Transcript of Welcome! April 04, 2011. Few administrative things… Options Intro! (Very Intro) Stock Profile.
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- Welcome! April 04, 2011
- Slide 2
- Few administrative things Options Intro! (Very Intro) Stock
Profile
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- In the next few weeks, we will begin transition of officers Any
paid member can apply Will update but generally: Submit resume and
application Short interview
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- Finally running at full steam http://ccig.osu.edu
http://ccig.osu.edu
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- 5 Call options Put options
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- 6 A call option gives you the right to buy within a specified
time period at a specified price The owner of the option pays a
cash premium to the option seller in exchange for the right to
buy
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- Buy a ticket to Ohio State football game Three options: Go to
the game Sell it Let it expire University wrote the option and gets
to keep the premium (ticket cost) no matter which alternate I
choose 7
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- 8 A put option gives you the right to sell within a specified
time period at a specified price It is not necessary to own the
asset before acquiring the right to sell it
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- 9 All exchange-traded options have standardized expiration
dates The Saturday following the third Friday of designated months
for most options Investors typically view the third Friday of the
month as the expiration date
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- 10 The striking price of an option is the predetermined
transaction price In multiples of $2.50 (for stocks priced $25.00
or below) or $5.00 (for stocks priced higher than $25.00) There is
usually at least one striking price above and one below the current
stock price
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- 11 Puts and calls are based on 100 shares of the underlying
security The underlying security is the security that the option
gives you the right to buy or sell It is not possible to buy or
sell odd lots of options
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- The right to BUY the underlying instrument at a certain price
on a specified future date
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- Why? You want to capitalize on an increasing trend in the spot
market (bullish). The trend could be either long-term or
short-term
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- Example: You believe GOOG will rise towards the 500 level in
about a months time. The spot rate is currently 450. You buy a GOOG
Call with a one month expiry and a strike of 450. The price is 10
dollars.
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- Upside: Unlimited, and calculated by: Closing spot price Strike
price - premium = profit
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- Example: You believe GOOG will rise towards the 500 level in
about a months time. The spot rate is currently 450. You buy a GOOG
Call with a one month expiry and a strike of 450. The price is 10
dollars. Upside: Unlimited, and calculated by: Closing spot price
Strike price - premium = profit Ex. 480 - 450 - 10 = 20 dollars
Downside: The premium (10 dollars) which will be lost if the option
is Out-of-The-Money (OTM) at expiry
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- Put Options
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- The right to SELL the underlying instrument at a certain price
on a specified future date
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- Why? You want to capitalize on a decreasing trend in the spot
market (bearish). The trend could be either long-term or
short-term
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- Example: You believe GOOG will fall towards the 400 level in
about a months time. The spot rate is currently 450. You buy a GOOG
Put with a one month expiry and a strike of 450. The price is 10
dollars.
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- Example: You believe GOOG will fall towards the 400 level in
about a months time. The spot rate is currently 450. You buy GOOG
Put with a one month expiry and a strike of 450. The price is 10
dollars. Upside: Unlimited, and calculated by: Strike price closing
spot price - premium = profit Ex. 450 - 400 - 10 = 40 dollars
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- Example: You believe GOOG will fall towards the 400 level in
about a months time. The spot rate is currently 450. You buy GOOG
Put with a one month expiry and a strike of 450. The price is 10
dollars. Upside: Unlimited, and calculated by: Strike price closing
spot price - premium = profit Ex. 450 - 400 - 10 = 40 dollars
Downside: The premium (10 dollars) which will be lost if the option
is Out-of-The-Money (OTM) at expiry
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- International Business Machine
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- Stock Ticker IBM Price: $164.25 Market Cap: ~200 Billion P/E:
14
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- IBM has transitioned itself Very much used to be hardware, iron
horse company More of a solutions-oriented company, whether it
software, hardware or consulting.
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- Stock has risen 12% in 2011 28% in the past 12 months. Big
boost from Asia During fiscal 2010, IBM generated 23% of total
sales from the Asia Pacific region. Roughly 42% of sales came from
the Americas and 32% came from Europe, the Middle East and Africa.
Sales, net income and earnings per share gained 4.3%, 10% and 16%,
respectively, during the past 12 months. Fourth-quarter net income
stretched 9.2% to $5.3 billion and EPS climbed 16% to $4.18,
Boosted by a smaller float
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- Gross margin steady at 54% Operating margin up from 23% to 24%.
$12 billion of cash and $29 billion of debt at the quarter's
conclusion, for a quick ratio of 1 and a debt-to-equity ratio of
1.2. Asia Pacific quarterly revenue extended 14% to $6.6 billion,
outpacing all other regions. Bottom line: make strides in high
margin services and the company is being run like a well oiled
machine (no pun intended)
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- Personal Experience.. TA?
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- What are your questions?
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