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Q: please define the "bear spread"

Category: glossary , Asked by: Eileen F. From United States

A: "bear spread " is 1. An option strategy seeking maximum profit when the price of the underlying security declines. The strategy involves the simultaneous purchase and sale of options; puts or calls can be used. A higher strike price is purchased and a lower strike price is sold. The options should have the same expiration date. 2. A trading strategy used by futures traders who intend to profit from the decline in commodity prices while limiting potentially damaging losses. 1. You make money if the underlying goes down and lose if the underlying rises in price. 2. A bear spread is created through the simultaneous purchase and sale of two of the same or closely related futures contracts. This is accomplished in the agricultural commodity markets by selling a future and offsetting it by purchasing a similar contract with an extended delivery date. Visit eToro

  1. Q: Do you know of an online fx platform that has a modest minimum deposit that you can recommend for me

    Category: money , Asked by: Kristen F. From Fort Lauderdale, United States

    A: We recommend you to check out "Xforex". The minimum deposit is only $50, the service is excellent, you don't need to give up any of the money you made to the site, plus the platform graphics are the nicest enhanced.

  2. Q: please tell me what an "initial cash flow" is

    Category: glossary , Asked by: Darnell B. From United States

    A: The amount of money paid out or received at the start of a project or investment. This is generally a negative amount because projects often require a large initial capital investment by a company that will generate positive cash flow over time. During the capital budgeting process, the attractiveness of a project is evaluated based on the cash flows generated by the project over its life. Using discounted cash flow analysis, the project's future value of the cash flows over its life are brought back to the present value to determine whether it is worthwhile for the company to pursue the project. Because the initial outlay is made at the start of the project (time zero), it isn't discounted. For example, an oil company evaluating the attractiveness of a new refinery may budget for an initial outlay of $100 million to get the project started. This is then evaluated along with the future cash flows the project will generate over its life.

  3. Q: please tell me what the "origination points" is

    Category: glossary , Asked by: Ariel U. From Long Beach, United States

    A: an "origination points " is A type of fee borrowers pay to lenders or loan officers in order to compensate them for the role they play in evaluating, processing and approving mortgage loans. Credit history is one factor that plays a role in the amount of origination points a borrower needs to pay. Unlike the other types of points (for example, discount points), origination points are not tax deductible. Typically, each single origination point represents 1% of the mortgage loan. For example, if you are borrowing $150,000 and the bank is charging you 1.5 origination points, you will end up paying $2,250 (or 1.5% of $150,000). Since the amount of origination points required to be paid is not set in stone, borrowers may be able to negotiate the amount of origination points that they pay.

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