Investor’s Business Daily has spent years Analyzing leaders and successful people in all walks of life. Most have 10 traits that, when combined, can turn dreams into reality. each day we highlights one.
Options Trade idea on $NKE and $ORLC presented on #CNBC Options Actions.. March 16, 2018 “Nike’s growing problems. Are big hurdles ahead for Nike? With CNBC’s Melissa Lee and the Options Action traders.”
$ORCL Looks Strong and poised for Break Out.
WE ARE NOT AN INVESTMENT ADVISER The information provided is solely for your personal use and for your benefit only. SeekingOptions.com and the author of this post assumes no responsibility for your trading results. There is a high degree of risk in trading.
Educational Tip of the Day (SOURCE: NASDAQ.com):Foreign Corrupt Practices Act: An amendment to the Securities Exchange Act created to prohibit bribery of foreign officials by publicly held US companies.
Beta equation (security): The market beta of a security is determined as follows: Regress excess returns of stock y on excess returns of the market. The slope coefficient is beta. Define n as number of observation numbers.
- Beta=
- [(n) (sum of [xy]) ]-[ (sum of x) (sum of y)]/
- [(n) (sum of [xx]) ]-[ (sum of x) (sum of x)]
- where: n = # of observations (usually 36 to 60 months)
- x = rate of return for the S&P 500 index
- y = rate of return for the security.
High-grade bond: A bond with Triple-A or Double-A rating in Standard & Poor’s, or Moody’s rating system.Import Quota: Puts limits on the quantity of certain products that can be legally imported into a particular country during a particular time frame. There is a Fixed quota, which is a maximum quantity not to be exceeded, and tariff rate surcharge, which permits additional quantities but at much higher duty.Leverage ratios: Measures of the relative value of stockholders, capitalization, and creditors obligations, and of the firm’s ability to pay financing charges. Value of firm’s debt to the total value of the firm (debt plus stockholder capitalization).Married Put and Stock: The simultaneous purchase of stock and the corresponding number of put options. This is a limited risk strategy during the life of the puts because the stock can be sold at the strike price of the puts.
Educational Tip of the Day (SOURCE: NASDAQ.com):Junk bond: A bond with a speculative credit rating of BB (S&P) or Ba (Moody’s) or lower. Junk or high-yield bonds offer investors higher yields than bonds of financially sound companies. Two agencies, Standard & Poors and Moody’s Investor Services, provide the rating systems forcompanies’ credit.
Strike price: The stated price per share for which underlying stock may be purchased (in the case of a call) or sold (in the case of a put) by theoption holder upon exercise of the option contract.4
Open interest: The total number of derivatives contracts traded that have not yet been liquidated either by an offsetting derivative transaction or by delivery.
Overtrading: Excessive broker trading in a discretionary account. Underwriters persuade brokerage clients to purchase some part of a new issue in return for the purchase by the underwriter of other securities from the clients at a premium. This premium is offset by the underwriting spread.
Hedged portfolio: A portfolio consisting of a long position in the stock and a long position in the put option on the stock, so as to be riskless and produce a return that equals the risk-free interest rate.
Educational Tip of the Day (SOURCE: NASDAQ.com):
J-curve: Theory that says a country’s trade deficit will initially worsen after its currency depreciates because higher prices on foreign imports will more than offset the reduced volume of imports in the short run.J Curve (2): In context of private equity, the curve that is formed by plotting returns generated by a private equity fund against time from inception to termination. There is usually negative returns (due to start up costs and management fees) in early years and investment gains in the outlying years as the portfolio of companies mature.Option cycle: The cycle of option expiration months. The most common cycles are: January, April, July, and October (JAJO); February, May, August, and November (FMAN); and March, June, September, and December (MJSD).Option elasticity: The percentage increase in an option’s value, given a 1 percentage point change in the value of the underlying security.Value-added tax: A value added tax (VAT) is a form of consumption tax. As a buyer, it is a tax on the purchase price. As a seller, it is a tax on the “value added” to a product, material or service at his/her stage of its manufacture or distribution. For example, if a television is built by a company in a country that charges VAT, the manufacturer is charged VAT on all of the parts they purchase to produce the television. Once the television is sold, the consumer pays VAT on the entire product. The VAT is ultimately passed on to the end user.Vertical spread: Simultaneous purchase and sale of two options that differ only in their exercise price.Horizontal spread: The simultaneous purchase and sale of two options that differ only in their expiration dates.