What is Synthetic Stock?

What is Synthetic Stock?

(This is an excerpt from my book, There is Always an Option, so the prices are not current) I just want to say one word to you, just one word, synthetics Obviously this is play on the famous quote from that fine old movie, The Graduate. The actual word Benjamin is...
When To Expect Early Assignment

When To Expect Early Assignment

Stock options are American style and it is good to know when an option is likely to be exercised ahead of the expiration date Let’s keep in mind that American style options, unlike European style options may be exercised at any moment in their lifetime. As said above,...
Options Are a Wasting Asset

Options Are a Wasting Asset

Options decay as time goes on. They are a wasting asset. This time decay happens whether the market is open or not. 24/7, every day, including weekends and holidays. It also makes perfect sense when you think about it. Time adds value to options. Think of a put as an...
Pricing the Dividend Into the Price of the Option

Pricing the Dividend Into the Price of the Option

Last weeks column on Charts and Dividends was one of my most read ever, with 1000+ reads. So, I thought I’d step back a bit and review how the dividend is priced into and option. Simply put,  dividends make puts more expensive and calls cheaper. The puts get...
The Tao of the Dow

The Tao of the Dow

Today  I want to talk about the Dow Jones Industrial Average (DJIA). With General Electric (GE) being dropped from the DJIA after more than 110 years (and was an original component) I think it is appropriate. Last year the stock lost half its value and is down another...