vania-janet/multiturn-rag-retrieval-data huggingface dataset:
You pay a limited premium to buy it, and at expiration you essentially make the full amount that the stock has declined below the strike price, less what you paid for the option. That last part is important - because you pay a premium for the option, if it's down just a little, you might still lose some or all of what you paid for it, which is what you give up in exchange for it limiting your maximum loss. But wait, you might say. When I buy an option, I can lose all of my money, cant I? Yes, you can. Here's the key to understanding the way options limit risk as compared to the corresponding way to get ""normal"" exposure through getting long, or in your case, short, the stock: If you use the number of options that represent the number of shares you would have bought, you will have much, much less total money at risk. If you spend the same ""bag 'o cash"" on options as you would have spent on stock, you will have exposure to way more shares, and have the same amount of money at risk as if you bought the stock, but will be much more likely to lose it. The first way limits the total money at risk for a similar level of exposure; the second way gets you exposure to a much larger amount of the stock for the same money, increasing your risk. So the best answer to your described need is already in the question: Buy a put. I'd probably look at GLD to buy it on, simply because it's generally a little more liquid than IAU. And if you're new to options, consider the following: ""Paper trade"" first. Either just keep track of fake buys and sells on a spreadsheet, or use one of the many online services where you can track investments - they don't know or care if they're real or not. Check out www.888options.com. They are an excellent learning resource that isn't trying to sell you anything - their only reason to exist is to promote options education. If you do put on a trade, don't forget that the most frustrating pitfall with buying options is this: You can be basically right, and still lose some or all of what you invest.
I agree with the other posters that you will need to seek the advice of a tax attorney specializing in corporate taxation. Here is an idea to investigate: Could you sell the company, and thereby turn the profits that are taxed as ordinary income into a long-term capital gain (taxed at 15%, plus state income tax, if any)? You can determine the value of a profitable business using discounted cash flow analysis, even if you expect that the revenue stream will dry up due to product obsolescence or expiry of licensing agreements.  To avoid the capital gains taxes (especially if you live in a high-tax state like California), you could also transfer the stock to a Charitable Remainder Trust. The CRT then sells the shares to the third-party acquirer, invests the proceeds and pays you annual distributions (similar to an annuity). The flip side of a sale is that now the acquiring party will be stuck with the taxes payable on your company's profits (while being forced to amortize the purchase price over multiple years -- 15, if I recall correctly), which will factor into the valuation. However, it is likely that the acquirer has better ways to mitigate the tax impact (e.g. the acquirer is a company currently operating at a loss, and therefore can cancel out the tax liabilities from your company's profits).  One final caveat: Don't let the tax tail wag the business dog. In other words, focus your energies on extracting the maximum value from your company, rather than trying to find convoluted tax saving strategies. You might find that making an extra dollar in profits is easier than saving fifty cents in taxes.
When you buy shares, you are literally buying a share of the company.  You become a part-owner of it. Companies are not required to pay dividends in any given year.  It's up to them to decide each year how much to pay out. The value of the shares goes up and down depending on how much the markets consider the company is worth.  If the company is successful, the price of the shares goes up.  If it's unsuccessful, the price goes down.  You have no control over that.  If the company fails completely and goes bankrupt, then the shares are worthless. Dilution is where the company decides to sell more shares.  If they are being sold at market value, then you haven't really lost anything.  But if they are sold below cost (perhaps as an incentive to certain staff), then the value of the company per share is now less.  So your shares may be worth a bit less than they were.  You would get to vote at the AGM on such schemes.  But unless you own a significant proportion of the shares in the company, your vote will probably make no difference. In practice, you can't protect yourself.  Buying shares is a gamble.  All you can do is decide what to gamble on.
Problems with shorting  1. The price could become even more insanely high.   2. The stock you borrowed could be recalled leaving you sitting on a loss.  3. High borrowing costs.  4. Potentially limited loss potential e.g. when a takeover is announced, or when the company has a windfall, or fraudulently announces phony good news.  Shorting could still be useful as a niche 10% of your portfolio; the risk is limited that way. Also high short interest tend to make me look a bit harder before buying.
