What the Hell is a Stock option?

A 'stock option' is a contract between two parties giving the buyer (also known as the 'taker') the right, but not the obligation, to either buy or sell a specific quantity of shares at a pre-agreed price (known as the 'strike price' or 'exercise price') by a certain future 'expiry' date. There are two different types of options that can be traded, known as 'call options' and 'put options'.

For an option contract to be traded there must be both a 'buyer' and a 'seller' involved in the transaction. The buyer pays an upfront amount; known as the 'premium', to the option seller (the seller is also often referred to as the 'writer' of the option contract). In the Australian market, each option contract typically covers 1,000 of the underlying shares and the premium is expressed as a specific number of cents per share.

Buying Call Options:

A Buyer of Calls aims to profit by a rising stock price, as they have locked in a "purchase" price at which they can buy the underlying shares at whenever they wish up until the expiry date.

Selling Call Options:
A Seller of Calls is committed to selling the underlying shares at a pre-agreed price, no matter how high they might get. In exchange for this potential obligation, they receive an upfront premium.

Buying Put Options:
A Buyer of Puts can profit by a decreasing stock price, as they have locked in a "selling" price at which they can sell the underlying shares up until the expiry date.

Selling Put Options:
A Seller of Puts is committed to buying shares at a pre-agreed price, no matter how low they might get. In exchange for this obligation, they receive an upfront premium.

OK now for some examples to show you a few basic ways of buying and selling put and call options:

So let's say you've found a share that you think will increase in price and think you can make a profit if you are right. Rather than buy the actual shares, you might decide to purchase some Call Options. This will enable you to spend much less capital but can still get the benefit from the rise in the share price.

Maybe you own 1,000 shares in a company and the share price appears to be flat and going nowhere, so you decide to sell a Call Option against those shares. This will earn you a premium income. This way, even if the shares are right where they started when the Expiry Date comes along, you've made a small amount of money.

Your share has gone though a recent rise and the share price seems to have flattened out and you are now concerned that your share price might fall. You decide to purchase some Put Options, knowing that if the shares do fall, you've locked in a selling price and now have a form of "insurance" on your shares to protect you from losing too much.

There's a share you'd be happy to own, but only if it was at a lower in price, so you decide to sell some Put Options at a Strike Price just below the current market price and you'll receive a premium upfront. When the Expiry Date comes along, if the share is above the Strike Price you won't have to buy the stock and will be able to retain the premium. If the share is under your Strike Price, you'll be Exercised and hence forced to buy the shares at the pre-agreed price.

Here a list of some important terms which you will find are regularly used when referring to options:

All Ordinaries Index:
The main Australian stock market price index which tracks the change in the Total market value of a range of stocks.

Ask/Ask Price:
The price a trader or market maker is willing to accept for selling a stock or option. Also referred to as the offer price.

When an option holder exercises the contract an option writer is selected to fulfill the obligation. The option writer is required to sell (in the case of a call) or purchase (in the case of a put) the underlying stock at the specified strike price.

At-Market or At-the-Market:
An order to buy or sell a stock or option at the current market price. Also referred to as a Market Order.

At-the-Money (ATM): An option whose strike price is equal to (or close to) the current price of the underlying stock.

At-the-Opening Order:
A market order that requires it to be executed at the opening of the market or of the trading of the security or else it is cancelled.

ATR Stop:
A stop set to activate if price drops a multiple of its Average True Range.

Australian Stock Exchange (ASX): Six Australian trading floors are linked through the Stock Exchange Automated Trading Systems (SEATS). Administrative headquarters are in Sydney.

Avoidable Risk: Risk items that can be eliminated through management. Bearish Someone is said to be a bear or be bearish if they think a stock or the market is going to trend down over a particular time frame. Also a negative or pessimistic outlook.

Bear Market: A declining stock market, usually over a prolonged period. Also, a market in which prices of a certain group of stocks are falling or are expected to fall.

Bear (or Bearish) Spread:
One of a variety of strategies involving two or more options (or options combined with a position in the underlying stock) that will profit from a fall in the price of the underlying stock.

Bear Call Spread:
The simultaneous writing of one call option with a lower strike price and the purchase of another call option with a higher strike price.

Bear Put Spread:
The simultaneous purchase of one put option with a higher strike price and the writing of another put option with a lower strike price.

