Author Archive Admin

Options

 

Notes

 

Options are contracts where you have the right but not the obligation to either buy (call ) or sell (put) financial instruments at the exercise (strike) price on or before a predetermined date.

 


Types

 

  1. American
      • Can exercise the option any time up to the expiration date.
      • Higher risk to the seller (writer).
      • More expensive (premium) than the European type option.
      • Options traded on the ASX are predominantly American type.
  2. European
      • Can exercise the option only on the contract expiration date.
      • Lower risk to the seller (writer).
      • Less expensive (premium) than the American type option.

 


Strategies

 

  • Vertical Bull Spread
  • Call Bull Spread
  • Vertical Bear Spread
  • Put Bear Spread
  • Straddle
      • Long Straddle
      • Short Straddle
  • Strangle
      • Long Strangle
      • Short Strangle
  • Barrier Option
      • Knock-Out
      • Knock-In

 


 

  • 1 Option Contract: 100 Shares
  • Seller (Writer):
  • Buyer (Taker):
  • Call (Buy) Option: The right but not obligation to buy the financial instrument at the exercise (strike) price.
  • Put (Sell) Option: The right but not obligation to sell the financial instrument at the exercise (strike) price.
  • Premium:
      • How much you pay for the contract.
      • The level of risk is reflected in the premium of the option.
  • Exercise (Strike) Price: The agreed price on the contract.
  • Moneyness:
      • In The Money (ITM): Profit
      • The Strike Price of a CALL OPTION is below the market price.
      • At The Money (ATM): Break-Even
      • Out of The Money (OTM): Loss
      • Deep In The Money: Large Gain
      • An option that would lead to a large profit if it were exercised
  • Covered Option: The writer owns stock to be able to fulfill the contract.
  • Naked Call Option: The writer does not own stock to fulfill the contract which is underwritten by a third party.
  • Option Contracts:
      1. Exchange Traded Options (ETOs)
      2. Over-The-Counter (OTC)
  • Intrinsic Value
  • Price Volatility

 


 

  • Issued By:
  • Issued To:
  • Type of Security:
  • Duration:
  • Source:
  • Market:
  • Return:
  • Principle:
  • Liquidity:
  • Risk Level:

 


Calculation

 

$$V = max(S-X, 0)-P $$

 


Long Call

 

 


Short Call

 

 


Long Put

 

 


Short Put

 

 


Long Straddle

 

  • Strategy: Neutral
  • Conditions: High Volatility
  • Buy:
      • 1 ATM CALL
      • 1 ATM PUT
  • Time Decay: Negative impact
  • Break Even Points: Long Call – Premium, Long Call + Premium
  • Max. Loss: Limited
  • Max. Profit: Unlimited

 

 


Short Straddle

 

  • Strategy: Neutral
  • Conditions: Low Volatility
  • Sell:
      • 1 ATM CALL
      • 1 ATM PUT
  • Time Decay:
  • Break Even Points:
  • Max. Loss: Unlmited
  • Max. Profit: Limited

 

 


Long Strangle

 

With this strategy, a trader is looking for a major move; either up or down in the underlying stock before expiration. This market neutral strategy is specifically designed for high volatility conditions where stocks are swinging wildly back and forth.

 

  • Strategy: Neutral
  • Conditions: High Volatility
  • Buy:
      • 1 OTM CALL
      • 1 OTM PUT
  • Time Decay:
  • Break Even Points:
  • Max. Loss: Limited
  • Max. Profit: Unlimited

 

 

 


Short Strangle

 

  • Strategy: Neutral
  • Conditions: Low Volatility
  • Sell:
      • 1 OTM CALL
      • 1 OTM PUT
  • Time Decay:
  • Break Even Points:
  • Max. Loss: Unlimited
  • Max. Profit: Limited

 

aaa

Movies & Documentaries

 

The Founder (2016)

 


The Accountant (2016)

 


Betting on Zero (2016)

 


Equity (2016)

 


The Big Short (2015)

 


Blackhat (2015)

 


The Gambler (2014)

 


The Wolf of Wall Street (2013)

 


Assault on Wall Street (2013)

 


Margin Call (2011)

 


The Flaw (2011)

 


The Social Network (2010)

 


Wall Street: Money Never Sleeps (2010)

 


Trader Games (2010)

 


American Greed (2007)

 


Enron: The Smartest Guys in the Room (2005)

 


Rogue Trader (1999)

 


Wall Street (1987)

 

Financial Performance Indicators

Profitability

  • Earnings Before Interest and Tax (EBIT) to Total Funds Ratio

 

  • Earnings Per Share (EPS)

Good for measuring company performance over time. However, not recommended for benchmarking against other company EPS values.

