Mandatory Redemption Schedule (Bond) – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is a Mandatory Redemption Schedule?The mandatory redemption schedule is a plan that specifies the point at which the issuer of a bond with a sinking fund provision is required to redeem all or part of the outstanding issues of the particular bond prior to its...

Underwater (Value of Asset) – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What Does Underwater Mean?Underwater is a term that refers to a situation in which the present value of an asset is less than its face or nominal value. When the market value of an asset is less than the original amount that the owner paid for it, such as asset has...

Lamda (Options Pricing) – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is Lambda?One of the “Greeks” being lambda refers to the ratio of an option’s change in dollar price to a 1% change in the anticipated price volatility (implied volatility), of an underlying asset. Lambda informs investors of how much the price...

Ladder Option – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is a Ladder Option?A ladder option refers to an exotic option which looks in partial profit as soon as the underlying asset hits predetermined rungs or price levels. This assures at least some profit, irrespective of the underlying asset retracing beyond the...

Naked Put – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is a Naked Put?A naked put is a strategy peculiar to put options contract, this strategy is one in which an investor writes or sell a put option without holding any short position in the underlying contract. Using a naked put, an investor that holds no position,...

Narrow Basis (Stocks) – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is a Narrow Basis?A narrow basis describes the proximity or convergence between the spot price of a commodity and the price of that same commodity in a futures contract. In a futures contract, the price for a commodity is set at a future date. The present price...