All options have an underlying asset, such as a stock, an exchange-traded fund, or a future, the values of which change over time. The value of an option, therefore, also change along with the underlying asset. Depending on the price of the underlying asset, an option can be in-the-money, outof-the-money, ... Read More

Straddle is an options strategy where the investors buy and sell a put and a call option simultaneously. The type of underlying, expiry date, and strike prices remain the same for the straddle strategy to work. The investors who use the straddle strategy expect something drastic in the market to ... Read More

A number of studies using different techniques and different economies and time periods have found that equity betas are unstable in both individual common stock and portfolios.Equity beta measures the volatility of a security relative to the market’s volatility. A security with a beta of 1.00 rises and falls at ... Read More

Strips and straps are two options strategies applied to increase the returns from an investment. Both strips and straps are related to options where market movements are compared with the underlying stock’s prices. As profits can be made from both upward and downward direction of the stock’s value, adding one ... Read More

Arbitrage Pricing TheoryArbitrage Pricing Theory (APT) is used to assess and anticipate the returns of assets and portfolios.APT is a model that shows the relationship between an asset’s expected risk and the return.The APT model shows how the changes in macroeconomic factors affect an asset’s returns. These variables are inflation, ... Read More

A "strangle" is an investment strategy where an investor buys both "call" and "put" options. Both of these options have identical maturity dates but the strike prices are different. These options are usually bought "out of money."Generally, the strike price of a call option is higher than the underlying stock’s ... Read More

Options are a type of derivative financial instrument between two parties who contractually agree to transact an asset at an agreed price before a future date. An "option" provides its owner the opportunity and right to either buy or sell the asset at the exercise price, but the owner is ... Read More

"Opportunity cost" is a term that is used extensively in economics and finance. The uniqueness of the term lies in the fact that there is no mention of the opportunity cost of capital in the accounting books. It is not an "explicit cost"; so, there is no mention of this ... Read More

What is a Put Option?A put option is a contract that allows the option holder to sell a number of underlying securities at an agreed-upon price before a certain date. The price at which put option’s securities are sold is known as the "strike price."When the option is exercised, the ... Read More

Call options can help in minimizing portfolio losses. A call option can be exercised at any point in time to earn a premium. Call option holders are not obligated to buy the options, but they can hold options they have as long as they want. So, is there any specific ... Read More