Indices

 

RegionCountryIndex
AfricaBotswanaBSE DCI - Botswana Stock Exchange Domestic Company Index
AfricaBotswanaBSE FCI - Botswana Stock Exchange Foreign Company Index
AfricaEgyptEGX 30 Index
AfricaGhanaGSE All-Share Index
AfricaMoroccoMADEX Index (Moroccan Most Active Shares Index)
AfricaMoroccoMASI index (Moroccan All Shares Index)
AfricaNigeriaNSE 30 Index
AfricaNigeriaNSE All Share Index
AfricaSouth AfricaJSE - Johannesburg Stock Exchange Domestic Company Index
AfricaZambiaLASI -LuSE All shares Index
AfricaZimbabweZimbabwe Industrial Index
AfricaZimbabweZimbabwe Mining Index
AmericasArgentinaMERVAL - 12 Companies
AmericasBrazilIBOVESPA - Bovespa Index
AmericasCanadaS&P/TSX 60
AmericasCanadaS&P/TSX Composite Index
AmericasCanadaS&P/TSX Venture Composite Index
AmericasChileIPSA
AmericasColombiaCOLCAP
AmericasColombiaIGBC
AmericasHaiti
AmericasJamaica
AmericasMexicoIndice de Precios y Cotizaciones (IPC) (Bolsa Index)
AmericasPeruSPBLPGPT
AmericasTrinidad and Tobago
AmericasUnited StatesBarron's 400 Index
AmericasUnited StatesCBOE DJIA BuyWrite Index (BXD)
AmericasUnited StatesCBOE NASDAQ-100 BuyWrite Index (BXN)
AmericasUnited StatesCBOE NASDAQ-100 Volatility Index (VXN)
AmericasUnited StatesCBOE S&P 500 BuyWrite Index (BXM)
AmericasUnited StatesCBOE Volatility Index (VIX)
AmericasUnited StatesDJIA - Dow Jones Industrial Average
AmericasUnited StatesDow Jones Transportation Average
AmericasUnited StatesDow Jones Utility Average
AmericasUnited StatesNASDAQ Composite
AmericasUnited StatesNASDAQ-100
AmericasUnited StatesNYSE Arca Major Market Index
AmericasUnited StatesRussell 1000
AmericasUnited StatesRussell 2500
AmericasUnited StatesRussell 3000
AmericasUnited StatesRussell MidCap
AmericasUnited StatesRussell Small Cap Completeness
AmericasUnited StatesRussell Top 200
AmericasUnited StatesS&P 100
AmericasUnited StatesS&P 500 (GSPC, INX, SPX)
AmericasUnited StatesS&P Midcap 400
AmericasUnited StatesS&P Midcap 400/BARRA Growth
AmericasUnited StatesS&P Midcap 400/BARRA Value
AmericasUnited StatesS&P SmallCap 600
AmericasUnited StatesS&P SmallCap 600/BARRA Growth
AmericasUnited StatesS&P SmallCap 600/BARRA Value
AmericasUnited StatesWilshire 4500
AmericasUnited StatesWilshire 5000
AmericasVenezuelaÍndice Bursátil Caracas (IBC)
AsiaBangladeshCASPI
AsiaBangladeshCSC X
AsiaBangladeshCSE 30
AsiaBangladeshCSE50
AsiaBangladeshCSI
AsiaBangladeshDSE
AsiaBangladeshDSEX
AsiaChinaCSI 100 Index
AsiaChinaCSI 300 Index
AsiaChinaCSI 300 Index
AsiaChinaSSE 180 Index
AsiaChinaSSE 50 Index
AsiaChinaSSE Composite Index
AsiaChinaSZSE 100 Index
AsiaChinaSZSE 200 Index
AsiaChinaSZSE 300 Index
AsiaChinaSZSE Component Index
AsiaHong KongHang Seng China Enterprises Index
AsiaHong KongHang Seng China H-Financials Index
AsiaHong KongHang Seng China-Affiliated Corporations Index
AsiaHong KongHang Seng Index
AsiaIndiaBombay Stock Exchange (BSE) - Sensex
AsiaIndiaNational Stock Exchange (NSE) - Nifty50
AsiaIndiaNIFTY BANK
AsiaIndiaNIFTY MIDCAP 100
AsiaIndiaNIFTY NEXT 50
AsiaIndiaNIFTY SMALLCAP 100
AsiaIndiaS&P BSE 500
AsiaIndonesiaIDX Composite
AsiaIndonesiaJII - Jakarta Islamic Index
AsiaIndonesiaLQ-45
AsiaIranTEPIX
AsiaIsraelTA-125 Index (Tel Aviv 125)
AsiaIsraelTA-35 Index
AsiaIsraelTA-90
AsiaJapanNikkei 225
AsiaJordanASE Weighted Index
AsiaKazakhstanKASE
AsiaMalaysiaFTSE Bursa Malaysia Index
AsiaMalaysiaKuala Lumpur Composite Index
AsiaMalaysiaMESDAQ
