control
Trailing Stop	Stop price moves with the stock (trails by $ or %)	Locking in gains while letting winners run

📊 Technical Analysis Quick Reference

Key Indicators

SMA	Average of closing prices over N periods (equal weight)
EMA	Weighted average emphasizing recent prices
RSI	Momentum oscillator (0–100). >70 overbought, <30 oversold
MACD	12-day EMA − 26-day EMA. Signal line = 9-day EMA of MACD
Volume	Confirms trends — rising price + rising volume = strong move

Support & Resistance Rules of Thumb

Support = price floor where buyers step in
Resistance = price ceiling where sellers step in
Broken support often becomes new resistance (and vice versa)
More "touches" at a level = stronger support/resistance
Round numbers often act as psychological support/resistance

🏛️ The Greeks — Options Sensitivity Measures

Greeks at a Glance

Greek	Measures	Range	Key Insight
Delta (Δ)	Price change per $1 stock move	Calls: 0 to 1 Puts: −1 to 0	≈ probability of expiring ITM. ATM ≈ 0.50
Gamma (Γ)	Rate of change of delta per $1 stock move	Always positive	Highest for ATM options near expiration
Theta (Θ)	Daily time decay ($ lost per day)	Negative for buyers Positive for sellers	Accelerates in last 30–45 days. Sellers benefit.
Vega (ν)	Price change per 1% IV change	Always positive	Highest for ATM, longer-dated options
Rho (ρ)	Price change per 1% interest rate change	Calls: positive Puts: negative	Usually minor impact; matters more for LEAPS

💰 Options Key Formulas

Intrinsic & Extrinsic Value

Call Intrinsic: max(Stock − Strike, 0)

Put Intrinsic: max(Strike − Stock, 0)

Extrinsic: Premium − Intrinsic Value

💡 At-the-money options have the most extrinsic value and therefore the fastest time decay in dollar terms.

Breakeven Points

Long Call	Strike + Premium Paid
Long Put	Strike − Premium Paid
Covered Call	Stock Cost − Premium Received
Cash-Secured Put	Strike − Premium Received
Bull Call Spread	Long Strike + Net Debit
Bear Put Spread	Long Strike − Net Debit

📈📉 Max Profit & Max Loss Quick Reference

All Basic Strategies

Strategy	Max Profit	Max Loss	Outlook
Long Call	Unlimited	Premium paid	Bullish
Long Put	Strike − Premium (stock → $0)	Premium paid	Bearish
Covered Call	Premium + (Strike − Stock Cost)	Stock Cost − Premium (stock → $0)	Neutral / Mildly Bullish
Protective Put	Unlimited (above breakeven)	Stock Cost − Strike + Premium	Bullish with protection
Bull Call Spread	Strike Width − Net Debit	Net Debit paid	Moderately Bullish
Bear Put Spread	Strike Width − Net Debit	Net Debit paid	Moderately Bearish
Iron Condor	Net Credit received	Width of wider spread − Net Credit	Neutral (low volatility)
Short Strangle	Net Credit received	Unlimited	Neutral (low volatility)

🛡️ Risk Management Rules of Thumb

Position Sizing Rules

1-2% Rule: Never risk more than 1-2% of your total portfolio on any single trade
5% Rule: No single position should exceed 5% of your portfolio
10% Options Rule: Consider limiting total options exposure to 10% or less of your portfolio
Cash Reserve: Keep 5-20% cash for opportunities and emergencies

Common Risk-Reward Ratios

1:2 minimum — Risk $1 to potentially make $2
1:3 ideal — Risk $1 to potentially make $3
You can be wrong 50% of the time and still be profitable with a 1:2 ratio
Options sellers often accept lower ratios with higher probability of profit

💡 Win Rate × Avg Win must be greater than Loss Rate × Avg Loss for long-term profitability.

🧠 Trading Psychology Pitfalls

Know Your Biases

Bias	What It Is	How to Combat It
FOMO	Fear of missing out on profits	Stick to your trading plan; there's always another trade
Loss Aversion	Feeling losses more than equivalent gains	Use predefined stop-losses; accept losses as part of the process
Confirmation Bias	Seeking only information that confirms your view	Actively seek opposing viewpoints; play devil's advocate
Revenge Trading	Aggressive trades to recover losses	Walk away after a loss; review your journal before re-entering
Overtrading	Too many trades from boredom or excitement	Set daily/weekly trade limits; quality over quantity

💼 Tax Quick Reference

Capital Gains Taxes

Short-term (held < 1 year)	Taxed as ordinary income (10–37%)
Long-term (held ≥ 1 year)	Preferential rates (0%, 15%, or 20%)

💡 Options held < 1 year always generate short-term gains/losses. LEAPS held >1 year may qualify for long-term treatment.

Key Tax Rules

Wash Sale Rule: Cannot claim a loss if you buy a substantially identical security within 30 days before or after the sale
Expired options: Premium paid is a capital loss; premium received is a short-term gain
Assigned options: Adjust cost basis of the stock
Capital loss deduction: Up to $3,000/year against ordinary income; excess carries forward

📏 Market Cap Categories

Category	Market Cap Range	Characteristics
Mega Cap	$200B+	Industry titans (Apple, Microsoft). Most stable, lowest risk.
Large Cap	$10B – $200B	Well-established companies. Generally stable with moderate growth.
Mid Cap	$2B – $10B	Growth potential with moderate risk. Sweet spot for many investors.
Small Cap	$300M – $2B	Higher growth potential, higher volatility. Less analyst coverage.
Micro Cap	< $300M	Highest risk, potentially highest reward. Low liquidity, limited info.

🎯 Asset Allocation Rules of Thumb

Age-Based Stock Allocation

💡 Classic rule: Stock % = 110 − Your Age
Age 25 → 85% stocks, 15% bonds
Age 40 → 70% stocks, 30% bonds
Age 60 → 50% stocks, 50% bonds

This is a starting point — adjust based on your risk tolerance, goals, and other income sources.

Diversification Targets

Sectors: Spread across at least 4–5 sectors
Geography: Include international exposure (10–30%)
Asset types: Stocks, bonds, REITs, cash equivalents
Rebalance: Check quarterly, rebalance when allocations drift 5%+ from targets

📚 Related Resources

Glossary — Full A-Z definitions of all investing and options terms
Strategy Quick-Reference — Every options strategy at a glance
Course Home — Back to the full lesson list