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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 non brokered private placement?
A "brokered" private placement is when a registered rep sells stock for a company. A "non brokered" offering is when the company's investor relations department sells the stock directly to investors.
A US Treasury bill has a beta of 0 while the overall market has a beta of what?
Beta is the measure of a security's volatility compared to the volatility of the market as a whole. Therefore, the market as a whole has a beta of 1.
You have 1000 in unrealized stock gains how can you best put this money to use?
An "unrealized stock gain" is the difference between your basis in the stock and what it's selling for now. If you listen to guys like Jim Cramer, you're supposed to immediately dump the stock, pay taxes on the gain and invest in one of the stocks he's hyping.
I'm going to tell you how to make money the really old-fashioned way: buy and hold. This applies if you like the stock--if you didn't ever like the stock you should get rid of it, but my question is always, 'if you didn't like the stock in the first place, why did you buy it?' Obviously you don't want to lose much of this gain, so my recommendation is to buy a one-year at-the-money put to protect your gain.
List of shares at nse stock exchange?
You can get the list of all shares on the nse from the website http://www.nseindia.com/content/equities/EQUITY_L.csv
You can get the list of shares of bse from the website
http://www.bseindia.com/mktlive/bhavcopy.asp
Why would a preferred stockholder want the stock to have cumulative dividend feature?
Because if the company is ever unable to make it's preferred dividend payment, the amount rolls over for the next time. The company is not allowed to pay dividends or distributions on lower classes of shares until they catch up on the back payments owed to the preferred shareholders. Some classes of preferred don't have the cumulative feature and if the company misses a payment, the payment is lost and not made up. That is why preferred stock investors look for the cumulative feature. If a company hasn't paid in a long time and you buy the shares then the company decides to pay off the back interest you get all the past payments that are owed on the shares even though you just bought them, though after a while of non-payment it is not likely the company will ever catch up and will end up going belly up instead.
Can an individual buy and sell stocks without a stock broker?
Yes in todays high technical world, an individual can create a n account with a stock and a financial instruments company. Through their system, a client can make trades vis a home PC at less cost than by using a salesperson as an intermediary. Most of the websites will advise you on how to do this and what stocks to buy. An investor can ignore all types of financial advice and make trades based on their own knowledge.
Which market is the exclusive exchange for trading financial futures and options in Canada?
Bourse de Montreal
Advantage and disadvantage of Profitability index PI?
Disadvantages of Profitability Index are:-
Only used for divisible projects
strategic value of projects are not considered.( only figures are dealt with not long term not short term
limited use when protect have differing cash flow pattern. ( only limited to investment with major cash at the beginning)
absolute NPV vale is ignored, smaller projects receive more favourable treatment ( the equation treats all project as equally important.
R.ogunleye university of Herfordshire (UK)
What is a futures contract is?
It is an agreement to buy or sell a standard quantity of a commodity or a security - such as gold, $US or bank bills of exchange - on a specific future date at an agreed price determined at the time the contract is traded on the futures exchange.
It is a binding contract, enforceable at law. Futures contracts are traded by open outcry on the floors of most futures exchanges, although the computer age has seen the spread of screen trading.
What is the difference between a forward contracts futures contracts and options?
Forwards and futures are essentially the same thing: a commitment to buy/sell at a certain date for a certain price. The difference is in futures contracts you're also committed to sell a certain quantity, whereas in a forward you're not.
An options contract gives you the option, but not the obligation, to buy or sell. This is great if you're working with stocks. If you have a futures contract to buy 500 shares of Coca-Cola for $10 per share on January 15 and Coke closed at $8 on January 15, you just lost a thousand dollars. If you were long on a put with the same spread between strike and stock prices, you made $1000.
Forwards and futures have a purpose in life--IF you're dealing commodities with the intention to use them. You make frozen pies. You know you need ten tons each of wheat, sugar and apples. If you have a futures contract for October delivery on all of those commodities, you know what your pies' materials value is going to be, hence you can publish a good price for your pies. But futures speculators--investors who buy futures with the intent of selling the product after delivery, or the contract to a producer (there is a secondary market in futures)--have a long and proud history of losing their asses on these, so I recommend against them as an investment vehicle.