Bid/Ask Quotation:
The latest bid and ask prices for a stock or option contract.

Bid/Ask Spread:
The difference in price between the latest available bid and ask quotations.

Bid Price:
The highest price a potential buyer or market maker is willing to pay for a particular stock or option.

Blue Chip Stock:
A term derived from poker where blue chips held the most value. Blue chips in the stock market are those stocks that have the most market capitalization.

An individual or firm who is paid a commission for executing stock market orders on behalf of their customers. A broker at a brokerage firm deals directly with customers. A floor broker on the trading floor of an exchange actually executes someone else's trading orders.

The commission brokers charge for executing stock market orders. Based on either a schedule of rates or a percentage basis.

Someone is said to be a bull or be bullish if they think a stock or the market is going to trend up over a particular time frame. Also a positive or optimistic outlook.

Bull Market:
A rising stock market, usually over a prolonged period. Also, a market in which prices of a certain group of stocks are rising or are expected to rise.

Bull (or Bullish) Spread:
One of a variety of strategies involving two or more options (or options combined with an underlying stock position) that will profit from a rise in the price of the underlying stock.

Bull Call Spread:
The simultaneous purchase of one call option with a lower strike price and the writing of another call option with a higher strike price.

Bull Put Spread:
The simultaneous writing of one put option with a higher strike price and the purchase of another put option with a lower strike price.

If you purchase an option contract, regardless of whether you are opening or closing a position, you are a buyer.

A covered call position in which stock is purchased and an equivalent number of calls written at the same time. This position may be transacted as a spread order, with both sides (buying stock and writing calls) being executed simultaneously. Refer also Covered Call.

Call Option:
A contract that gives the holder of the option the right, but not the obligation, to buy a certain quantity of shares of an underlying stock from the seller or writer of the option at a specific price (strike price) up to a specified date(expiration). For the writer of a call option, the contract represents an obligation to sell the underlying stock if the option is assigned.

A call or put option issued by the OCC.

Contract Size:
The amount of the underlying stock covered by the options contract. One stock option contract consists of 100 shares (USA) or 1000 (Australia and UK) ? unless adjusted for a special circumstance like a stock split or a stock dividend.

To close out an open position. This term is used most frequently to describe the purchase of an option or stock to close out an existing short position.

Covered Call:
The selling or writing of a call option while holding the underlying stock. By receiving a premium, the writer seeks to gain additional return on the underlying stock or gain some element of protection from a decline in the value of that underlying stock.

Covered Cash-Secured Put:
An option strategy in which a put option is written against a sufficient amount of cash (or T-bills) to pay for the stock purchase if the short option is assigned.

Covered Combination:
An option strategy in which a call and a put with the same expiration, but different strike prices, are written against the underlying stock. In reality, this is not a fully covered strategy because assignment on the short put would require purchase of additional stock.

Covered Option:
An open short option position that is fully offset by a corresponding stock or option position. That is, a covered call could be offset by long stock or a long call, while a covered put could be offset by a long put or a short stock position. This insures that if the owner of the option exercises, the writer of the option will not have a problem fulfilling the delivery requirements.

Credit spread:
A spread strategy that increases the account's cash balance when it is established. A bull spread with puts and a bear spread with calls are examples of credit spreads.

Debit Spread:
An option spread strategy that decreases the account's cash balance when it is established. A bull spread with calls and a bear spread with puts are examples of debit spreads.

A term used to describe how the theoretical value of an option erodes or reduces with the passage of time. Time decay is specifically quantified by theta.

Diagonal Spread:
A strategy involving the simultaneous purchase and writing of two options of the same type that have different strike prices and different expiration dates.

The potential for prices to move down. Also, the potential risk one takes with directional trading.

Exchange Traded Options (ETOs):
Options issued by stock exchanges, not companies. Derived from stocks.

To exercise an option contract by buying (in the case of a call) or selling (in the case of a put) the underlying stock at the Strike Price.

Exercise Price:
The price at which you may buy the underlying stock, if you hold a call, or sell the underlying stock, if you hold a put. Also referred to as the strike price.

Last day on which an option can be traded. The date after which an option is no longer valid and you can no longer exercise it.

Extrinsic Value:
The price of an option less its intrinsic value. Same as time value.

