What is Short Covering? Short covering, also called “buying to cover”, refers to the purchase of securities by an investor to close a short position in the stock market. The process is closely related to short selling. In fact, short covering is part of short selling, which involves the risky practice of borrowing and selling…
What is Rolling LEAP Options? Rolling LEAP options refers to extending the trading duration of stock options to the next trading period. Investors rollover options to manage a winning or losing position. In a losing position, they extend the time to hopefully prevent losses before they close the position. However, they must possess sufficient and…
What is an L Bond? An L Bond refers to an unrated life insurance bond that finances the purchase and premium payments of life insurance contracts bought in the secondary market. The bond offers a higher yield than other publicly traded offerings to compensate for the risk that the insurance policy benefits may not be…
What is Market Value Added? Market value added (MVA) is the amount of wealth that a company is able to create for its stakeholders since its foundation. In simple terms, it’s the difference between the current market value of the company’s stock and the initial capital that was invested in the company by both bondholders…
What is Passive Income? Passive income is any money earned in a manner that does not require too much effort. There are several passive income-generating ideas that require a lot of work to begin with, like developing a blog or leasing property, but eventually, they earn money even when the owner is asleep. Reasons for…
What is Coattail Investing? Coattail investing refers to an investment strategy where an investor replicates the investment style of well-known successful investors. Individual investors use information published on the Securities Exchange Commission (SEC) website to know what companies a specific investor invested in. Coattail investing works well when the institution or investor being mimicked invests…
Pessimist vs. Optimist Investors Differentiating between pessimist vs. optimist investors is best defined by the saying, “A pessimist is an optimist with experience.” An optimist is hopeful and confident that things will turn out for the better. On the other hand, a pessimist always keeps in mind the possibility of the worst outcome. An optimist’s…
What is Hot Money? Hot money is the investment of funds between varying vehicles or assets in order to increase capital gains. In other words, a hot money strategy can be defined as the practice of actively using funds in various investments rather than just letting a single investment appreciate over time. The investments are…
What are Bonds? Bonds are fixed-income securities that are issued by corporations and governments to raise capital. The bond issuer borrows capital from the bondholder and makes fixed payments to them at a fixed (or variable) interest rate for a specified period. What is an Indenture? An indenture is a binding contract between an…
What is a Celebrity Bond? A celebrity bond is a type of asset-backed security issued by a holder of fame-based intellectual property rights. Issuers of celebrity bonds receive money upfront from investors in exchange for proceeds from future royalties from the works of art, which are covered by intellectual property rights listed in the security. Celebrity…
