Archive for money
Index Options Trading (Part I)
Posted by: | CommentsThe options market has caught the fancy of many investors and this is not surprising. The beauty of options is embedded in its very name. You have the options but not the obligation to buy or sell stocks at a given price by a given time. Now for options buyers this option unlike futures limits their maximum liability to the option premium they had paid at the time of buying the options contract.
In’78, Chicago Board Options Exchange (CBOE) began options trading on popular stock indexes such as the S&P 500 Stock Index. The CBOE options trades in multiples of $100 per index point. This is much cheaper than the $250 multiple per index point for the S&P futures contract.
An index option allows the investor to buy the stock index at a set point within the given time period. Let’s take an example. Suppose the S&P 500 Index is at 1100 points. You have a bullish opinion of the market and are of the opinion that the S&P 500 Index will go further up.
There are options Greeks that you need to understand. Time and volatility are two very important factors for an options contract. In case of an index options, what this means is that if any time for the next three months you decide to exercise your call option, you will get $100 for each point the index is above 1150. So you decide to purchase a call option at 1150 for three months for 50 points. In other words you paid an option premium of $5000.
So when an options contract loses value, you only lose the premium that you had paid while buying that contract. In that case you will only lose the premium of $5000 that you had paid to buy the call index option. Now, 1150 is the strike price of the index option. In case the S&P 500 Index does not rise above 1150, you can simply decide to not exercise your call option.
So for you to make a profit with this call option, the S&P 500 Index will have to rise above 1200 point within the next three months otherwise you will lose your premium. Contrast this with S&P futures. Call options are considered to be bullish.
In case the S&P Index had fallen to 1100 point, you would have recouped your options premium. Put options are considered to be bearish. A Put Index Option works in exactly the same way as a Call Index Option except that you make profit when the stock index goes down. If you had bought the put index options instead of the call index option in our example above, every point below the strike price of 1150 would have given you a profit of $100.
Options are highly dependent on the volatility of the market as well as time to expiry. As the options contract nears expiry, its premium starts decreasing. The more the options contract is away from expiry, the higher the premium you will have to pay. But the most important factor is the expected volatility of the market. Now the option premium that you pay is determined by the market and it depends on many factors like interest rates and dividend yield.
Mr. Ahmad Hassam has done Masters from Harvard University. Try these cash printing Forex Signals from heaven. Discover a revolutionary Forex Robot System! This and other unique content ” articles are available with free reprint rights.
Growth Stocks Investment
Posted by: | CommentsCapitalization or cap refers to the combined value of all the share of a company’s stocks. The division between large cap, mid cap and small cap are often blurry and not sharp. When you start looking for good stocks, you often come across these terms like large cap, mid cap, small cap, growth and value. Let’s discuss these terms for a moment.
Mid caps are companies with $1 to $5 Billion in capitalization and small caps are companies with $250 million to $1 Billion in capitalization. Anything below $250 million can be considered as micro cap. However the following divisions are generally accepted: Large caps are companies with over $5 Billion in capitalization.
What is the P/E ratio? The P/E ratio divides the price of the stock by the earnings per share. Suppose, company ABC stock is presently selling for $50. Now suppose that last year company ABC earned $5 for every share of the stock outstanding. This means stock ABC P/E ratio is 50/5=10. So the higher the P/E ratio, the more investors are willing to pay for the stock.
Now the higher the P/E ratio, the more growth the company is supposed to have. So it can be either the company is growing real fast of the investor have high hopes of its growth. Now these hopes can be realistic or foolish, you never know!
The lower the P/E ratio, the more value the company has. Low P/E ratio companies are not considered to be the movers and shakers in the market. Now, if you follow financial news than you must know that the large growth companies always grab the headlines. But do the growth stocks really make best investment? According to Fama and French, two famous researchers who did ground breaking research on stocks, over the last 77 years, large growth stocks have only seen 9.9% annualized rate of return as compared to 11.5% for the large value stocks.
