re: crashy writes bhp calls "Crash/stelep, there is only one reason instalment warrants deliver higher returns and that is because of the higher leverage and higher risk."
Im not sure I agree with all of that red. Since the buyer of an instalment warrant pays a fraction of the purchase price, and also receives the dividends, I would argue that they are a 'limited-risk' instrument, in that the most you can lose is the original outlay. Yes leverage is a factor in the return, but 'risk' is certainly lower, not higher. Instalment buyers pay a premium, but a fairly low one by eto time premium standards. By purchasing the 'cheap' long premium of the instalment, and selling 'expensive' short term eto premiums regularly, the result is a net discount.
Think of it like this.....a wrecker goes to a damaged car auction. He buys a banged up magna for $600. This is our instalment. He then strips the car of parts, and sells them over time. This is our monthly call writes. Of course its possible that he buys a lemon now and again, but over the long term he will make a good profit. The same priciples apply in the options market.
- Forums
- ASX - By Stock
- crashy writes bhp calls
re: crashy writes bhp calls "Crash/stelep, there is only one...
-
- There are more pages in this discussion • 28 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add BHP (ASX) to my watchlist
|
|||||
Last
$38.54 |
Change
-0.800(2.03%) |
Mkt cap ! $196.3B |
Open | High | Low | Value | Volume |
$38.65 | $38.77 | $38.50 | $156.2M | 4.047M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
10 | 1163 | $38.53 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$38.54 | 868 | 7 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
14 | 2124 | 38.550 |
13 | 3875 | 38.540 |
18 | 11742 | 38.530 |
12 | 3556 | 38.520 |
27 | 13122 | 38.510 |
Price($) | Vol. | No. |
---|---|---|
38.560 | 1307 | 11 |
38.570 | 4120 | 10 |
38.580 | 4242 | 16 |
38.590 | 3362 | 9 |
38.600 | 6495 | 12 |
Last trade - 12.26pm 12/09/2024 (20 minute delay) ? |
Featured News
BHP (ASX) Chart |