Forex Spot Rate

  

See: Foreign Exchange. See: Forex Option & Currency Trading Options. See: Forex Futures.

The spot rate is the price at this moment that a given future transactional price...prices itself. Think of a spot rate as being the one image from the swami's crystal ball that tells you the price today of buying a boatload of euros with U.S. dollars transacting 278 days from this moment.

The term also refers to the number of times your dog Spot has wizzed on the carpet.

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Finance: What Is a Put Option?83 Views

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finance a la shmoop what is a put option? hot potato hot potato

00:07

ow ow! yeah remember that game well nobody wanted the potato, poor thing. the

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players wanted to put it in someone else's hands. well put options kind [glue put around a flaming potato]

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of work the same way. a put option is the right or option or choice to sell a

00:24

stock or a bond at a given price to someone by a certain end date.

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all right example time. you bought netflix stock at the IPO a zillion years

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ago at $1 a share. that's you know splits adjusted. all right now it's a hundred

00:42

bucks a share. if you sell it you pay taxes on a gain of 99 dollars a share. in

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California that would be a tax of something like almost 40 bucks. well the

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stock was a hundred but you keep only something like 60. feels totally unfair.

00:58

right so you really don't want to sell your stock but you're nervous about the [graph shown]

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next few months that Netflix will crater for a while and go down ten

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maybe twenty dollars. longer term though you think it'll hit 300. so this is the

01:13

perfect setup to maybe look at buying some put options on Netflix. if the stock

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goes down your put options go up. with Netflix volatile but at a hundred bucks

01:23

a share ,you look up the price of an $80 strike price put option expiring in

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December, and you know that's mid-september now .for five bucks a share

01:33

you can protect your stock for the next few months .think about it like temporary [stocks placed in vault]

01:37

term life insurance. you pay the five dollars a share in the stock goes down

01:41

to 82 by mid December, worst of all worlds. well not only did you lose the $5

01:48

a share but your stock has lost $18 in value. but had Netflix really cratered

01:55

and gone to say $60 a share well you would have exercised your put and sold

02:01

your shares at 80 bucks. well those put options you paid $5 for

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would be been worth 15 bucks a share. in buying that put option you've [equation shown]

02:11

guaranteed that your loss will be no more than a $75 value for your Netflix

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position at least for that time period and ignoring taxes. well remember that

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options expire after December whatever like the third Friday of the month it's

02:26

usually when options expire, you then have no protection and your shares float

02:31

along naked. naked? really who knew accounting could get so [paper put option goes "skinny dipping".]

02:36

raunchy. yeah well that's naked put options.

02:40

that's what they really are people.

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