Correction: At 4:20, the graph in the top left-hand corner is slightly off; for total return, the curve should not intercept at (30,0), but rather should be shifted slightly to the left so that the bend in the line occurs at (30,-2). Sorry for the blunder.
Option Pricing Factors:
- Underlying stock price (higher = higher call premium, lower put premium)
- Underlying stock price volatility [expected] (higher = higher option premium)
- Underlying stock dividends (higher = lower call premium, higher put premium)
- Option's strike price (higher = lower call premium, higher put premium)
- Time until expiration (longer = higher option premium)
- Interest rates (higher = higher call premium, lower put premium)
Intro/Outro Music: https://www.bensound.com/royalty-free-music
Episode Music: http://freemusicarchive.org/music/Podington_Bear/
This channel is for education purposes only and is not affiliated with any financial institution. Richard Coffin is not registered to provide investment advice and as such does not provide recommendations on The Plain Bagel - those looking for investment advice should seek out a registered professional. Richard is not responsible for investment actions taken by viewers.
I had a put option on the dia on election night. Market down 900 points. Placed a sell order and by the time the market opened it had recovered. Why does it seem like after hours is where all the money is made? Since then I have discontinued buying these out of discouragement. I'm thinking I would like to try again. Put option on the dia. Any tips would be appreciated as I'm just doing this on my smart phone. I was looking at two weeks out buying at 239-237. Still very new to this options narrative.
Not a pro by any means but here's my grasp on it. If you want to invest in a company you buy stock in that company so you basically own a small part of it. If the company's value increases so does the value of your stock. Generally slowly and steadily it increases over time assuming the company does well.
Now let's assume that this is too slow and too boring for you or you think the value of a company is about to drop. Options give you a way to make a bet on your assumption that the stock will drop.
They're all basically different ways of gambling.
For the $2 call option your betting that the $30 stock will go up more than $2. Scenario one it goes up $4 so you just made $2. Scenario 2 it goes up $2 you didn't gain anything. Scenario 3 it goes up less than $2 or even drops. You only lose $2 because you don't use the put. The difference between buying the actual stock that started at $30 is that the most you can lose is $2. If you bought the $30 stock and it dropped to $5, you just lost $25. So you're basically betting for the cost of $2 that the $30 stock will go above $32 before your option expires.
For a put it's basically the opposite. For the cost of the option say $2 you're betting that the $30 stock will drop more than $2.
Most likely these investments are made in large multiples I'm assuming since nobody goes to the trouble just to make a measly $2. So you might buy 100 $2 options or 1,000 maybe 50,000.
Did that make any sense? Or am I lost too?
You're putting out money in hopes that something you believe will happen and it isn't for a good or service. You could lose the money you had you could get the same amount back or you could make money. So yeah it is gambling. The real question is how risky is it and what can you do to minimize the risk. You can lower the risk by researching a company and waiting longer for a return.
For monthly income. When the stock is moving sideways you can buy and also sell at the same time, buy and sell a call and also buy and sell a put on the other side and you can make great income.
There are income strategies and also growth strategies which can be months long.
can you make a video on stop losses, like when to lock in profits and enter at lower position. Maybe it's too specific and active trading/market timing is not ideal for your general audience compared to other topics but just an idea :)
I can certainly cover the different types of market orders, but yeah I'll probably avoid the specific active strategies people use with them.
I've added it to the list of topics to cover, thanks for the idea! :)
+sunnohh 99% of people who comment things like that, went to either a shitty university or to a degree which has nothing to do with economics. This is so basic that even in non-related degrees can explain it to you. Something tells me that US students put themselves in debt and get a mediocre education in the best facilities.
Dan H it all depends but my first thought would be that options would be safer because, again, you’re paying an upfront fee for limited downside risk. But I’ll look more into it and answer this next Q&A vid :)
Although foreigners may now invest in A-shares, there is a monthly 20 percent limit on repatriation of funds to foreign countries.
Performance of A-shares.
Since its inception in 1990, including a major reform in 2002, the index has seen great fluctuations. Overall, however, it has grown along with the Chinese economy. The years 2015 to 2016 were a particularly difficult period, with a 52-week performance of -21.55 percent as of July 20, 2016.
As China grows from an emerging market to an advanced economy, there is substantial demand for Chinese equity. Stock exchange regulators continue efforts to make A-shares more broadly available to foreign investors and have them recognized by the global investing community.
In June 2017, the MSCI Emerging Markets Index announced a long-awaited decision it would add stocks to its index. According to CNBC, MSCI will add 222 China A Large Cap stocks to its benchmark emerging markets index gradually beginning in 2018. The MSCI website reveals the stocks it will list include the Bank of China, China Merchants Bank, Guotai Junan, Ping An Insurance, according to a document on Tsingtao Brewery, SAIC Motor, Suning Commerce and Spring Airlines.
Current Dividend Preference.
Participating Preferred Stock.
Convertible Preferred Stock.
Cumulative preferred stock includes a provision that requires the company to pay preferred shareholders all dividends, including those that were omitted in the past, before the common shareholders are able to receive their dividend payments.
Non-cumulative preferred stock does not issue any omitted or unpaid dividends. If the company chooses not to pay dividends in any given year, the shareholders of the non-cumulative preferred stock have no right or power to claim such forgone dividends at any time in the future.
Participating preferred stock provides its shareholders with the right to be paid dividends in an amount equal to the generally specified rate of preferred dividends, plus an additional dividend based on a predetermined condition. This additional dividend is typically designed to be paid out only if the amount of dividends received by common shareholders is greater than a predetermined per-share amount. If the company is liquidated, participating preferred shareholders may also have the right to be paid back the purchasing price of the stock as well as a pro-rata share of remaining proceeds received by common shareholders.
Significance to Investors.