Understanding Option Greeks and Dividends: Rho
Rho is the amount a theoretical option's price will change for a corresponding one-unit (percentage-point) change in the interest rate used to price the option contract. Typically the interest rate used here would be the risk-free rate of return. The rate associated with investing in Treasuries is traditionally defined by market experts as virtually risk-free. […]
Understanding Option Greeks and Dividends: Theta
Theta refers to time decay and is the amount a theoretical option’s price will change for a corresponding one-unit (day) change in the number of days to expiration of the option contract. Each moment that passes melts away some of the option’s value. Not only does the premium melt away, but it does so at […]
Trading Stocks for Beginners
Just starting out with stock trading? Great! Before you begin actively trading and investing, educate yourself about how stocks work. Learning the fundamentals of the stock market can help you anticipate change and develop investment strategies to mitigate loss. As a popular security, stocks come with their own set of potential risks and rewards. We’ve […]
Mutual Fund Fees and Expenses
Investing costs can be a key factor in your net return. To minimize those costs, you need to understand how mutual funds assess fees and expenses. Though cost alone shouldn’t drive your investment decisions, a little research is valuable. The best choice at first glance may have hidden costs, and what seems expensive could turn […]
How to Choose the Right Mutual Fund
When it comes to investing in a mutual fund, it's important to factor in your investment objectives, risk tolerance, and time horizon. With a broad range of funds available (stock-based and bond-based), be sure to research all of your choices before making a decision. To get you started, here are some helpful articles on how […]
Popular Types of Mutual Funds
Many mutual funds combine an investment objective with a specific category of stocks. For example, a fund might be an international fund whose objective is growth, or a growth fund that specializes in small-cap stocks. Here are some common stock fund types, based on their investment objectives: Growth fund A growth fund’s primary objective […]
Investing in Bonds: A Beginner’s Guide Part 2 – Important Terms
Bond trading involves special terminology and strategy. Here’s a quick overview of the most common terms used by investors. Face value The face (par) value of your bond is the amount the issuer pays you, when your bond reaches maturity. Face value is not necessarily what you paid for the bond, which is known […]
Tips for Writing Successful Covered Calls (Part 1)
What is a covered call? A covered call is an income-producing strategy where you sell or write call options against shares of stock you already own. Typically, you'll sell one contract for every 100 shares of stock. In exchange for selling the call options, you collect an option premium. But that premium comes with an […]
Investing in Bonds: A Beginner’s Guide (Part 3)
Bonds provide a fairly predictable stream of income. They are called fixed-income securities because the amount of money you receive and the dates on which you receive your payments are specified in advance. Fixed-income securities typically have a lower risk factor than stocks. Of course, any investment involves risk. Risks and Rewards of Bond Investing […]
Tips for Writing Successful Covered Calls (Part 2)
What is assignment? If you sell a covered call, you're accepting an obligation in exchange for the option premium you collect. Your underlying shares of stock might be “called” away from you if the option buyer chooses to exercise. We say “might” here because it's not guaranteed that you'll be asked to honor this obligation. […]
