New answers tagged shares
1
Stock prices are not tied to current performance, they are tied to future performance that may be tied to current (and future) market conditions. So if the market thinks that a company will perform poorly going forward based on the current environment, then it's likely that it's stock price will suffer.
The financial (i.e. ignoring voting rights) value of a ...
-1
Consider an individual company. Or, a portfolio of companies.
At discount rate of 10%, and growth rate of 4%, one dollar of yearly income is worth 18.3 USD. (If you want the formula, open GNU Octave or Matlab and type sum(1.04.^[0:1000] ./ 1.10.^[0:1000]) into it).
Now, if this year, income drops by 20%, instead of getting 1 USD, you get 0.8 USD, the ...
0
AFAIC, the only reason that an investor should sell a standalone short put is to acquire shares at a better price. OK, check that box ---> you want more shares at a lower price.
What I'm considering is selling PUTs at 350, expiry in 150 days, or even 300 days. From what I've read they're most likely to expire as whoever bought them would just sell them ...
0
Think about what happens if TSLA is at 250 in 150 days. Or 200. Or 150. You instantly lose $100/share. Or $150. Or $200. Yes, that can happen if you buy the stock now, but you have control of how much you can lose (by selling before you lose too much). With a short put, your only option is to buy-to-close, which puts you at the mercy of the option market.
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0
The investor thinks that stock will drop to 300 but would be willing to buy at 300 so the investor wants to begin writing put options for the option-premium income ?
That's a very good plan except for the possibility that a company with a large amount of debt could go bankrupt if a severe recession were to occur. Then one technique for taking a position in ...
7
The stock price you see listed is the price of the last trade executed on the stock exchange. It doesn't mean that you will actually be able to buy or sell the stock at that price.
A stock market is a place which brings buyers and sellers together. People place buy offer "I want to buy X of this stock for at most $Y" and sell offers "I want to sell X of ...
3
The market is an auction. Volume moves price
If the current price is $50.00 by $50.05 with a size of 40x50, it will take the purchase of 5,000 shares to take out all of the shares offered at the ask price of $50.05. Those 5,000 buy side shares could be 50 people buying 100 shares each or one person buying 5,000 shares. The number of buyers is irrelevant.
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1
In addition to what has been explained by others, you should understand the concept (at least in the US) of Market Makers.
A market maker is a trader whose primary job is to create liquidity in the market by buying and selling securities. Market makers are always ready to buy and sell within the market at a publicly-quoted price. Usually, a market maker ...
6
It seems you have a misconception about share prices - they are not 'made' by someone or something. They are the direct result of a buyer and seller agreeing on a price.
So if nobody wants to buy - for whatever valid or other reason - no sales happen, and therefore there is no new 'share price'. The reported 'last sale price' would simply continue to be ...
3
What if investors think that a company is doing so badly that there just aren't any buyers at any price? In this case, will share price plummet any amount necessary until a match is achieved?
There will be quite a few illiquid stocks that don't trade... There can be many reasons and not just the company is not doing well. If a company is not doing well, the ...
3
This applies to trading in the USA and I would guess that it's similar in the UK:
The market is an auction and there will always be someones willing to transact at some price as long as the company is eligible for trading. The proof of that is that we have penny stocks that trade in the sub one cent range.
Stocks are suspended from trading by the SEC (...
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