AsiaNepalNEPSE Index
AsiaOmanMSM-30
AsiaPakistanKMI 30 Index
AsiaPakistanKSE 100 Index
AsiaPakistanKSE All Share Index
AsiaPakistanKSE-30 Index
AsiaPhilippinesPSE All Shares Index
AsiaPhilippinesPSE Financials Index
AsiaPhilippinesPSE Mining and Oil Index
AsiaPhilippinesPSEi - PSE Index
AsiaQatarDSM-200
AsiaSaudi ArabiaTASI - Tadawul All Share Index
AsiaSingaporeSTI - Straits Times Index
AsiaSouth KoreaKOSDAQ (for small cap companies)
AsiaSouth KoreaKOSPI
AsiaSri LankaAll Share Price Index (ASPI)
AsiaSri LankaColombo Stock Exchange Sector indices (CSE Sectors)
AsiaSri LankaMilanka Price Index (MPI) - (Discontinued)
AsiaTaiwanTAIEX - Taiwan Capitalization Weighted Stock Index
AsiaThailandSET Index
AsiaThailandSET100 Index
AsiaThailandSET50 Index
AsiaVietnamCBV Index
AsiaVietnamS&P Vietnam 10 Index
EuropeAustriaATX
EuropeBelgiumBEL20
EuropeBosnia and HerzegovinaBIRS
EuropeBosnia and HerzegovinaERS10
EuropeBosnia and HerzegovinaFIRS
EuropeBulgariaSOFIX
EuropeCroatiaCROBEX
EuropeCroatiaCROBIS
EuropeCzech RepublicPX Index
EuropeDenmarkOMXC20 - OMX Copenhagen 20
EuropeFinlandOMXH25 - OMX Helsinki 25
EuropeFranceCAC 40
EuropeFranceCAC All Share
EuropeFranceCAC All-Tradable
EuropeFranceCAC Large 60
EuropeFranceCAC Mid & Small
EuropeFranceCAC Mid 60
EuropeFranceCAC Next 20
EuropeFranceCAC Small
EuropeFranceSBF 120
EuropeGermanyDAX- 30
EuropeGermanyMDAX (Mid Cap)
EuropeGermanySDAX (Small Cap)
EuropeGermanyTecDAX
EuropeGreeceAthex 20
EuropeHungaryBUMIX Mid Cap
EuropeHungaryBUX Large Cap
EuropeHungaryCentral European Blue Chip Index Regional Large Cap
EuropeIcelandOMX Iceland 15 (Discontinued)
EuropeIcelandOMX Iceland 6
EuropeIrelandISEQ 20
EuropeItalyFTSE Italia Mid Cap
EuropeItalyFTSE MIB
EuropeItalyMIBTel
EuropeLithuaniaOMVX - OMX Vilnius
EuropeLuxembourgLuxX Index - Luxembourg Stock Exchange
EuropeNetherlandsAEX index
EuropeNetherlandsAMX index (Midcap)
EuropeNetherlandsAScX index (Small Cap)
EuropeNorwayOBX Index
EuropePolandWIG
EuropePolandWIG30
EuropePortugalPSI-20
EuropePortugalPSI-GERAL
EuropeRomaniaBET-10
EuropeRussiaMICEX - Moscow Interbank Currency Exchange
EuropeRussiaRTSI - RTS Index
EuropeSerbiaBELEX15
EuropeSerbiaBELEXline
EuropeSlovakiaSlovak Share Index
EuropeSpainIBEX 35
EuropeSpainMadrid Stock Exchange General Index
EuropeSwedenOMXS30 - OMX Stockholm 30
EuropeSwedenOMXSPI - OMX Stockholm PI
EuropeSwitzerlandSLI - Swiss Leader Index
EuropeSwitzerlandSMI - Swiss Market Index
EuropeSwitzerlandSMI Expanded
EuropeSwitzerlandSMI MID
EuropeSwitzerlandSPI - Swiss Performance Index
EuropeUkrainePFTS Index
EuropeUnited KingdomFT30 Index
EuropeUnited KingdomFTSE 100 Index
EuropeUnited KingdomFTSE 350 Index
EuropeUnited KingdomFTSE AIM All-Share Index
EuropeUnited KingdomFTSE AIM UK 50 Index
EuropeUnited KingdomFTSE All-Share Index
EuropeUnited KingdomFTSE Fledgling Index
EuropeUnited KingdomFTSE MID 250 Index
EuropeUnited KingdomFTSE SmallCap Index
EuropeUnited KingdomFTSE techMark Index
GlobalN/ADow Jones Global Titans 50
GlobalN/AFTSE All-World Index Series
GlobalN/AMSCI ACWI Index
GlobalN/AMSCI World
GlobalN/AOTCM QX ADR 30 Index
GlobalN/AS&P Global 100
GlobalN/AS&P Global 1200
GlobalN/AThe Global Dow - Global Version of the Dow Jones Industrial Average
OceaniaAustraliaAll Ordinaries
OceaniaAustraliaS&P/ASX 20
OceaniaAustraliaS&P/ASX 200
OceaniaAustraliaS&P/ASX 300
OceaniaAustraliaS&P/ASX 50
OceaniaNew ZealandNZX 50 Index