So most of these growth stocks become highly popular in a small period of time! Everyone rushes to buy these growth stocks thinking that they are great investments. The most probable cause seems to be their immense popularity. Since most of the headlines are captures by high growth companies, investors seem to think that they are the best investments. Now intuitively you might have thought that growth stocks are better. What can be the reason for their lower performance over the years?
Think about Google, how its stock price shot up within a matter of weeks after it hit the market. Weeks after that it began to cool off. So large growth stocks tend to get overpriced before you are able to buy them!
Mr. Ahmad Hassam has done Masters from Harvard University. Try these cash printing Forex Signals from heaven. Discover a revolutionary Forex Robot System! You can get a unique content version of this article from the Uber Article Directory.
Energy Futures (Part I)
Posted by: | CommentsOne thing should be clear to you. Energy markets will be a major focal point in the global financial makers and the global economy for many years to come. The key to understanding energy trading is to understand oil, natural gas, gasoline and heating oil futures.
NYMEX trades futures and options contracts for crude oil, natural gas, heating oil, gasoline, coal, electricity and propane. NYMEX is also home to trading in metals. Trading in energy futures is centralized at the New York Mercantile Exchange (NYMEX), the world’s largest physical commodity futures exchange.
For smaller traders NYMEX offers e-mini contracts for oil and natural gas that also trades on the GLOBEX network of the Chicago Mercantile Exchange (CME). Trading in NYMEX is conducted in two divisions: 1) The NYMEX Division and 2) The COMEX Division. You can trade crude oil futures. If you haven’t done futures trading before than before you start trading crude oil futures, you should first educate yourself on how to trade futures contracts. The good thing is that you can paper trade on your demo account with the use of virtual money. Paper trading is something that should not be missed by even professional traders. Practice makes your trading perfect!
The relationship between energy and interest rates is very important to understand. This relationship ties together the two most important aspects of the global economy: energy (the fuel for growth) and the interest rates (the catalyst that powers borrowed money to do things). Next to interest rates, energy and especially oil is the center of the universe not only for the industry but also for the financial markets.
As a trader, you should know this fact that oil price rise often tends to slow down the economy and lower retail sales as well as consumer confidence with lower traffic on the highways. Sometimes the rise in oil prices leads to the increase in interest rates through the bond market and the actions of central banks and the other times the opposite happens. Rise in oil prices if often inflationary.
Now you need to understand the Peak Oil Concept. Peak oil is the concept that the world oil production has peaked and the production of oil will never be as high again. Oil prices and the interest rates generally move in the same direction when viewed over long periods of time.
Many oil wells have gone dry. US was a major producer of oil in the beginning of the 20th century but over time, depleted all its oil reservoirs. The last oil well went dry in Texas in the early part of’70s. Oil production in countries like Venezuela, Iran and Nigeria has peaked and is going down. Non OPEC sources of oil like North Sea and Mexico are also showing sign of declining production. There has been no major oil well discovery for the last few decades. Some people consider the Peak Oil idea as controversial but this concept is increasingly plausible given the state of the global oil industry. The peak oil concept is very important for you to know. This means that now in the next few decades, we will be witnessing an uptrend in the oil prices as the global demand increases and the supply is unable to catch up with the global demand of oil. When oil prices reach above $100 per barrel, it becomes too expensive for the industry as well as the private consumer. With this price level, chances are that more and more investment will go into the alternative energy industry. Now you should keep these facts in the background of your mind as a trader. In any case, most of the experts now agree that in the next 10-20 years, the oil production will peak and after that it will start declining.
Now this means that in the short run, following oil prices can be a highly profitable strategy. Your aim as a trader is to make quick profits by trading the price fluctuations in the oil market. So the important facts that you need to keep in the back of your mind while trading oil is: 1) Demand fluctuates but supply of oil is finite. 2) The world runs on oil and any threat to the supply of oil often leads to rising prices. As an oil trader your primary goal is to consider the effects of events on the supply of oil and correlate this effect with your charts.
Mr. Ahmad Hassam has done Masters from Harvard University. Trade Dow Futures . Learn Commodity Trading ! You are welcome to reprint this article – but get your own unique content version here.