What is the minimum value of a call option?
The minimum value of a call option is zero. Why is that? Because options lose value with time until they expire on their pre-determined expiration date. Upon expiration, if the price of the underlying stock is less than the strike price of the call option, then the call seller gets to keep the premium received, whereas the call buyer has lost all the money paid for the option. For additional education there are many good websites to consult. One site of interest ishttp:/www.safe-options-trading-income.com.
Order that a company goes through to make an initial public offering?
Steps in an IPO Process:
Let us now have a look at how an initial public offering process is initiated and reaches its conclusion. The entire process is regulated by the 'Securities and Exchange Board of India (SEBI)', to prevent the possibility of a fraud and safeguard investor interest.
Selection of Investment Bank
The first thing that company management must do when they have taken a unanimous decision to go public is to find an investment bank or a conglomerate of investment banks that will act as underwriters on behalf of the company. Underwriter's buy the shares of the company and resell them to the general public. The company must also hire lawyers that can guide them through the legal maze that an IPO setup can be. It must be ready with detailed financial records for intensive fiscal health scrutiny that SEBI would perform. Some companies may also opt to directly sell their shares through the stock market, but most prefer going through the underwriters.
Step 1: Preparation of Registration Statement
To begin an IPO process, the company involved must submit a registration statement to the SEBI, which includes a detailed report of its fiscal health and business plans. SEBI scrutinizes this report and does its own background check of the company. It must also see that registration statement fulfils all the mandatory requirements and satisfies all rules and regulations.
Step 2: Getting the Prospectus Ready
While awaiting the approval, the company, with assistance from the underwriters, must create a preliminary 'Red Herring' prospectus. It includes detailed financial records, future plans and the specification of expected share price range. This prospectus is meant for prospective investors who would be interested in buying the stock. It also has a legal warning about the IPO pending SEBI approval.
Step 3: The Roadshow
Once the prospectus is ready, underwriters and company officials go on countrywide 'roadshows', visiting the major trade hubs and promote the company's IPO among select few private buyers (Usually corporates or HNIs). They are fed with detailed information regarding company's future plans and growth potential. They get a feel of investor response through these tours and try to woo big investors.
Step 4: SEBI Approval & Go Ahead
Once SEBI is satisfied with the registration statement, it declares the statement to be effective, giving a go ahead for the IPO to happen and a date to be fixed for the same. Sometimes it asks for amendments to be made before giving its approval. The prospectus cannot be given to the public without the amendments suggested by SEBI. The company needs to select a stock exchange where it intends to sell its shares and get listed.
Step 5: Deciding On Price Band & Share Number
After the SEBI approval, the company, with assistance from the underwriters decide on the final price band of the shares and also decide the number of shares to be sold.
There are two types of issues: Fixed Price and Book Building
Fixed Price - In a Fixed price issue - the company decides the price of the share issue and the number of shares being sold. Ex: ABC Ltd public issue of 10 lakh shares of face value Rs. 10/- each at a premium of Rs. 55/- each is available to the public thereby generating Rs. 6.5 Crores.
Book Building - A Book building issue helps the company discover the price of the issue. The company decides a price band and it gives the investor an option to choose the price at which he/she wishes to bid for the company shares. Ex: ABC Ltd issue of 10 lakh shares of face value Rs. 10/- each at a price band of Rs. 60 to 70 is available to the public thereby generating upto Rs. 7 Crores. Here the amount generated through the issue would depend on the highest amount bid by most investors.
Step 6: Available to Public for Purchase
On the dates mentioned in the prospectus, the shares are available to public. Investors can fill out the IPO form and specify the price at which they wish to make the purchase and submit the application. This open period usually lasts for 5 working days which is a SEBI requirement.
Step 7: Issue Price Determination & Share Allotment
Once the subscription period is over, members of the underwriting banks, share issuing company etc will meet and determine the price at which shares are to be allotted to the prospective investors. The price would be directly determined by the demand and the bid price quoted by investors. Once the price is finalized, shares are allotted to investors based on the bid amounts and the shares available.