Protected: Insurance

This content is password protected. To view it please enter your password below:

Protected: Risk Management

This content is password protected. To view it please enter your password below:

Protected: Capital Asset Pricing Model (CAPM)

This content is password protected. To view it please enter your password below:

Exchanges

Clearing House Electronic Sub-register System (CHESS)

 

Notes

The Clearing House Electronic Sub-register System (CHESS) is an Australian Securities Exchange (ASX) system which facilitates the transfer and settlement of securities between market participants.

 

  • Participants
      • Retail investors (through approved brokers)
      • Institutional investors (through approved non-brokers)

 

  • Settlement
      • 2 business days (T+2)

 


 

 

Reconstruction

 

Notes

A reconstruction may be a Share Split (increase the number of shares) or Share Consolidation (decrease the number of shares).

If the share price of a company is too high the company may consider splitting the number of shares to ensure the share price is more affordable and liquid in the market.

Any orders present in the market are purged at the end of the trading day prior to the reconstruction.

 


1. Share Split (Stock Split)

A share split occurs when a company issues more shares to its existing shareholders, increasing the total number of shares outstanding while maintaining the overall value of the investment. The value of each share is adjusted accordingly, so the total market value of the investment remains the same.

  • Purpose: The main reason a company may do a stock split is to make its shares more affordable for small investors if the price per share has become too high. It often happens when a company’s share price rises significantly, and the company wants to make shares more accessible.
  • Example:
    • If a company announces a 2-for-1 share split, it means that each shareholder will receive one additional share for every share they already own. If you held 100 shares priced at $100 each, after the split, you would have 200 shares priced at $50 each.
    • The total value of your investment is still $10,000 (100 x $100 = 10,000, and after the split, 200 x $50 = 10,000), but you now have more shares.

 


2. Share Consolidation (Reverse Stock Split)

A share consolidation, or reverse stock split, is the opposite of a share split. In this case, a company reduces the number of its outstanding shares by consolidating multiple shares into one. The price per share increases proportionally, so the total value of the investment remains unchanged.

  • Purpose: Companies often do this when their stock price is very low and they want to increase the share price to make it look more attractive or to meet listing requirements on a stock exchange.
  • Example:
    • If a company announces a 1-for-2 reverse stock split, it means that shareholders will exchange every two shares for one new share. If you held 100 shares priced at $2 each, after the consolidation, you would have 50 shares priced at $4 each.
    • The total value of your investment remains the same (100 x $2 = 200, and after the consolidation, 50 x $4 = 200).

 


Summary
  • Share Split: Increases the number of shares while reducing the price per share.
  • Share Consolidation: Reduces the number of shares while increasing the price per share.

Both actions don’t change the total value of a shareholder’s investment, but they can have significant effects on a company’s stock price and appeal to different types of investors.

 


 

 


 

Reconstruction

 

Value of Shares ($):
Final Quantity of Shares (#):
Expected Final Share Price ($):