In-the-Money (ITM):
If you were to exercise an option and it would generate a profit, it is known as being in-the-money. In other words it has intrinsic value. A call option is ITM if the strike price is less than the current price of the underlying stock. Puts are ITM when the strike price is above the current stock price.

Intrinsic Value:
The value of an option if it were to expire immediately. OTM and ATM options have no intrinsic value. For ITM options, the intrinsic value is the difference between the strike price and the current stock price.

Using a smaller amount of money to control an investment of greater value. For example, options provide greater leverage than shares.

Liquidity / Liquid Market:
A trading environment characterized by high trading volume, a narrow spread between the bid and ask prices, and the ability to trade larger sized orders without significant price changes. Liquidity in stocks is measured by trading volume and in options is measured by what is known as open interest.

When you purchase stock through your broker you can do so using cash or margin. Most brokers offer a margin facility where you only have to put up a portion of the cash required (typically 50%). The balance of the funds are borrowed from the broker.

Margin Account:
A traders account in which a brokerage firm lends the customer part of the purchase price of securities.

Margin Call:
If the price of stock that a trader has bought falls below a set proportion of the initial cash investment (for example 75%) they will receive a margin call. The trader is then required to either deposit additional funds into their account or sell some shares to cover the shortfall.

Margin Requirement:
The minimum equity required to support a position where margin is used.

Market Depth:
A summary of current bids and ask prices on a particular stock or option. An indication of liquidity.

An exchange member on the trading floor who buys and sells stocks or options for his or her own account and who has the responsibility of making bids and offers and maintaining a fair and orderly market.

Money Management:
Strategies used to ensure a trader's survival and profitability. Key elements are (a) capital preservation; (b) cutting losses; and (c) taking profits.

Naked Call:
The writer of the option does not hold the shares of the underlying stock represented by the option.

Naked Option:
A short option position that is not fully covered if notification of assignment is received.

Naked Put:
Writer of a put option not short the underlying stock. Out-of-the-Money (OTM) An option whose exercise price has no intrinsic value is know as out-of-the money. A call option is OTM if its strike price is above the current stock price. Puts are OTM when the strike price is below the stock price.

Paper Trading:
Simulated trading but without putting money into the market.

Premium: Price a buyer pays to an option writer for granting an option contract.

Rolling: A trading action in which the trader simultaneously closes an open option position and creates a new option position at a different strike price, different expiration, or both. Variations of this include rolling up, rolling down, rolling out and diagonal rolling.

One unit of ownership of stock.

An options strategy where you hold two or more simultaneous positions. Also refer to Bid-Ask Spread.

Spread Rolls:
Using a spread order to bridge the closing of one position and the establishment of a new one.

Units of ownership of public companies.

Time Decay:
The decline in value of an option as the expiration date approaches.

Time Spread:
An option strategy which involves the purchase of a longer-term option (call or put) and the writing of an equal number of nearer-term options of the same type and strike price. Also known as a calendar or horizontal spread.

Unavoidable Risk:
Risk items that cannot be eliminated but can still be managed.

This is just an introduction to world of exchanged traded options and I hope this may have sparked an interest inside you to explore the world further.

Author Raymond Heye has been trading options and found all kinds of secrets that he is willing to share with others though several articles he has written To learn more, visit: http://www.ourmoneyfarm.com

In The News:

I would always recommend mutual funds over individual stocks: Anand Rathi  LivemintThe effort needed to manage individual stocks is much higher than the effort required for mutual funds.Anand Rathi talks about the ongoing economic slowdown ...
Beat the slowdown by investing smartly  Economic TimesBy Rishabh Parakh The economic slowdown and a volatile stock market are making a lot of investors nervous. Many mutual funds investors are wondering ...
What India’s top three mutual funds bought and sold last month  LivemintInflows into Indian equity mutual funds rose for the fourth straight month in August even as the nation's stocks suffered their worst three-month period since 2016.
Mutual funds: What should you do with underperforming mid-cap, small-cap funds?  Business TodayWhile mid and small-cap stocks respond faster to different economic cycles due to their smaller size, similar tendency is reflected in stocks of these companies.
Mutual fund investors riding out market volatility through smart moves  LivemintMumbai: Retail flows into equity mutual funds have ebbed and flowed with the broad moves in the markets. Flows rose when the markets did well and fell when ...
Actively or passively managed mutual funds: Which should you invest in?  Economic TimesAn ET Wealth study finds that most actively managed equity schemes have beaten their benchmarks.
Top 17 Nifty stocks in which MF schemes have over 2% exposure; should you buy?  Moneycontrol.comMutual fund schemes witnessed a steady inflow in August even as the broader market sentiment remained sombre amid concerns over the macro-environment ...
Should you invest in small cap mutual funds now?  Economic TimesMany wealth advisors believe that investors could go for a staggered investment in small cap mutual funds.
Top 10 mutual fund picks that withstood market mayhem to cushion fall in returns  Economic TimesWhen 80 per cent of the stocks in the domestic market have seen wealth erosion in the ongoing selloff, even the seasoned money manager has not remained ...
Why you should invest in multi cap mutual funds  Economic TimesMany advisors are recommending multi cap funds in the current environment to investors. This scheme which bundles large-, mid- and small cap stocks is often ...
Mutual fund managers say tough times ahead, but ask investors to stay the course  Economic TimesA deluge of negative news flow has severely impaired the sentiment in the stock market.
Essel Group gets more time from NBFCs, mutual funds to repay debt  Economic TimesNEW DELHI: Subhash Chandra-led Essel Group has got additional time from mutual funds and non-banking financial companies (NBFC) to meet repayment ...
If you are wondering which stocks to buy, top fund house offers cues  Economic TimesHDFC Asset Management, India's largest money manager by assets, was busy buying select banks, PSU and infrastructure stocks all through August, even as ...
Is time to say goodbye to small cap mutual funds?  Economic TimesAs per Sebi re-categorisation norms, small cap mutual funds are mandated to invest at least 65 per cent of their corpus in small cap stocks.
What mutual fund managers are doing in the current market?  Economic TimesThese are trying times for the mutual fund managers. A bleak economic scenario coupled with countess stark data points have severely impaired the sentiment ...
Best small and mid cap mutual fund managers 2019  Economic TimesHere are the top 5 fund managers in the small and mid cap category who have created the most wealth for investors.
Top 5 funds, managing Rs 12.53 lakh crore, shopped for these stocks in August  Moneycontrol.comInox Fluorochemicals, Sterling and Willson, Somany Home Innovation, JSW Holdings and Adani Enterprises among the top picks.
India equity mutual fund fees among most expensive in the world  Economic TimesBy Nupur Acharya India still ranks among the most expensive countries in the world in terms of fees charged on equity and hybrid mutual funds, even after ...
Waiting for market revival? SIPs in these 12 stocks can deliver big  Economic TimesSIP in equities can help reduce the risk of timing the market by averaging out benefits.
Mutual Fund Update: Stocks sold by fund managers in July 2019  Dalal Street Investment JournalIn our last update we listed the top 5 stocks that attracted fund managers in the month of July 2019. Now let's have a look at top 5 stocks that witnessed a lot of ...
Sebi sets up panel to suggest norms for social stock exchanges  Economic TimesMumbai: The Securities and Exchange Board of India (Sebi) said on Thursday it has constituted a working group on Social Stock Exchanges (SSE) under the ...
Hidden tech gems to invest in now, picked by a mutual-fund manager with a great track record  MarketWatchYou don't have to own the big tech stocks to make decent profits. Here are six lesser-known gems that are ready to take advantage of coming trends in tech.
Index Funds Are the New Kings of Wall Street  The Wall Street JournalMoney managers that mimic the stock market just became the new titans of the fund-management world. Funds that track broad U.S. equity indexes hit $4.27 ...
Which cap fits best? Mutual Funds  India TodayEquity markets have, over the past two months, seen significant correction. Their bellwether index, the S&P BSE Sensex, has corrected around 10 per cent (as ...
Investing in mutual fund becomes cheaper on Sebi measures  Economic TimesInvesting in mutual funds has become less expensive in India due to several investor-friendly measures taken by the markets regulator Sebi, including ban on ...