Note: In case of oversubscribed issues, shares are not allotted to all applicants.
Step 8: Listing & Refund
The last step is the listing in the stock exchange. Investors to whom shares were allotted would get the shares credited to their DEMAT accounts and for the remaining the money would be refunded.
What is backwardation in commodity markets?
In short, whether we have Backwardation or Contango depends on how the expected future spot prices are quantified and how the related commodity strips behave. Contango and Backwardation in Common Usage Investment professionals on financial TV channels and in newspapers colloquially refer to upward trends in futures prices as contango and downward trends in futures prices as backwardation. Contango and Backwardation in Economic TheoryIn economic theory regarding Backwardation and Contango, associated with John Maynard Keyns and John Hicks, for Contango to exist, expected spot prices (someday in the future) have to be lower than current futures prices for the same future moments, and reverse has to apply for Backwardation. Thus whether we have a contango or bacwardation depends on an arbitrary forward estimate of spot prices. For example, if we estimate that today's spot price, price at which a physical commodity is trading today, is an expected spot price someday in the future, and we see an upward trend in a commodity strip (series of future contracts prices), we see a contango. On the other hand, if the futures prices in a commodity strip trending upwards are considered unbiased estimates of the expected future spot prices, meaning they are equal, there is no Contango or Backwardation to speak of. By the way, upward trend of estimates may be a result of storage expenses.
What does it mean that a stock option is in the money?
An in-the-money option is one that makes financial sense to exercise. In-the-money puts are ones where the security's open-market price is lower than the option's strike price. In-the-money calls are ones where the security's open-market price is higher than the option's strike price.
Difference between put option and call option?
The holder/purchaser/owner of a call option contract has the right to buy an asset (or call the asset away) from a writer/seller of a call option contract at the pre-determined contract or strike price. The holder/purchaser/owner of a call option contract expects the price of the underlying asset to rise during the term or duration of the call contract, for as the value of the underlying asset increases so does the value of the call option contract. Conversely, the write/seller of a call option contract expects the price of the underlying asset to remain stable or to decline. The holder/purchaser/owner of a put option contract has the right to sell an asset (or put the asset) to a writer/seller of a put option contract at the pre-determined contract or strike price. The holder/purchaser/owner of a put option contract expects the price of the underlying asset to decline during the term or duration of the put contract, for as the value of the underlying asset declines the contract value increases. Conversely, the writer/seller of a put option contract expects the price of the underlying asset to remain stable or to rise.
How or Where do you research Waffle House Inc company stock?
The only way you can buy Waffle House stock is to work for Waffle House. It's an employee-owned company.
The term BSE refers to the Bombay Stock Exchange and it is one of India's largest stock exchanges. Thousands of companies are listed in it.
bse is a brain disease in cows.. it wasfound in great Britain in 1986
Basically the money doesn't go anywhere. When you buy a stock you will get a confirmation statement from your broker, showing the amount you paid for the stock + the commission. When you sell the stock you will also get a confirmation statement from your broker, showing the amount you sold the stock for - the commission. You compare the "Net Amount" from those two statements to see if you made a profit or had a loss. Either way, that must be reported to the IRS. The "Value" of your stock can go up or go down or stay the same. Once you buy a stock the amount you paid is only meaningfull to you and the IRS, as the only other time the IRS cares about the "Value" of your stock is when you sell it. The money is gone once you buy the stock - you can think of it as it went to whomever sold it.
There's intrinsic value and extrinsic value in options.
Intrinsic value is the either the stock price minus the exercise price, or the other way around depending on which way the stock is going to travel. In the case of this call, if I exercised at $25 and sold at $30, the intrinsic value is $5 per share.
To calculate extrinsic value, subtract the premium from the intrinsic value. On this deal, you paid seven dollars to make five so the exercise value, or extrinsic value, of this option is negative two dollars. The idea of buying calls is to MAKE money so most people would look at this one close: is the stock going to clear $32 before the option expires? Thirty-two dollars is the break-even point so if you couldn't be sure of being able to sell the stock for more than that you'd be best off to pass on the deal.
