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Stock Options and Futures

Options are the right to buy or sell a security at a set price over a specified period of time. Futures are contracts to buy or sell assets at a set price on a predetermined future date.

827 Questions

What is a mutual fund and how does it work?

A Mutual Fund is nothing but a common pool of money collected from a lot of people which is used by an experienced fund manager who invests the money in the Share market. Not many of us are experienced in investing directly in the Equity market. Mutual funds are a boon to the investor who doesnt have enough knowledge to invest directly in the market but wants to take a risk and gain higher returns from the market.

What does this 'stock option plan' mean?

A stock option gives you the right to buy stock at a specific price. In the US, they're a fairly common way to partially pay companies' executives. Acme might give its CEO an option on 1000 shares of stock at the price of $50 per share as part of her paycheck. What she'll do is to wait until the stock hits, say, $65 per share then exercise her option and make $15,000 in paper wealth in one whack.

Let's say your company's shares cost 50 pounds per share the day you buy your option, and they are going to sell you an option to buy enough stock to be worth 5000 pounds (or 1000 shares). You get a year to exercise the option after you get it. If you wait until the stock goes to 80 pounds per share, you'll get 8000 pounds worth of stock for 5000 pounds. If you are allowed to resell the stock right after you get it, you'll make 3000 pounds instantly. If you must hold it for a while--some companies make you, to keep you from being suspected of insider trading--wait till it goes up even more and then sell it.

What is the Relationship between option price and exercise price?

For a call option, the option price is convex and decreasing with increasing strike price, assuming a fixed maturity and same underlying price.

What are the key differences between owners funds and borrowed fund?

The difference between owner's funds and borrowed funds is just that. One is owned, and the other must be paid back.

What is the best online options strategy analysis tool?

I have purchased several products for options strategy analysis. But as far as online version is concerned, none of them can beat the The Options Lab, available at http://www.TheOptionsLab.com. It is very intuitive and easy to use.

One of articles from Barron's also mentioned it.

What are the characteristics of futures?

Futurism developed to glorify the urban life as well as machinery/industrialization. Futurism employs techniques of Divisionism (see Seurat's artwork!), Cubism features (specifically the analysis of energy), dynamism, urban subject matters, and depiction of movement. If you look at Umberto Boccioni's Unique Forms of Continuity in Space and also his The City Rises painting, you will get a pretty good idea of Futurism!

Explain and give a graphical depiction of these strategies the share prices to increase and create a bullspread trading strategy by using call options?

There is no way to include graphics and pictures here. For detailed examples and explanation on the bull call spread, please review the related link below.

What are Small Medium Micro-enterprises?

Udyog Aadhar is also known as Aadhar for Business. It is a unique 12 digit Government identification number issued by the Ministry of MSME for all small and medium enterprises and small scale industries. These business entities are registered through this process as MSME with their Aadhar Card Number. This helps them in registering for taxes such as GST also when opening other bank accounts it eases the process. If your business ids eligible for it I recommend you to register it under MSMEs as you will have a significant leverage. It has various benefits such as:

• Exclusive government subsidies

• Exclusive government provisions

• Can apply for micro-businesses and other schemes

• Can apply to loan without guarantee

• Loans at Subsidised rate.

How are Futures useful to an Investor?

My opinion is that they're not. Millions of people have tried speculating in the commodities market and gotten taken. Two reasons exist for this. First of course is the fact commodities change price all the time. And second is the reality of a futures contract: by entering into one, you guarantee you will buy whatever it is the contract says you will, on the date it says on the form. So you have a July wheat futures contract that's marked for 600 cents per bushel, wheat is selling for 500 cents per bushel, the bakers and millers know you have nowhere in your house to store 150 tons of wheat, and it's June. "Well gee Mr. Speculator, too bad about the price of wheat, I'll take that contract off your hands for...oh, 485 cents per bushel." You of course still need to pay the man with the five truckloads of wheat 600 cents per bushel.

Options contracts, by comparison, have a LOT of uses to an investor. You can use them to stop losses or lock in gains. You can buy stock cheap with them.

Are options contracts referred to as future contracts?

No. Options let you decide whether to go through with the transaction; futures require that you do.

A statement that describes how something behaves?

A statement that describes how something behaves is often referred to as a behavioral description or characteristic. It outlines the actions, reactions, or tendencies of an object, organism, or system under specific conditions. For instance, stating that "water boils at 100 degrees Celsius at sea level" describes the behavior of water when subjected to heat. Such statements are essential in scientific and technical contexts to predict and understand phenomena.

What is the mean of hedge?

The meaning of a "hedge" would be best described as a "hedge of protection" against the volatile market. Also used in the term Hedge Fund

Which spread betting broker is best?

As for comparing the spread betting companies it really depends on what you want to trade and over what time period. For instance IG Index are known to have the widest choice and are good for shares etc but Capital Spreads possibly has the tightest spreads, good for short term trading etc .

In what ammount does the strike price of an option move?

The strike price of an option does not change - strike price is fixed for the duration of the option.

The price of the option will move based on the following:

* Price of underlying asset (moves with - asset price goes up, option price goes up)

* Time left to expiration (moves with - time left goes down, option price goes down)

* Volatility of underlying asset (moves with - volatility goes up, option price goes up)

* Risk free rate (moves with - risk free rate goes up, option price goes up)

Does the Great American Gold Company still exist?

No the dude that started it buttfucked investors for 10 mill and then peeled out to China.

Can the vale of call option be negative?

No. The value of a call option can never be negative. For example, let's say that one has a call option on FOO with a strike price of $30 and the option expires at the end of the day.

If the underlying price of FOO shares are below $30, the price of the option will be very near $0 (because no one would pay much for the right to pay for an underwater option), but there is still a chance that the stock will go above $30 (no matter how remote).

If the underlying price of FOO shares are at $30, the price of the option will be low, but positive (because there is a chance that the stock will go above $30.

If the underlying price of FOO shares are above $30, the price of the option will be slightly higher than the difference between the strike price and the share price (because there is so little time left for changes; however, there will be some time value as suggested in the examples above).

What is the ticker symbol for Citizens Bank?

Citizens Bank is owned by the Royal Bank of Scottland ticker symbol RBS traded on the New York Stock Exchange.

Explain carefully the difference between writing a put option and buying a call option?

When you write a put option, you are player banker to someone betting that the price of a stock is going up. You receive the "bet" in the form of the options premium earned form the person buying the put options from you. If the stock fails to exceed the strike price of the put options by expiration, the buyer has lost the bet and you keep the "bet" money as profit. In this case, your profit is limited to the "bet" money or options premium you received for selling the put options.

When you buy a call option, you are buying the right to buy a stock at a fixed price until expiration. If you buy a call option with strike price of $10 and the stock subsequently went up to $50, you can still buy the stock at $10 and then sell it for $50, making the $40 difference as profit. In this case, your profit is only limited to how high the stock rises.

What you will get if you Buy a put option or Sell short a stock which becomes Suspended or Bankrupt?

That is very good since you do not have to but back the shares and you make all the money you sold the shares for in the beginning.