Sell Your Gold And Silver To Weather The Recession
Posted by: | CommentsTimes are tough. Those who haven’t already lost their jobs are concerned they might in the near future. Meanwhile, the cost of living is rising for millions of families. You may be a college student who needs funds for tuition and books. Or, you might be a stay-at-home mom trying desperately to make ends meet. Whatever your circumstances, there may be a solution hidden in your dresser drawers: gold and silver.
Many people have old jewelry, tooth fillings, and coins that contain a healthy store of value due to their gold or silver content. These items sit at the bottom of drawers and are all but forgotten. If you need cash to weather the recession, selling these assets may be the quickest solution. Below, we’ll explain why more people than ever are selling their gold and silver. We’ll also give you a few tips for selling your precious metal.
Stability In A Volatile Economy
Regardless of the economic climate and the fluctuations of currencies (for example, the U.S. dollar), precious metals experience little variance in value. Of course, prices have risen and fallen over the years, but most economists agree that gold and silver tend not to deviate much from their normal price band.
If you own precious metals, there’s a good chance they are worth as much or more than their worth at the time you acquired them. They are a store of value, especially during a recession. Close observers of the market will have noticed that the prices of gold and silver have climbed over the past few years. Now may be the time to sell both for extra money.
Where To Sell Your Assets
There are several ways to sell your precious metals. Many people do so through online auctions and gold parties. Auctions are a hit-or-miss event; your assets may fail to generate interest. Gold parties are usually organized by a host who gathers a group of people along with a local buyer. The buyer will weigh each piece brought by attendees and make an offer.
Selling to online buyers has become far more popular. The process is simple and low-maintenance, and sellers usually enjoy better prices.
Getting The Best Deal For Your Assets
In a way, the online market is similar to a swap meet. There are many buyers who are willing to make an offer for your precious metals. Some will offer a better price than others. Some will be more trustworthy than others. One of the advantages to selling online is that reputable buyers list the prices they’re willing to pay. It’s easy to compare them.
One note of caution: don’t choose an online buyer solely on the merit of the price they’re willing to pay. Remember, some are unreliable. Sending your assets to them can be risky if you don’t conduct a bit of due diligence. Call them on them phone to personally speak with them. Read the agreement on their website. By taking a few precautions, you’ll receive a competitive price while enjoying a problem-free experience.
The best online resource to sell gold or sell silver can be found at www.refinity.com
Business Grants For Minority Women
Posted by: | CommentsIn order to start a business, women will usually go get a loan from the bank or perhaps ask friends and family for a loan. Not many realize that they can get free money in the form of grants.
Business grants for minority women are better than getting loans and borrowing money in many ways. One is that they do not require repayment of the money and also your credit will not be checked since you are not required to repay it.
For you to apply for minority business grants for women, you must be an African American, Asian, or Hispanic female. The government offers minority business grants for women. Other organizations such as non-profits or businesses might also offer grants. Before you go out applying for minority business grants for women, you need to have a convincing business plan to show your grantors. Without a plan, they would have no reason to give you money. If you do not know how to write a business plan, there are many sample business plans you can look at online. You may also want to hire a consultant who can help you write up a plan.
If you want to be taken seriously for minority business grants for women, then you must have a business plan. The grantors want to see that the money they give you will be put to good use. A business plan can also help you to organize your business and set goals.
If you do not know how to write a business plan, there are many sample business plans you can look at online. You may also want to hire a consultant who can help you write up a plan.Go to the government website to find grants. The website lists many grants so you will need to sift through them and find the ones that pertain to your cause.
There is also the state and local government you can try to see if they have business grants for minority women. They usually do not mix there grants with the federal grants. Figure out a schedule to apply to as many business grants for minority women as you can. You want to build your chance of receiving grants. James is a financial expert and has helped many minority women obtain grants for minority women in business.
Through his many years of business financing, he has created a website for helping others. Please visit his website for more information.
To read more about US grants, check out Success Grants. Also, check out the Success Grants review now!