The “nuclear option” is a way to end a filibuster in the US Senate by forcing a vote with a simple majority. Filibusters involve long speeches to delay a decision, but can be ended by invoking cloture or the nuclear option. The latter involves interrupting with a point of order and requesting an immediate vote, […]
A luxury space hotel called Aurora Station is set to open in 2022, offering a 12-day trip around the Earth’s orbit for $9.5 million per person. The hotel will orbit the Earth every 90 minutes, allowing guests to see 16 sunrises and sunsets every 24 hours. Reservations require an $80,000 deposit and a three-month training […]
Embedded options are contracts associated with securities that allow one party to take a specific action against the other, such as repurchasing bonds or returning them to the issuer. Valuing securities with embedded options can be complex, and it is important to carefully read contracts and terms to understand the built-in option that may accompany […]
Beginners trading options should learn about option parameters, set long-term investment goals, and understand how options work. They should analyze critical aspects of an option and limit their risk by not using short-term money. A clear menu of option costs and good record-keeping are also important. When beginners are thinking about trading options, some of […]
An option contract allows the buyer to purchase assets at a future time, but is one-sided as the seller must sell if the buyer decides to exercise the option. It is often enforceable only with an option consideration. Contracts with option provisions oblige the buyer to perform other aspects of the contract, but the buyer […]
The “local option” allows US counties and municipalities to decide certain issues themselves by popular vote, such as the sale of alcohol and local taxation. This option has its roots before the Constitution and was used by the Anti-Saloon League to campaign county after county to ban the sale of alcohol locally. All states have […]
Roth options allow US taxpayers to make contributions to their retirement plan from their net earnings, rather than gross earnings. Withdrawals from Roth accounts are exempt from federal income tax, making them attractive to highly-compensated employees. The Internal Revenue Service imposes annual contribution limits on these accounts, and early withdrawals are subject to tax penalties. […]
Employee stock options are privately issued between an employee and an employer, with certain conditions attached. They cannot be sold immediately and are generally not transferable. Companies offer more stock options to valuable employees, with an exercise price set by the company. Employee shares have a longer duration than regular shares and are generally taxable. […]
An expansion option is an investment that can be insured to help companies take advantage of unexpected expansion opportunities, offsetting the costs of moving forward. It can be used in various situations, such as expanding production or allowing tenants to expand their retail space. The option is typically secured at the time of purchase and […]
Stock option valuation involves determining the value of a stock option using methods such as the binomial and Black-Scholes models. It includes finding the intrinsic value of the stock and making projections for its future value. Online calculators can be used, but it’s best to research before using them. Stock option valuation is the multi-layered […]
Non-qualified stock options allow the buyer to purchase shares at a certain price but must pay income taxes on the proceeds generated by the sale. They are commonly offered to non-executive employees and can provide significant gains in the stock market. However, the individual must pay tax on the difference in price, unlike incentive stock […]
Commodity options allow investors to buy or sell a commodity at a guaranteed price for a fixed period of time. There are two types of options: call and put. Options are less expensive than the actual product and can reduce risk, but options writers can suffer huge losses. A commodity option is a contract in […]
A seagull option is an investment strategy used in forex trading that involves buying and selling currency options to minimize risk and is relatively inexpensive. The strategy involves creating a hedge by buying a call option and selling a put option or creating a combination of call and put options. The options must be equal […]
A bond option is a financial derivative that allows the holder to buy or sell a bond at a specified price. There are two types of options, call and put, and they can be American or European. The price is determined using the Black-Scholes method. A bond option is a financial derivative. It gives the […]
Gold options give the right, but not the obligation, to buy or sell gold at a set price on a certain date. They offer flexibility and are an attractive investment for some traders in the gold market. Options are traded in various markets and can be exercised or allowed to expire. They are attached to […]
A down and down option is a type of option that becomes worthless if the price of the underlying security falls below a certain level, known as the barrier. This makes it riskier, so it can usually be bought at a discount. The option seller benefits if the price does not reach the stock price […]
An option fee is a payment made by a buyer to a seller in a real estate sale, giving the buyer the right to back out of the deal for a certain period. It is almost entirely restricted to Texas and is negotiated between the buyer and seller for around $100 to $200 USD for […]
A bargain purchase option in a lease agreement allows the lessee to purchase the asset at the end of the lease at a significantly lower price than its fair market value, making it a capital lease and obligating the lessee to include the asset on its balance sheet. The lessee is responsible for taxes, insurance, […]
The binomial option pricing model is a method of determining the value of an option contract, useful for US options, which can be exercised any time before the expiration date. It is based on a branching structure that allows investors to make specific predictions about future prices, and can be adjusted to reflect anticipated changes […]
Options trading strategies can be bullish, bearish, or neutral, with various call and put combinations forming the basis of these strategies. Traders must understand the risks and rewards before entering the options market. Smart Asset offers free educational resources. Options trading strategy can be classified into three distinct categories: bullish, bearish, and neutral. Options are […]
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