Top stocks mutual funds bought and sold in August 2019  CNBCTV18Domestic mutual funds remained net buyers for a fourth straight month, resulting in an overall inflow of Rs 1.02 lakh crore in August, much higher than Rs 87000 ...
Stock market crash? No Problem: Here are 4 steps to embrace it with a 'bear' hug  MoneycontrolThe stock market crash is the best excuse you can use to rebalance your portfolio. Getting rid of the non-performing investments and realigning your portfolio.
Fidelity Advisor Mid Cap Value Fund’s Superior Stock Picking Should Drive Outperformance  ForbesDespite the shortcomings of accounting-based metrics such as price-to-earnings ratios, return on equity, or accounting book value to pick stocks, many mutual ...
Mutual funds are not there to provide risk capital: Sebi chief  Economic TimesMumbai: Mutual funds are not banks and are not around to provide risk capital, said Securities and Exchange Board of India chairman Ajay Tyagi. The capital ...
Rise in mutual fund inflows through SIPs is a good sign: Aditya Agarwal, MD, Morningstar India  Economic TimesAditya Agarwal, Managing Director, Morningstar India, discusses the key knowns and unknowns of the mutual fund sector and the potential of returns it offers ...
HDFC AMC, Reliance Nippon Life stocks are undeterred by Sebi tweaks  LivemintEquity markets are subject to market risks, but that adage does not seem to apply to stocks of asset management companies (AMCs). While the broader market ...
From SBI MF to Aditya Birla Sun Life MF, top mutual funds bulk up on cash  Business StandardFive of the top 10 mutual funds by equity value are holding cash in the range of 8-11 per cent, a reasonably high number. Equity funds typically hold cash ...
Gold vs Equity: Where should you invest in struggling markets?  The Financial ExpressThe basic problem behind investors losing money in equity markets is that, unlike in case of physical assets, they don't follow the investment basics for financial ...
How retail investors tripped up on Yes Bank – Zerodha CEO releases data in blog post  LivemintZerodha CEO said 2 lakh people out of the 7 lakh who have demat accounts with Zerodha, hold Yes Bank stock and his clients are collectively sitting on an ...
Is T. Rowe Price Global Stock (PRGSX) a Strong Mutual Fund Pick Right Now?  Yahoo FinanceIf you have been looking for Global - Equity funds, a place to start could be T. Rowe Price Global Stock (PRGSX). PRGSX holds a Zacks Mutual Fund Rank of 2 ...
How ULIPs stack up against MFs  Moneycontrol.comOne major advantage of investing in ULIPs today is that the withdrawal is tax free. This is irrespective of whether the funds are invested in equity or debt.
Is Vanguard Total International Stock Index Fund (VGTSX) a Strong Mutual Fund Pick Right Now?  NasdaqIf you're looking for an Index fund category, then a possible option is Vanguard Total International Stock Index Fund (VGTSX). The fund does not have a Zacks ...
Soon access, share all your data from a one-stop store  LivemintAccount aggregators will put in all your financial data at one place, with your consent.You will be able to share financial data related to your bank account and ...
How much money can I make in mutual funds?  Business Insider IndiaA large number of investors are investing in mutual funds to grow their money. As is the case with any investment instrument, your money can yield very high.
Sebi wants MFs to invest only in listed securities  Economic TimesSebi said it has also decided to give flexibility to MFs to invest in unlisted NCDs up to a maximum of 10% of the debt portfolio of the scheme.
Bet on these 10 stocks for 12-22% returns by next Ganesh Chaturthi  MoneycontrolThe market hit a *fresh* record high this year, but gave negative return since the last Ganesh Chaturthi, with the Nifty50 falling 3 percent and Mid-Smallcap sinking ...
These two key portfolio diversification strategies can help you buffer stock market risk  MarketWatchStories resonating with MarketWatch readers this past week.
9 steps to protect your finances against recession in the economy  Economic TimesBad news is infectious. As reports of job losses, slowing demand and the liquidity crisis trickled in last week, the stock markets slipped. To be sure, the Nifty has ...
Vanguard Roth IRA: Is It the Best Roth for You?  NerdWalletWith a Vanguard Roth IRA you'll find some of the lowest-cost mutual funds around. But Vanguard's other costs and mutual-fund minimums are a disadvantage.
Good time to invest in India with a long-term view: Mark Mobius  Moneycontrol"India will continue to grow in the long-term, but there is a lot of confusion w.r.t taxation," Mark Mobius, founder of Mobius Capital Partners LLP said in an ...
The Best Value Funds  Morningstar.comValue is striking back--for now. These value-focused funds all earn Morningstar Analyst Ratings of Silver or better.
IBD 50 Stocks To Watch: Essent Near Buy Point As Business Booms  Investor's Business DailyEssent Group, featured in today's IBD 50 Stocks To Watch, could benefit from the Fed's rate cut. The leading growth stock is also close to a buy point.
Is Vanguard PRIMECAP Fund Admiral (VPMAX) a Strong Mutual Fund Pick Right Now?  Yahoo FinanceIf you've been stuck searching for Large Cap Growth funds, you might want to consider passing on by Vanguard PRIMECAP Fund Admiral (VPMAX) as a ...
Penny Stocks To Billions? Only Two Rare Examples  Investor's Business DailyThe idea of turning pocket change into a billion bucks is alluring. But this mirage of penny stocks is also nearly a complete fantasy.
