Equity and equity index derivatives - trading strategies

For example, if you write an uncovered call, you face unlimited potential loss since there is no cap on how high a invex price can rise. Margining of Institutional Trades. Allows for Portfolio diversification. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction. United States Census Bureau.

ProShares is the world's largest provider of VIX Futures ETFs. These funds generate a K-1 tax form. More information about taxation for ProShares VIX Futures ETFs is in our FAQs. These Short or Ultra ProShares ETFs seek returns that are 2x or -1x the return of an index or other benchmark target for a single day. Due to the compounding of daily returns. ProShares' returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period.

These effects may be more pronounced in funds with larger or inverse multiples and in funds with volatile benchmarks. Investors should monitor their ProShares holdings consistent with their strategies. For more on correlation, leverage and other risks, please read the prospectus. Investing involves risk, including the possible loss of principal. ProShares ETFs are generally non-diversified and each entails certain risks, including risks associated with the use of derivatives swap agreements, futures contracts and similar instruments.

Please see their summary and full prospectuses for a more complete description of risks. Investing in ETFs involves a substantial risk of loss. The funds generally are intended for short-term investment horizons, and investors holding shares over longer-term periods may be subject to increased risk of loss. The assets the ETFs invest in can be highly volatile, and the funds may experience large losses.

There have equity and equity index derivatives - trading strategies potential negative impacts from rolling futures positions and extended periods where the strategies utilized by the ETFs have caused significant and sustained losses. The value equity and equity index derivatives - trading strategies the shares of the funds relates directly to the value of, and realized profit or loss from, the financial instruments and other assets held by the funds.

Fluctuations in the price of those assets could adversely affect an investment in the shares. The level of the VIX has historically reverted to a long-term mean i. As such, the potential upside of exposure to VIX futures may be limited and any gains subject to significant and unexpected reversals. ProShares Trust II is a commodity pool as defined in the Commodity Exchange Act and the applicable regulations of the CFTC.

ProShare Capital Management LLC is the Trust Sponsor and commodity pool operator CPO. The Sponsor is registered as a CPO with the CFTC, and is a member of the NFA. This information must be accompanied or preceded by a current ProShares Trust II Prospectus ProShares are distributed by SEI Investments Distribution Co. Your use of this site signifies that you accept our Terms and Conditions of Use.

Equity Volatility with VIX Futures ETFs. ProShares VIX Futures ETFs. These ETFs are designed as tools for knowledgeable investors who seek to:. These questions and answers from the Investment Company Institute will help. Considerations for Geared Investing. K-1 Tax Information for Shareholders. Nine Questions Every ETF Investor Should Ask Before Investing. Investing in Best way to buy stock options ETFs.

SEC Day Yield is a standard yield calculation developed by the Securities and Exchange Commission SEC that facilitates fairer comparisons of funds. The figure reflects dividends and interest earned by the securities held by the fund during the most recent day period, net the fund's expenses. Unsubsidized SEC Day Yield shows what the SEC Day Yield would have been without the contractual fee waiver. Duration is a measurement of how long, in years, it takes for the price of a bond to be repaid by its internal cash flows.

Modified duration accounts for changing interest rates. It measures the sensitivity of the value of a bond or bond portfolio to a change in interest rates. Higher duration means greater sensitivity. The weighted average maturity WAM of a portfolio is the average time, in years, it takes for the bonds in a bond fund or portfolio to mature.

WAM is calculated by weighting each bond's time to maturity by the size of the holding. Portfolios with longer WAMs are generally more sensitive to changes in interest rates. Yield to maturity YTM is the annual rate of return paid on a bond if it is held until the maturity date. Weighted average yield to maturity represents an average of the YTM of each of the bonds held in a bond fund or portfolio, weighted by the relative size of each bond in the portfolio.

A coupon is the interest rate paid out on a bond on an annual basis. The weighted average coupon of a bond fund is arrived at by weighting the coupon of each bond by its relative size in the portfolio. Weighted average price WAP is computed for most bond funds by weighting the price of each bond by its relative size in the portfolio.

This statistic is expressed as a percentage of par face value. The price shown here is "clean," meaning it does not reflect accrued interest. Monthly volatility refers to annualized standard deviation, a statistical measure that captures the variation of returns from their mean and equity and equity index derivatives - trading strategies is often used to quantify the risk of a fund or index over a specific time period.

The higher the volatility, the more the returns fluctuate over time. Absolute return strategies seek to provide positive returns in a wide variety of market conditions. These strategies employ investment techniques that go beyond conventional long-only investing, including leverage, short selling, futures, options, etc.

Arbitrage refers to the simultaneous purchase and sale of an asset in order to profit from a difference in the price of identical or similar financial instruments, on different markets or in different forms. For example, convertible arbitrage looks for price differences among linked securities, like stocks and convertible bonds of the same company.

Merger arbitrage involves investing in securities of companies that are the subject of some form of corporate transaction, including acquisition or merger proposals and leveraged buyouts. Commodity refers to a basic good used in commerce that is interchangeable with other goods of the same type. Examples include oil, grain and livestock. Correlation is a statistical measure of how two variables relate to each other. Two different investments with a correlation of 1.

The higher the correlation, the lower the diversifying effect. Currency refers to a generally accepted medium of exchange, such as the dollar, the euro, the yen, the Swiss franc, etc. Market neutral is a strategy that involves attempting to remove all directional market risk by being equally long and short. Futures refers to a financial contract obligating the buyer to purchase an asset or the seller to sell an assetsuch as a physical commodity or a financial instrument, at a predetermined future date and price.

