Eric Berch
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor owns. See: Covered or hedge option strategies.
Net transaction exposure
Offsetting inflows against outflows in a given currency to determine extent of exposure to risk.
Average
An arithmetic mean return of selected stocks intended to represent the behavior of the market or some component of it. One good example is the widely quoted Dow Jones Industrial Average, which adds the current prices of the 30 DJIA stocks, and divides the results by a predetermined number, the divisor.( - Mark Berch)
Ian Berch: Writing puts to acquire stock
Selling a put option at an exercise price that would represent a good investment by an option writer who believes a stock's value will fall, so that the writer cannot lose. If the stock price unexpectedly goes up, the option will not be exercised and the writer is at least ahead the amount of the premium received. If the stock loses value, as expected, the option will be exercised, and the writer has the stock at what he had earlier decided was originally a good buy, and he has the premium income in addition.
Fixed-dollar security
A nonnegotiabledebt security that can be redeemed at some fixed price or according to some schedule of fixed values, e.g., bank deposits and government savings bonds.
Reset bonds
Bonds that allow the initial interest rates to be adjusted on specific dates in order that the bondstrade at the value they had when they were issued. ( Mark Berch )
Pure discount bond
A bond that will make only one payment of principal and interest. Also called a zero-coupon bond or a single-payment bond.
Ian Berch
Normal Distribution
The well known bell shaped curve. According to the Central Limit Theorem, the probability density function of a large number of independent, identically distributed random numbers will approach the normal distribution. In the fractal family of distributions, the normal distribution only exists when alpha equals 2, or the Hurst exponent equals 0.50. Thus, the normal distribution is a special case which in time series analysis is quite rare. See: Alpha, Central Limit Theorem, Fractal Distribution.
Eric Berch: Future investment opportunities
The identification of additional, more valuable, investment opportunities in the future that result from a current opportunity or operation.
Ian Berch: Unamortized premiums on investments
The unexpensed portion of the difference between the price paid for a security and its par value.