by Henry Liverman | May 31, 2021 | Market Definitions
A strategy for investment that involves choosing stocks that appear to be under or overvalued relative to their intrinsic or book value. Value investors believe that the market reacts disproportionately strongly to good or bad news, which results in price movements...
by Henry Liverman | May 31, 2021 | Market Definitions
A part of a group of measurements known as the “Greeks” which are used in options pricing. Also called the time decay of an option, theta is a measurement used to show the decline in value of an option due to the passage of time. This means an option...
by Henry Liverman | May 31, 2021 | Market Definitions
An strategy for options trading designed to imitate a short stock position. A synthetic short is created by selling at-the-money calls and buying an equal number of at-the-money outs of the same underlying stock with the same expiration date. A synthetic short...
by Henry Liverman | May 31, 2021 | Market Definitions
An options strategy involving holding both a call and a put option with the same expiration date of the same underlying asset (similar to a straddle) but with different strike prices (differentiating it from a straddle). This is a good strategy if the trader thinks...
by Henry Liverman | May 29, 2021 | Market Definitions
TIPS are Treasury bonds that are indexed to an inflationary gauge to protect investors from inflation-related decline in purchasing power. In theory, TIPS are adjusted in price to retain real value as inflation rises. They are a popular asset for both protecting...
by Henry Liverman | May 29, 2021 | Market Definitions
An options strategy involving the purchase of a put and a call option for the same expiration date and strike price on the same underlying security. This strategy is profitable when the stock either rises or falls from the strike price more than the premium paid. ...
by Henry Liverman | May 29, 2021 | Market Definitions
The current price in a marketplace that an asset (eg, a security, commodity, or currency) can be bought or sold for immediate delivery. Though spot prices are specific to both time and place, in a global economy the spot price of most securities or commodities tend...
by Henry Liverman | May 29, 2021 | Market Definitions
A market where financial instruments (eg, commodities, currencies, and securities) can be traded for immediate delivery (ie, exchange of cash). This is in contrast to a futures contract, which is based on the underlying asset delivery at a future date. Spot markets...
by Henry Liverman | May 29, 2021 | Market Definitions
An options strategy which protects against large losses while also limiting gains. This is done through two strategies known as protective puts and covered calls. The protective collar itself consists of a long position in the underlying security, a put option...
by Henry Liverman | May 28, 2021 | Market Definitions
An investment similar to a bond made up of a bundle of home loans bought from the banks that issued them. Investors in MBSs receive periodic payments similar to bond coupon payments. Of note, the MBS is only as safe as the mortgage loans that are backing it up. The...
