The S&P 500 index tracks the largest companies in the United States. Its stocks are curated by the S&P Index Committee, which selects companies based on a number of factors, including market capitalization, sector allocation, and liquidity. It is not possible to invest directly in the S&P 500, nor any other index.

The term index futures refers to futures contracts that allow a firm or individual to buy or sell a contract derived from a financial index today to be settled at a future date.  Traders use these contracts to speculate on the price direction indexes, such as the S&P 500. They also use index futures to hedge their equity positions against losses.

An index option is a financial derivative that gives the holder the right (but not the obligation) to buy or sell the value of an underlying index, such as the S&P 500 index, at the stated exercise price. No actual stocks are bought or sold. Often, an index option will utilize an index futures contract as its underlying asset.

Put options increase in value as the underlying index falls in price, as volatility of the underlying index increases in price, and as interest rates decline in price. Put options lose value as the underlying index increases in price, as volatility of the index price decreases, as interest rates rise, and as the time to expiration nears.

Commodities are an important aspect of most American’s daily life. A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Traditional examples of commodities include grains, gold, beef, oil, and natural gas.

For investors, commodities can be an important way to diversify their portfolios beyond traditional securities. Because the prices of commodities tend to move in opposition to stocks, some investors also rely on commodities during periods of market volatility.

Put options increase in value as the underlying index falls in price, as volatility of the underlying index increases in price, and as interest rates decline in price. Put options lose value as the underlying index increases in price, as volatility of the index price decreases, as interest rates rise, and as the time to expiration nears.

“Overlay” is a term used by SafeGuard to describe the use of 3-5 alternative investment managers in attempt to enhance the performance of CORE ONE. 

We choose these managers based on several objectives including consistent performance over time, diversification independent from the S&P, exposure to multiple market types and the establishment of risk controls. A third-party specialty firm helps SafeGuard evaluate and choose from a universe of over 400 alternative investment managers. SafeGuard can change these managers at the discretion of its own investment managers.

Put options increase in value as the underlying index falls in price, as volatility of the underlying index increases in price, and as interest rates decline in price. Put options lose value as the underlying index increases in price, as volatility of the index price decreases, as interest rates rise, and as the time to expiration nears.

Cash and cash equivalents refers to the line item on the balance sheet that reports the value of a company’s assets that are cash or can be converted into cash immediately. Cash equivalents include bank accounts and marketable securities such as commercial paper and short-term government bonds.

Cash equivalents should have maturities of three months or less and must also be able to be liquidated to cash; for this reason, cash equivalents often have active markets.

A company carries cash and cash equivalents to pay its short-term bills but to also preserve capital for long-term capital deployment.