Learn Options Trading

Learn Options Trading

Options are contracts used by investors to take a speculative position – or a hedge – based on expected future price movements of the underlying securities. An option is a contract which can be exercised if the price of an underlying security moves favorably. An option will be written or sold short by one investor and bought by another. It will name the strike price at which the security can be bought or sold before the expiration of the contract. Continue reading...

What Are the Contribution Limits For My Thrift Savings Plan?

Contribution limits for the TSP are the same as regular 401(k)s. Employees and employers using the TSP will have the same contribution limits as 401(k) plans. An employee can defer up to $18,000 a year in 2016, plus a $6,000 catch-up deferral if the employee is over 50 years old. The employer can contribute up to a maximum total balance of $53,000 (or $59,000 if the employee is over 59 ½), including employee deferrals. There is a standard 1% employer flat contribution, and some Federal employees will also receive a match. Continue reading...

How do Bitcoin Transactions Work?

How do Bitcoin Transactions Work?

Two words: blockchain technology. Transactions in bitcoin are encoded, packed into a block of other transactions, and all of these are sent out to thousands of computers running blockchain computations, known as hashes. All of these computers are running similar algorithms designed to force honest work and to take time for the computers to complete. The purpose of this step is merely forcing the blockchain to require time, energy, and effort, and to be randomized and decentralized when it is validating transactions. Whichever computer solves it first receives an incentive reward, and the entire blockchain, comprised of all computers running bitcoin client software, then updates the ledger to include the most recent validated transactions. Continue reading...

What is Cash-Flow Financing?

Cash flow financing is an alternative method of securing a loan, in which cash flows are the collateral, not assets. In cash flow financing, also known as cash flow loans, a lending institution will base their decisions regarding the size of the loan and the loan repayment schedule on future expected cash flows of the company. The cash flows serve as collateral instead of assets, as in an asset-backed loan. Continue reading...

What is an Accidental Death Benefit?

What is an Accidental Death Benefit?

Accidental Death Benefits are paid only if the cause of death is deemed to be an accident. Sometimes a regular life insurance or health insurance contract will offer an Accidental Death rider. The rider is appended to the contract for a relatively inexpensive additional premium and will pay a specified death benefit if the insured’s cause of death results from an accident. There are several exclusions to the definition of accident, and usually these are things like dangerous activities (sky diving, cave diving), acts of violence and war, and accidents resulting from driving under the influence or other examples where the insured has willfully put themselves in danger, or committed a crime, will usually not be covered. Continue reading...

What Does it Mean to have a "Duty of Best Execution"?

To have a “duty of best execution” means that a broker or entity fulfilling a trade request has to do so at the best possible execution for their client. The ‘duty of best execution’ is more than just a guideline - it’s an SEC law. Broker-dealers must report quarterly to the SEC on how they route customers' orders, to ensure compliance. "Best execution” refers to both timing and price. What is the Fiduciary Standard? What is the Suitability Standard? How do Advisors Charge and How Much Should I Pay? Continue reading...

What is a currency swap?

What is a currency swap?

In a currency swap, institutions will enter into an arrangement lasting anywhere from 1 to 30 years, in which they loan each other an equal principal amount at the current exchange rate, lending out their currency and taking a loan in a foreign currency, and paying an interest rate in foreign currency to their lending counter-party. Institutions that engage in a currency swap (also called a cross-currency swap) seek to increase their exposure or liquidity in a foreign currency, and in some cases seek to take advantage of favorable interest rates in the arrangement. In fact, a currency swap can be considered a variation on an interest rate swap, except that in this case, a notional principal is exchanged at the onset. Continue reading...

What are credit derivatives?

What are credit derivatives?

Stemming from the hedging strategy of Credit Default Swaps, an entire speculative derivatives market continues to grow, in which tranches of credit risk and indices are traded. With the ballooning of consumer credit in recent years, it is only natural that a credit derivatives market would follow it. In essence, the risk associated with a loan or bond is separated from the actual asset and is passed on to a counter-party for a premium, and then other market participants become involved, perhaps in the form of futures contracts or other derivatives. Continue reading...

What Are the Basics of Mutual Funds?

What Are the Basics of Mutual Funds?

Mutual funds come in many varieties, but here are some basics to keep in mind to help you find your way. While most people have definitely heard the term mutual fund, many people do not understand how they work and how to use them. With over 10,000 mutual funds available in the marketplace today, the average person may have a hard time selecting appropriate mutual funds for his or her portfolio, determining a good asset mix, and understanding all of the charges associated with buying, owning, and selling mutual funds. Continue reading...

Who is an activist investor?

Who is an activist investor?

Activist investors buy enough voting shares to influence the decisions of a company, sometimes for political or moral reasons, sometimes for purely financial reasons. Activist investors can act alone or in groups, but their goal is to acquire enough shares of a company’s equity to influence the company’s decisions. Activist shareholders may need as little as 10% of shares to sway corporate governance. Continue reading...