Best And Worst Q3 2019: Large Cap Blend ETFs And Mutual Funds  Seeking AlphaThe Large Cap Blend style ranks first in Q3'19. Based on an aggregation of ratings of 78 ETFs and 711 mutual funds in the Large Cap Blend style. QUAL is our ...
Index Funds Have More Money Than Active Funds  MONEYIndexing just became the undisputed heavyweight champion of the stock market, and small investors should be cheering the victory. The amount of money in ...
Why Is This Gold-Rated Stock Fund Hoarding Cash?  Morningstar.comThe following is our latest Fund Analyst Report for AMG Yacktman ((YACKX)). Morningstar Premium Members have access to full analyst reports such as this for ...
Mutual fund investors keep faith in stocks despite market rout  LivemintMumbai: Investors in Indian equity mutual funds bought more last month, unfazed by the selloff that saw the nation's $1.9 trillion market log its worst July in 17 ...
3 Real Estate Funds to Grab Today  Zacks.comBelow we share with you three top-ranked real estate mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy).
Auto ka time aayega? Experts positive about auto stocks despite alarming August sales numbers  MoneycontrolThe sales numbers are alarming and challenges for the sector are mounting. At first glance, it looks logical to stay away from auto stocks.
What India's biggest mutual funds bought and sold in July  LivemintInvestors in Indian equity mutual funds bought more last month, unfazed by the selloff that saw the nation's $1.9 trillion market log its worst July in 17 years.
Propping up Stock Market: Govt measures falling flat  The Daily StarThe government's recent measures to prop up the stock market appear to have failed as the unusual fall of share prices continues to rattle investors. Yesterday ...
4 Mutual Funds to Tap the Growing Housing Market  Zacks.comThe American housing market is growing at a decent pace courtesy of several factors such as record low mortgage rates and a solid domestic economy. As more ...
Goldman Sachs Finds 5 Top Stocks Mutual Funds Have Loaded Up On  24/7 Wall St.To say that mutual fund portfolio managers tend to follow the herd is an incredible understatement, and it always has been. While publicly they sometimes seem ...
Big relief for market as govt withdraws FPI surcharge: 15 key announcements  Business StandardFinance Minister Nirmala Sitharaman on Friday announced the roll back of the controversial tax surcharge on the Foreign Portfolio Investment (FPIs) announced ...
Index funds overtake stock-picking funds, now Kings of Wall Street – The Wall Street Journal  BizNewsThe Wall Street Journal reports that index funds now attract more assets than their higher-costing actively managed counterparts.
4 Northern Mutual Funds for Spectacular Returns  Zacks.comBelow we focus on three top-ranked Northern mutual funds. Each has earned a Zacks Mutual Fund Rank #1 (Strong Buy).
Is it time to stop investing in equity mutual fund schemes?  Economic TimesMany DIY or Do-It-Yourself investors are ready to give up on equity mutual funds. They believe that it doesn't make sense to bet on equity mutual funds as the ...
Diversify your portfolio by investing a portion in US-focused mutual funds  MoneycontrolDeveloped markets such as US have delivered significant returns over market cycles.
MF shopping list: Top 30 stocks that fund managers bought & sold in June  MoneycontrolMutual funds increased allocation to private banks, consumer, utilities, technology, NBFCs, retail, metals and PSU bank stocks in June, an ICICIdirect report said.
Top 10 stocks that mutual fund managers bought and sold in March 2019  Moneycontrol.comData for equity flows into mutual funds for March came as a breather after a weak February. An increase in net inflows in equity and income category led to the ...
Why picking the right mutual fund is key in a tough market  LivemintWhy have mutual fund (MF) returns fallen? Mutual funds primarily invest in equity (stocks) or debt (bonds). On the equity side, mid and small cap MFs have given ...
Should you invest in international mutual funds?  LivemintIf you were to sort all equity mutual funds available for retail investment by their one-year performance, international funds would come on top. The best ...
Invest in reliable outperforming mutual funds: Here are 8 of these  Economic TimesThese funds tend to score well on risk-adjusted metrics and hold dependable stocks in their portfolios.
What India's three largest mutual funds bought and sold in June  Economic TimesHeres what the top three asset managers bought and sold last month.
Consider investing in direct stocks only if you can monitor portfolio proactively  LivemintDirect stocks can be considered if you have the ability to do research to identify the stocks to be bought as well as to be sold.You should be revisiting your ...
Mutual funds’ exposure to this space at all-time high; should you buy?  Economic TimesMoney managers on Dalal Street continued to shower affection on private banks for the ninth successive month as their exposure hit 19.90 per cent in June, ...
Top 30 stocks that fund managers bought & sold in July; do you own any?  MoneycontrolMutual funds net bought Rs 14,846.75 crore worth of shares last month. Their inflows into equity funds also improved to Rs 8,113 crore in July, rising nearly 6 ...
Best mutual funds to invest for 3 to 4 years  Economic TimesIf you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.
What India's top three mutual funds bought and sold in March  Economic TimesIndias largest money manager held 1.5 trillion rupees in equities.
