Finelo Blog

Risk-Adjusted Return Formula: What You Need to Know

Risk-adjusted return measures how much return an investment produces for the amount of risk taken; the higher the ratio, the better the reward per unit of risk.

Real Rate of Return Formula: How to Calculate and Understand It

The real rate of return tells you how much an investment increases your purchasing power after removing inflation.

Profitability Index Formula: Guide to Investment Evaluation

Example (hypothetical): if discounted future cash flows total 120 and the initial investment is 100, PI = 120 ÷ 100 = 1.20 — about 20% value created per unit invested.

Probability of Profit in Options: Learn the Concept, Uses & Risks

Probability of Profit (PoP) is the chance an options trade finishes with any net gain (profit > $0).

Financial Literacy

Primary vs. Secondary Market: Comparison

The short answer: the primary market is where an issuer sells new securities for the first time (e.g., an IPO or a new bond issue); the secondary market is where investors buy and sell those existing securities among themselves, providing liquidity and ongoing price discovery Charles Schwab.

Chart Analysis

Price Action Cheat Sheet: Structure, Patterns, and Limitations

Price action is the study of changes in price, often using swing highs and lows, support and resistance, ranges, and candlestick formations.

Portfolio Return Formula: Formula, Examples & Interpretation

Short answer (40–60 words): Calculate portfolio return by computing each holding’s return (price change plus dividends), multiplying each by its portfolio weight, and summing those contributions.

Payback Period Formula: Its Importance and Calculation

Who this helps: small-business owners, project managers, and investors who need a quick, liquidity-focused screen to compare projects or to estimate how long capital will be tied up.

Pattern Day Trader Rule: Current $25,000 Requirement and Proposed Changes

The pattern day trader (PDT) rule currently applies to certain customers who day trade securities in a margin account.

Chart Analysis

Order Block Trading: Learn the Concept & Risk Controls

An order block is a price zone that traders mark from the last candle pointing against a strong, impulsive move.

Options Volatility Skew: Learn the Concept, Uses & Risks

Volatility skew is the pattern of implied volatilities across option strikes and expirations — it shows how the market prices downside vs. upside risk and affects option premiums and strategy selection.

Options Strategies Cheat Sheet: Learn the Concept, Uses & Risks

Quick answer: The most useful options strategies to learn first are long calls and puts, covered calls, cash-secured (short) puts, protective puts, and basic spreads (verticals).