Many a times, stock price gap up or down following the quarterly earnings report but often, the direction of the movement can be unpredictable. For instance, a sell off can occur even though the earnings report is good if investors had expected great results If you are very bullish on a particular stock for the long term and is looking to purchase the stock but feels that it is slightly overvalued at the moment, then you may want to consider writing put options on the stock as a means to acquire it at a discount Also known as digital options, binary options belong to a special class of exotic options in which the option trader speculate purely on the direction of the underlying within a relatively short period of time Cash dividends issued by stocks have big impact on their option prices.
This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date As an alternative to writing covered calls, one can enter a bull call spread for a similar profit potential but with significantly less capital requirement. In place of holding the underlying stock in the covered call strategy, the alternative Some stocks pay generous dividends every quarter.
You qualify for the dividend if you are holding on the shares before the ex-dividend date To achieve higher returns in the stock market, besides doing more homework on the companies you wish to buy, it is often necessary to take on higher risk. A most common way to do that is to buy stocks on margin It has been a source of controversy and criticism ever since.
Shorting East India Company stocks in the 18th century by the London-based banking house Neal, James, Fordyce and Down led to a major crisis, resulting in the collapse of the vast majority of private banks in Scotland and a huge liquidity crisis. Short selling is also responsible for magnifying the Dutch Tulip Crisis. Short sellers were blamed for the crash of and this led to the implementation of laws governing short selling.
In a fund that bought some stocks while selling others short hedged some of the market risk — this was the beginning of hedge funds. It is a contract between two parties to exchange some specified asset at a specified price by in the case of an American option or on in the case of a European option a specified date. The buyer of the put option has the right, but not the obligation, to sell the asset at this specified price and the seller has to buy this asset, if the buyer sells it.
If the spot price at the specified future date is significantly lower than the strike of the option, buyers of the options make a profit — they have the right to sell the asset at a price higher than the market price. We hope you enjoyed reading the above definition of gold short selling. If you'd like to learn more about gold in particular about its most recent price swings and their implications is it a good time to short gold? It's free and if you don't like it, you can easily unsubscribe.
Sign up today. A derivative that provides you with leverage during downtrends, while limiting your risk. The catch is that you have to be right on time. Short-term trades are trades that terminate within a short period from their inception. They can be very profitable, but they are also very risky. Trend is the general direction — up, down or sideways — in which the price of an asset is heading for a prolonged period of time.
Sign up for free. Discover what market correlations are, and how you can use them to your advantage. Within definitions. But, the margin account of his hedging short position undoes a part of his profits. So, those commercial hedgers 'adjust' their total net short position according to the price outlook.
When the price sits near a bottom, they have the lowest net short position, simply because the downside price moving room is small. When the price sits near a top, they have the highest net short position, because the downside price moving room is high. So, they throttle their amount short positions.
Every short position requires a long position, you can't have a contract with one side, every seller needs a buyer. So, on the demand side of the futures market, there are people betting on higher prices and lower prices, but mostly, they bet on higher prices, which is the reason that the silver futures market demand side is always net long, and consequentially, the supply side is net short.
Imagine such a demand side speculator wants to grab the profit, by dumping the position where his margin account accumulated dollars from during a price uptrend. It's impossible for JP Morgan to keep the short position, because the counterparty on the long side doesnt exist anymore.
So all that hyped talk about JP Morgan covering shorts, being in trouble, commercial failure, is just trying to make people think the price will breakout, in order to make them pay higher prices after which the hype-makers then dump for profit. All it is, is closing the short contract sides when the speculators on the demand side decide to grab the by the price uptrend realized profit on their margin accounts.
If they didnt grab it, and the silver price dropped, they would start to give again away the profits they accumulated in the uptrend. Likely the same that blame JP Morgan and hype about 'shorting zilver', are the very same long siders that grab the profit, with as incentive to shift the 'blame', focus to others. Of course, a system bank like JP Morgan is a crap institution, one of the core nodes that the govts has in its monetary system of theft. But that doesnt mean that what they do on the silver market is different than any of these markets.
Usually they have the best insight in the supply, bullion banks like JP Morgan often finance mining projects and other silver market nodes, and that insight give them a better trading position than the X average joes that hunt the free bucks, causing the latter to lose. Pirocco , Oct 19, JoelAG , Oct 19, Pirocco , Oct 20, You must log in or sign up to reply here. Show Ignored Content. Share This Page Tweet. Your name or email address: Do you already have an account?
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