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What are put options and why would I want to sell them?

Put options are a contract which gives the buyer the right but not the obligation to sell a specified amount of an underlying security within a time range at a specific price. Conversely if you are the seller or writer of a put option you have the obligation to buy the security at a predetermined price within that time range from the buyer. So, for example let’s say shares of ABC Corp are currently trading for $100 per share. Investor A is bearish on ABC Corp., so they buy a 1 put option contract for $2 per share (1 contract represents 100 shares) from Investor B at an exercise price of $80 expiring in 90 days. Therefore, Investor A at the time of purchasing the option would pay Investor

Looking Beyond the Headlines

Making investment decisions can be confusing amid constant conflicting information from news headlines. Often making decisions based on news headlines can actually result in poor portfolio performance. There are several reasons for this. Firstly, news media is successful based on their ability to get viewership or readership. This makes them prone to exaggerate or sensationalize news stories either intentionally or unintentionally. Fear in media sells and there are several reasons for this. Medium Media has a good article that addresses this topic. Secondly, News sentiment is generally positive when the stock market is up and is negative when the stock market is down. Therefore, if you

Quick Tips to Diversify Your Investment Portfolio

The purpose of diversification is to minimize correlation risk within your investment portfolio. In a simplified example say you had two Investments A and B. If investment A went down 10% in a given year you don’t want investment B to be correlated to investment A such that it also goes down proportionally. Ideally you would want Investment B to be negatively correlated or at least correlated to a lesser degree such it doesn’t go down on a 1:1 ratio. This should firstly be done by diversifying by asset class between investments such as stocks, bonds, real estate, private equity, and cash. Once you have divided your assets between such categories you want to ensure to look at the diversi

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