"I have heard that investing more money into an investment which has gone down is generally a bad idea*. ""Throwing good money after bad"" so to speak. Is investing more money into a stock, you already have a stake in, which has gone up in price; a good idea? Other things being equal, deciding whether to buy more stocks or shares in a company you're already invested in should be made in the same way you would evaluate any investment decision and -- broadly speaking -- should not be influenced by whether an existing holding has gone up or down in value. For instance, given the current price of the stock, prevailing market conditions, and knowledge about the company, if you think there is a reasonable chance that the price will rise in the time-period you are interested in, then you may want to buy (more) stock. If you think there is a reasonable chance the price will fall, then you probably won't want to buy (more) stock. Note: it may be that the past performance of a company is factored into your decision to buy (e.g was a recent downturn merely a ""blip"", and long-term prospects remain good; or have recent steady rises exhausted the potential for growth for the time being). And while this past performance will have played a part in whether any existing holding went up or down in value, it should only be the past performance -- not whether or not you've gained or lost money -- that affects the new decision. For instance: let us suppose (for reasons that seemed valid at the time) you bought your original holding at £10/share, the price has dropped to £2/share, but you (now) believe both prices were/are ""wrong"" and that the ""true price"" should be around £5/share. If you feel there is a good chance of this being achieved then buying shares at £2, anticipating they'll rally to £5, may be sound. But you should be doing this because you think the price will rise to £5, and not because it will offset the loses in your original holding. (You may also want to take stock and evaluate why you thought it a good idea to buy at £10...
It's great that you have gotten the itch to learn about the stock market. There are a couple of fundamentals to understand first though. Company A has strong, growing, net earnings and minimal debt, it's trading for $100 per share. Company B has good revenue but high costs of goods and total liabilities well in excess of total assets, it's trading for $0.10 per share. There is no benefit to getting 10,000 shares or 10 shares for your $1,000. Your goal is to invest in companies that have valuable products and services run by competent management teams. Sure, the number of shares you own will dictate what percentage of the company you own, and in a number of cases, your voting power. But even a penny stock will have a market capitalization of several million dollars so voting power isn't really a concern for your $1,000 investment. There is a lot more in the three basic financial statements (Income Statement, Balance Sheet, Statement of Cash Flows) than revenue. Seasoned accountants can have a hard time parsing out where money is coming from and where it's going. In general there are obvious red flags, like a fast declining cash balance against a fast growing liabilities balance or expenses exceeding revenue. While some of these things are common among new and high growth companies, it's not the place for a new investor with a small bankroll. A micro-cap company (penny stocks are in this group) will receive rounds of financing via issuing preferred convertible shares which may include options on more shares. For a company worth $20mm a $5mm financing round can materially change the finances of a company, and will likely dilute your holdings in common stock. Small growth companies need new financing frequently to fund their growth strategies. Revenue went up, great... why? Did you open another store? Did you open another sales office? Did the revenue increase this quarter based on substantially the same operation that existed last quarter or have you increased the capacity of your operation? If you increased the capacity of your operation what was the cost of the increase and did revenue increase as expected? Can you expect revenue to continue to grow at this rate or was it a one time windfall from an unusual order?
This is allowed somewhat infrequently.  You can often purchase stocks through DRIPs which might have little or no commission.  For example Duke Energy (DUK) runs their plan internally, so you are buying from them directly.  There is no setup fee, or reinvestment fee.  There is a fee to sell. Other companies might have someone else manage the DRIP but might subsidize some transaction costs giving you low cost to invest.  Often DRIPs charge relatively large amounts to sell and they are not very nimble if trading is what you are after. You can also go to work for a company, and often they allow you to buy stock from them at a discount (around 15% discount is common). You can use a discount broker as well.  TradeKing, which is not the lowest cost broker, allows buys and sells at 4.95 per trade.  If trading 100 shares that is similar in cost to the DUK DRIP.
An alternative scenario when the company shares are liquidly traded is that the company simply plans to buy back shares from the market in order to give employees their shares when options are exercised. In this case, the company needs the cash on hand, or cash flow to take money from, to buy those shares at current prices. Anyway, in either case, there is no dilution happening WHEN the options get exercised. Any dilution happened before or at the time the options were created. Meaning, the total number of shares in the company was already pre-set at an earlier time. As a result, the fact that the options exist in themselves will not slow price changes on the stock. However, price changes will be impacted by the total float of shares in the company, or the impact to cash flow if the company has to buy shares to redeem its option commitments. This is almost the same thing you're asking about, but it is technically different as to timing. If this is the case, can this be factored into any option pricing models like black-scholes? You're including the effect just by considering the total float of shares and net profits from cash flow when doing your modelling."
How to 'use' your shares: If you own common shares in a company (as opposed to a fund) then you have the right (but not the obligation) to excersize one vote per share on questions put before the shareholders. Usually, this occurs once a year. Usually these questions regard approval of auditors. Sometimes they involve officers such as directors on the board. You will be mailed a form to fill out and mail back in.  Preferred shares usually are not voting shares,but common shares always are.  By the way, I do not recommend owning shares in companies. I recommend funds instead,either ETFs or mutual funds. Owning shares in companies puts you at risk of a failure of that company. Owning funds spreads that risk around,thus reducing your exposure.  There are, really, two purposes for owning shares 1) Owning shares gives you the right to declared dividends 2) Owning shares allows you to sell those shares at some time in the future. (Hopefully at a profit)  One obscure thing you can do with owned shares is to 'write' (sell) covered put options. But options are not something that you need to concern yourself with at this point.  You may find it useful to sign up for a free daily email from www.investorwords.com.