Global macro strategies aim to profit from changes in global economies that are typically brought about by shifts in government policy, which impact interest rates and in turn affect currency, bond forex charts online free stock markets. Hedge funds invest in a diverse range of markets forex holy grail trading system securities, using a wide variety of techniques and strategies, all intended to reduce risk while focusing on absolute rather than relative returns.

Leverage refers to using borrowed funds to make an investment. Investors use leverage when they believe the return of an investment will exceed the cost of borrowed funds. Leverage can increase the potential for higher returns, but can also increase the risk of loss. Managed futures involves taking long and short positions forex 5 ema system futures and options in the global commodity, interest rate, equity, and currency markets.

Precious metals refer to gold, silver, platinum and palladium. Private equity consists of equity securities in operating companies that are not publicly traded on a stock exchange. Real estate refers to land plus anything permanently fixed to it, including buildings, sheds and other items attached to the structure. Short selling or "shorting" involves selling an asset before it's bought.

Typically, an investor borrows shares, immediately sells them, and later buys them back to return to the lender. Volatility is the relative rate at which the price of a security or benchmark moves up and down. Volatility is also an asset class that can be traded in the futures markets. Tradable volatility is based on implied volatilitywhich is a measure of what the market expects the volatility of a security's price to be in the future.

Geared investing refers to leveraged or inverse investing. CSM rated 5 stars for the 3-year period ending March 31, among 99 U. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Ratings are based on the ETF's Morningstar Risk-Adjusted Return measure which accounts for variation in monthly performance. The fund's performance and rating are calculated based on net asset value NAVnot market price.

An ETF's risk-adjusted return includes a brokerage commission estimate. This estimate is intended to reflect what an average investor would pay when buying or selling an ETF. This estimate is subject to change, and the actual commission an investor pays may be higher or lower. Morningstar compares each ETF's risk-adjusted return to the open-end mutual fund rating breakpoints for that category. The overall rating for an ETF is based on a weighted average of the time-period ratings e.

The determination of an ETF's rating does not affect the retail open-end mutual fund data published by Morningstar. Past performance is no guarantee of future results. SEC Day Yield is a standard yield calculation developed by the Securities and Exchange Commission that allows investors to more fairly compare funds. The figure is calculated by dividing the net investment income less expenses by the current maximum offering price.

SEC Day Yield unsubsidized is what the SEC day yield would have been without the contractual fee waiver. Current yield is equal to a bond's annual interest payment divided by its current market price. The current yield only refers to the yield of the bond at the current moment, not the total return over the life of the bond. Dividend yield shows how much a company pays out in dividends each year relative to its share price.

In the absence of any capital gains, the dividend yield is the return on investment for a stock. Effective duration is a measure of a fund's sensitivity to interest rate changes, reflecting the likely change in bond prices given a small change in yields. Higher duration generally means greater sensitivity. Effective duration for this fund is calculated including both the long bond positions and the short Treasury futures positions.

Distribution Yield represents the annualized yield based on the last income equity and equity index derivatives - trading strategies. Trailing price to earnings ratio measures market value of a fund or index relative to the collective earnings of its component stocks for the most recent month period. Price to book ratio measures market value of a fund or equity and equity index derivatives - trading strategies relative to the collective book values of its component stocks.

Weighted average market cap is the average market value of a fund or index, weighted for the market capitalization price times shares outstanding of each component. In such a weighting scheme, larger market cap companies carry greater weight than smaller market cap companies. Sometimes distributions are re-characterized for tax purposes after they've been declared.

Here, a doh current national nursing strategy dividend has been re-characterized as a Return of Capital "ROC". An ROC is a distribution to investors that returns some or all of their capital investment, thus reducing the value of their investment. In an efficient market, the investment's price will fall by an amount approximately equal to the ROC.

In general, investors are not taxed on an ROC unless it begins to exceed their original investment value. This is the dollar amount of your initial investment in the fund. This is the percentage change in the index or benchmark since your initial investment. Enter a positive or negative number. This is the dollar value that your account should be after you rebalance. This is the dollar amount you have invested in your fund.

Credit default swap CDS spread reflects the annualized amount espressed in basis points that a CDS protection buyer will pay to a protection seller. Higher CDS spreads indicate that the CDS market views the entity as having a higher risk of loss. The weighted average CDS spread in a portfolio is the sum of CDS spreads of each contract in the portfolio multiplied by their relative weights. Spread duration is a measure of a fund's approximate mark-to-market price sensitivity to small changes in CDS spreads.

Higher spread duration reflects greater sensitivity. Shareholder Supplemental Tax Information. It is a float-adjusted, market capitalization-weighted index of U. Infrastructure refers to companies that actually own and operate the transportation, communications, energy and water assets that provide essential services to our society.

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Equity Derivatives Market - Options: Delta, Theta, Gamma - Option Measures.

Equity Index Futures. Equity Index Futures are derivatives instruments that give investors exposure to price movements on an underlying Index. Market participants. What is an ' Equity Derivative ' An equity derivative is a derivative instrument with underlying assets based on equity securities. An equity derivative's value will. 5 Acknowledgement This workbook has been developed by NISM in close cooperation with the Examination Committee for NISM-Series-VIII: Equity Derivatives Certification.

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