In options trading, intrinsic value is the difference between the price of the underlying asset and the strike price of the option. The method used to calculate intrinsic value varies depending on the type of option purchased - in call options, it is...
The cost of carry plays a crucial role in identifying and exploiting arbitrage opportunities in financial markets. It represents the total expenses incurred to hold an asset over time, including interest rates, storage costs, insurance, and...
A mid-cap stock refers to a publicly traded company with a market capitalization generally between $2 billion and $10 billion. Market capitalization, or market cap, is calculated by multiplying a company’s current stock price by its total number of...
An annuity is a financial product that provides a regular income stream to the annuitant over a specific period or for the rest of their life. An annuity can be purchased from an insurance company, and the annuitant makes a lump sum payment or a...
Capital gains tax applies to the profit from selling or disposing of certain assets. Common assets subject to this tax include stocks, bonds, mutual funds, real estate, and collectables such as art, antiques, and precious metals. Cryptocurrencies are...
The concept of a "good price per share" is subjective and can vary depending on an individual investor's goals and risk tolerance. Generally speaking, a good price per share is one that provides a reasonable balance between potential returns and...
Stocks in the S&P and other market-cap-weighted indexes can overprice, meaning they rise above their fundamentals. Inflated index prices occur when a stock has a high weighting in an index but is overvalued. An increasing market cap doesn't...
Classified stocks are shares of a company that are categorized into different classes, often denoted as Class A, Class B, and so on. These classifications allow companies to assign varying rights and privileges to different groups of shareholders....
Several studies have shown that stocks outperform all other asset classes over time. Stock returns are capital gains and dividends.
Trailing stops are a useful tool for a variety of trading strategies, but they are particularly well-suited to trend-following strategies that seek to capitalize on the momentum of a particular asset. For example, a trader might use a trailing stop...