Obviously, you should not buy stock when the option is to pay down your debt. However, your question is different. Should you sell to reduce debt. That really depends on your personal situation. If you were planning to sell the stock anyway, go ahead and reduce your loans. Check out how the stock is doing and what the perspectives are. If the stock looks like it's going down, sell... Do you have savings? Unless you do, I should advise to sell the stock at any rate. If you do have savings, are they earning you more (in percentage) than your loans? If they are, keep them...
An advantage is that the bid/ask spread is smaller for the S&P. You would pay less for the protection. Also, the S&P puts are cash settled (meaning you get money put in your account on the business day after expiration day). A disadvantage is that the puts do not linearly go up as the market drops. (Delta hedging is a big deal in and of itself.) Another disadvantage is that they are wasting assets (see the Married puts section, previous). While the S&P puts can be used to maintain your market portfolio in the midst of a correction, you could purchase more puts than needed. If you had correctly timed the market, then your portfolio with puts would increase. (Your mileage may vary; some have predicted an imminent market crash way too often.) Collars involve selling out-of-the-money calls and using the premiums to buy out-of-the-money puts. There are many varieties of collars, but the most straightforward is to sell 1 call and buy 1 put for every 100 shares. (This can also be done for index puts and calls.) This has the effect of simultaneously: You get your insurance for almost free. But again, it is protecting your portfolio. As the name implies, you make money when the market goes bearish. Bear put spreads involve buying puts at a close strike price and selling an equal number of puts at a lower strike price than the first. You have a defined maximum loss (the premium you paid for the higher put minus the premium you received for the lower put). You have a defined maximum gain (the difference between strikes minus the defined maximum loss). Buy S&P 500 index puts. If you buy deep out-of-the-money puts, it won't cost much, but you have little probability of it paying off. But if they go in-the-money, there could be a sizable payoff. This is similar to putting one chip on red 18 on the roulette wheel. But rather than paying off 35:1, it is a variable payoff. If you're $1 in the money, you just get $100.
Companies do both quite often.  They have opposite effects on the share price, but not on the total value to the shareholders.  Doing both causes value to shareholders to rise (ie, any un-bought back shares now own a larger percentage of the company and are worth more) and drops the per-share price (so it is easier to buy a share of the stock).  To some that's irrelevant, but some might want a share of an otherwise-expensive stock without paying $700 for it. As a specific example of this, Apple (APPL) split its stock in 2014 and also continued a significant buyback program: Apple announces $17B repurchase program, Oct 2014 Apple stock splits 7-to-1 in June 2014. This led to their stock in total being worth more, but costing substantially less per share.
Par value SHOULD mean that they are offering you the options with a strike price (exercise price) that is equivalent to the current valuation of the company.  Note I said SHOULD. As long as you can confirm with HR (or if you're small enough, just ask the CEO) that your grant price is the same as the current valuation of the company's shares, then things are straight.  And while it's very unlikely that someone is doing Something Sneaky, it's always possible.  As a reference, my recent grant letter said:  [Company] (the “Company”) hereby grants you the following Option to   purchase shares of its common stock (“Shares”). The terms and   conditions of this Option are set forth in the Stock Option Agreement   and the [Company] 2013 Stock Incentive Plan (the “Plan”), both of   which are attached to and made a part of this document.
Depends on the structure of the company and what shares are outstanding.  If the pink sheet stock has no voting power then buying all that stock doesn't get you any control at all.  On the other hand, if the outstanding shares only represent 20% of the company's overall shares, then buying all the shares isn't likely enough to have a controlling interest. Thus, you'll have to dig into the details.  If you want an example of where I'd have my doubts, look at Nestle's stock which has the ticker of NSRGY.  There can be companies that are structured with stock on multiple exchanges that can also be a challenge at times.  There is also something to be said if you own enough stock in a company that this has to be disclosed to the SEC when you buy more.
No.  In good years, the income seems free. In a down year, particularly a bad one, the investor will be subject to large losses that will prove the strategy a bad one.  On the other hand, one often hears of the strategy of selling puts on stock you would like to own. If the stock rises, you keep the premium, if it drops, you own it at a bit of a discount from that starting point.