Sensex's rise from 20K to 40K: 5 lessons for equity mutual fund investors  Economic TimesWe look at some critical lessons that equity fund investors learnt during the journey of Sensex reaching 40K.
Here are a few mutual funds that stocked up on YES Bank in Q4FY19  Business StandardShares of YES Bank tanked 30 per cent in trade on Tuesday, after the bank reported a massive Rs 1,507 crore loss in the fourth quarter of financial year 2018-19 ...
Flows into mutual funds revive in May as Modi win seems to spur risk demand  LivemintFlows into Indian equity mutual funds in May rebounded from the smallest in 31 months as Prime Minister Narendra Modi's comfortable electoral win spurred ...
Mutual fund investors showing great appetite for assuming risk: Dhirendra Kumar  Economic TimesOne would have thought that new investors who came into mutual funds will be running away. But they are getting into riskier category of funds and the scale of ...
Actively-managed large cap mutual funds poised for a comeback  Economic TimesDefying predictions of their imminent irrelevance, some actively-managed large cap mutual fund schemes have bounced back to the top of the return chart.
A young investor’s guide to mutual funds  Economic TimesMany young investors, who are barely a year or two old in their career, are eager to start investing in mutual funds. ETMutualFunds.com receive many queries on ...
What India's top three mutual funds bought and sold in May  LivemintInflows into Indian equity mutual funds in May rebounded from the smallest in 31 months as Prime Minister Narendra Modi's comfortable electoral win spurred ...
Mutual funds shooting themselves in the foot?  Economic TimesWhat if banks take a leaf out of Kotak and HDFC Mutual Funds' decision to direct investors to come another day to get their money instead of paying them on the ...
Mutual fund SIPs don't make equity investing risk-free. Here's why  Economic TimesSIPs do reduce the risk of market timing & allow investors to buy more units when their price falls.
6 bad money habits that investors should give up  Economic TimesSome habits can exact a heavy toll on your finances. We look at a few common ones that you should give up.
What top mutual funds bought and sold last month  LivemintMumbai: Inflows into Indian equity mutual funds in January were the smallest in two years as heightened market volatility and political uncertainty cooled ...
SIPs in equity mutual funds are giving negative returns. What should you do?  Economic TimesSIP returns for many investors in mid- and small-cap funds in the last one year are negative after the sharp market correction. The key is to choose a fund wisely ...
How income from stocks and mutual funds are taxed for an individual  Moneycontrol.comCapital gains from transfer of unlisted share are considered as STCG where period of holding is less than or equal to 24 months, and LTCG when holding period ...
Is it time to switch to index mutual funds?  Economic TimesBy Rishabh Parakh It is one of the hottest topics debated these days: is it time for mutual fund investors to switch to passively-managed index funds from their ...
How concentrated is your mutual fund portfolio?  LivemintA concentrated portfolio can backfire badly if the fund manager's strategy goes wrong.A portfolio with few stocks can fall sharply if share prices of most stocks in ...
Stay away from stock tips  LivemintIf taming the stock market was easy, everyone would do it.Losing money in market is real and facing volatility is part of the deal.
Value mutual funds have given good returns over long term but can underperform in short term  Economic TimesOver the years, the benefits of value investing have been espoused by several market gurus and fund managers. Discussions around this investing philosophy ...
Equity mutual funds are offering negative returns. What should investors do?  Economic TimesAll equity mutual fund categories have been offering negative average returns in the last one year. Small cap and mid cap schemes were hit the most, with ...
Should investors with very long term horizon always pick small cap mutual funds?  Economic TimesMutual fund investors assume that their risk taking ability goes up if they have really long investment horizon.
Should you invest in algorithm-based quant mutual funds?  Economic TimesQuant funds work on a data-driven model that relies on a mix of parameters and algorithms to identify the right stocks at the right time. But can they beat actively ...
Can mutual funds give multibagger returns like stocks?  Economic TimesStocks can be multibaggers. They can offer extraordinary returns in a very short period. Can mutual funds ever do that? This was a question thrown at Rajeev ...
Best mutual funds to invest for 10 to 15 years  Economic TimesIf you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.
Stick to MFs if you lack knowledge on stocks  LivemintWhile equity is surely the way going forward considering your age and the financial goals, how you buy in equity is important.Direct stocks work very well if done ...
Understand difference between large-cap, mid-cap and multi-cap mutual funds when investing  Economic TimesExperts say large and mid cap mutual funds have carved a niche for themselves in portfolios.
Govt tweaks rules, increases limit to disclose investment in stocks, mutual funds for employees  Economic TimesNew Delhi: The Centre has increased the over 26-year-old monetary limit on disclosure of investment in shares and mutual funds by employees to six months of ...