I think of these things in terms of risk.  Investing in individual stocks is risky, and investing in brand new individual stocks is riskier still. However, the payoff can be quite high.  The fact that you work at the company increases your exposure. If the company goes under, then not only have you lost your investment, but you've lost your job and income as well.  It really depends on how much of your total portfolio this investment represents. Consider the following: If you can say yes to all or most of these, then a small investment in your company is fine. If you end up losing your investment, you'll still be okay.  I think it can help a company when the employees have a little skin in the game. I hope it pays out big for you.
I don't think you are reading the stock chart right.  ORCL has a beta of 1.12 which means it has more volatility than the market as a whole.  See image below for a fairly wild stock chart for a year.   I would not truly consider ESPP participation investing, unless you intend to buy and hold the stock.  If you intend to sell the stock soon after you are able, it is more speculation.  ESPP's are okay based upon the terms.  If the stock was a constant price, and you could sell right away, then an ESPP plan would be easy money.  Often, employees are often given a 15% discount to purchase the stock.  If you can sell it before any price drop, then you are guaranteed to make 15% on the money invested minus any commissions.   Some employers make ESPP participants hold the stock for a year.  This makes such a plan less of a value.  The reasons are the stock can drop in price during that time, you could need the money, or (in the best case) your money is tied up longer making the ROI less. The reasons people invest in stock are varied and is far to much to discuss in a single post.  Some of your colleagues are using the ESPP solely to earn the discount in their money.
"Think about the implications if the world worked as your question implies that it ""should"":  A $15 share of stock would return you (at least) $15 after 3 months, plus another $15 after 6 months, plus another after 9 and 12 months.  This would have returned to you $60 over the year that you owned it (plus you still own the share).  Only then would the stock be worth buying?  Anything less than $60 would be too little to be worth bothering about for $15? Such a thing would indeed be worth buying, but you won't find golden-egg laying stocks like that on the stock market.  Why?  Because other people would outbid your measly $15 in order to get this $60-a-year producing stock (in fact, they would bid many hundreds of dollars).  Since other people bid more, you can't find such a deal available. (Of course, there are the points others have brought up: the earnings per share are yearly, not quarterly, unless otherwise noted.  The earnings may not be sent to you at all, or only a small part, but you would gain much of their value because the company should be worth about that much more by keeping the earnings.)"
For ESPP, the discount that you get is taxed as ordinary income. Capital gains is taxed at the appropriate rate, which is different based on how long you hold it. So, yes, if the stock is going up,
One such strategy I have heard for those who have this opportunity is to purchase the maximum allowed. When the window to sell opens, sell all of your shares and repurchase the most you can with the amount you gained (or keep an equivalent to avoid another transaction fee). This allows you to buy at a discount, and spread out the risk by investing elsewhere.  This way you are really only exposing yourself to lose money which you wouldn't have had access to without the stock discount.
I'm confused. Are you asking why or telling us that you're bullish? Yes the stock will go up for a merger at a premium, but buying in now only gives you ~0.5% gain if it closes at $21.50. They won't trade over 21.50 unless a competing bid comes in or the bid is increased.
"A key principle of economics is: Sunk costs are irrelevant. You bought the stock at 147 and it has now fallen to 144. That's too bad. This has nothing to do with whether it is wise or foolish to buy shares at 144. The only relevant thing to consider is: Do I expect the stock to go up or down from 144? You have lost $3 per share on the original buy. Buying more shares will not ""reduce your loss"" in any way. Suppose you bought 100 shares at 147. The price then drops to 144. You have lost $3 per share, or $300 total. You buy another 50 more shares at 144. The price stays at 144. So your average purchase price is now (147 x 100 + 144 x 50) / 150 = 146. So I guess you could say that your ""average loss per share"" is now only $2. But it's $2 x 150 shares instead of $3 x 100 shares. You still lost $300. You didn't reduce your loss by a penny. Maybe it made you feel better that you reduced your average loss per share, but this is just an arithmetic game. If you believe that the stock will continue to drop, than buying more shares just means you will lose even more money. Your average loss per share may go down, but you're just multiplying that average by more and more shares. Of course if you believe that the stock is now at an unjustifiably low price and it will likely go back up, then sure, buy. If you buy at 144 and it goes back up to 147, then you'll be making $3 per share on the new shares you purchased. But I repeat, whether or not you buy more shares should have nothing to do with your previous buy. Buy more shares if you think the price will go up from the present price; don't buy more shares if you don't think it will go up. The decision should be exactly the same as if you had never previously bought shares. (I'm assuming here that you are a typical small investor, that you not buying enough shares to have any significant effect on the market, nor that you are in a position to buy enough shares to take control of the company.)"