Never Fall In Love!

Recently I watched my favorite football team lose a vital... Read More

Choosing An Investment Stock Broker

If you want one.And I don't recommend any broker with... Read More

Getting Even

I know there are a lot of you out there... Read More

Its Better

Question: How does it get better when it gets worse?Last... Read More

I Love You, Warren Buffet

Sometime around 1980, can't remember exactly, there was a flight... Read More

Successful Trading ? Taking Profits - Part 1

So you're started trading, you bought some positions with your... Read More

How to Maximize Your 401k Mutual Fund Returns

When it comes to 401k's there is an overabundance of... Read More

The Problem With Hedge Funds

Are hedge funds a suitable investment for you? Hedge funds... Read More

How We Eluded The Bear Of 2000

The date October 13, 2000 will forever be embedded in... Read More

Shorting Stocks ? The Basics, Part II of II

After the publication of the first part of this two... Read More


Duck! No I don't mean a quack, quack. I meant... Read More

Stock Market Insanity

Let's first define insanity. It is doing the same thing... Read More

Precision Money Management

This article describes the model of a natural relationship between... Read More

When Should I Sell?

People are always asking me when should I sell my... Read More

Kick The Tires

Before you buy another car you walk around the lot,... Read More

Evaluation I

An insane person cannot evaluate an insane evaluation system.As you... Read More

Economists #2

Economists know more about how the fragments of society work... Read More

Does Japan Matter?

For the last 12 years we have seen the Japanese... Read More

Enron Cure

Let's hope you did not have any of the Enron... Read More

My Neighbor Got A New Car

I don't know what kind it is, but I saw... Read More

Stock Market System ... ONLINE STOCK TRADING ... Beyond Day Trading Basics & Tips

Day trading is all about making buy and sell decisions.... Read More

Buy Low - Sell High

Now where have I heard that before? I know. It... Read More

Historical Briefing: Stocks, Finance and Money

The World Bank claims that some two billion of the... Read More

Investment Lawyers and Trash Stocks

The trash business in its efforts to cook their books... Read More

How To Beat The Mutual Fund Companies At Their Own Game

You'd have had to be living on a desert island... Read More