American Investment Training

Tuesday, April 3, 2018

Stock and Option Hedging Strategies - Stock and covered call writing for Series 7 Exam Study

Covered call writing with an existing long stock position is a popular hedging strategy that investors and brokers-in-training should know. It is an income strategy, and it lowers your cost on your main (long stock position) because of the premium you receive for selling (shorting/writing) the contract. 

Let's look at a covered call with Stock Example

Mr. Bonds owns 100 shares of HPK at $72 a share. HPK has been fairly stagnant recently, trading between 71 and 74. It has yet to breakthrough $75, but Mr. Bonds feels the stock has great potential to rise considerably in 3-6 months, so he does not want to sell it. How can he profit from this prediction?   One way is to sell (write) a call option contract on HPK to receive income. These contracts have monthly expiration dates, with the longer term expirations costing more money. 

He decides to initiate writing a covered call. It is called "covered" because he owns the stock that the call options is based on. If the call options is exercised, Mr. Bond will have to deliver (sell) his 100 shares to the call holder at a specific price set in the contract. This is called the strike price. If the call option does not get exercised and expires worthless - Mr. Bond keeps the premium he received for selling the option, and retains ownership in the stock. This is the best case scenario for an investor who writes call options on a long stock position. 

It is best explained by laying out a complete position - and the hedge. 

LONG 100 SHARES HPK@ $72 
SHORT 1 HPK JUL 75 CALL@3

Breakdown of the call option contract:

Each option contract represents 100 shares of stock. They also expire monthly. So this one expires in July. Whatever decision the investor makes, he must decide before the contract expires towards the end of July. Each contract carries a "premium" based on 100 shares. This contract is $300. That amount is what the buyer would pay to own the contract, and what the seller (writer) receives for shorting the contract. Each person betting on different directions of the stock. 

For Mr. Bond, he is shorting the call option hoping the stock stays stable and the option is expires. He keeps the $300 premium, which now lowers his cost on his stock to 69. He can continue to write calls periodically, and if he is successful - his cost (and break even) can be lowered even more. So YES!, you can make money on a sleepy stock. 

The maximum GAIN on this strategy (while both positions stay) is $600. If the stock rises enough to trigger the option, the investor MUST sell the shares at 75. He paid 72, and he also collected $300. 3 points on the stock and 3 on the premium = $600

What is the downside?  There always is a downside.....

The main downside is the stock itself drops big, and the contract expires.You lose in share price on your stock, and the contract is now gone. The lesser risk is the stock rises before July which triggers the option, and Mr. Bond has to sell his stock at 75. He still makes money, but if the stock continues to shoot up - the investor will miss out on it, as he no longer owns the stock itself. 

The Maximum LOSS is $6900.  If the stock drops to ZERO, the share value can all be lost - the $300 premium which he always keeps. 

The Breakeven is 69.  The breakeven on these positions is always the cost of the stock minus the premium received. He is profitable until the stock hits 69.

The best case scenario is the stock stays stable or within a thin trading range, the premium is kept, the option expires, and then at a later date - the stock jumps up strong for unlimited gains in the future.

For more information on finance, investing and the Series 7 exam, please visit:

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Tuesday, October 10, 2017

Broker Exams and Licenses NOT requiring Sponsorship - FINRA and NFA Licenses you can get independently


Become a Licensed Investment Professional Independently!
Series 65 - Series 63 - Series 3



The Series 7 and many other exams require a firm to sponsor you before you can sit for the licensing test. This usually means being hired as a full time employee first. After a probationary or training period, a registration can begin by the firm to set the broker trainee or other brokerage employee for an exam.

However, there are many exams that are not included in this restriction. Most of these exams are either advisory in nature (earning fees) or futures market based. The most popular and high valued licenses that do not require a firm to sponsor you include: 

INVESTMENT ADVISORY AND STATE LICENSES

SERIES 65 - Registered Investment Adviser. 

SERIES 63 - Uniformed State Law

SERIES 66 - Combined Series 63/ Series 65

FUTURES AND COMMODITIES LICENSES

SERIES 3 - Futures and Commodities 

SERIES 31 - Futures Managed Funds

SERIES 30 - Futures Branch Manager

SERIES 34 - Retail Forex 


ONLINE COURSES for the Series 63, 65 and 66 are available online to begin right away with 24/7 access:   https://blaze.firesolutions.com/portal/form/3155

Courses for the Series 3 and all futures exams can be ordered through our self study education site:

https://squareup.com/store/h-internet-international

Friday, July 14, 2017

Finra Licenses - Series 7, Series 65 and more. License Summaries - Test Questions and Series online course info

American Investment Training provides full online course training for the:

SERIES 6

SERIES 7

SERIES 9

SERIES 10

SERIES 24

SERIES 63

SERIES 65

SERIES 66

All courses include a full PASS Guarantee. If you complete the course and fail the real exam - we refund you 100%!   That is why our pass ratio is near 100%

Summary of Series Exams and Courses:

SERIES 6

The Series 6 exam - the Investment Company and Variable Contracts Products Representative Qualification Examination (IR) - evaluates an entry-level representative's proficiency to perform duties as an investment company and variable contracts products representative. This exam comprises 100 scored questions with an additional 5 unscored "pretest" questions. Applicants have two-hours and 15-minutes to complete the exam. The passing score is 70%.

SERIES 7

The Series 7 exam - the General Securities Representative Qualification Examination (GS) - evaluates an entry-level registered representative's proficiency to perform duties as a general securities representative. This exam comprises 250 scored questions with an additional 10 unscored "pretest" questions. Applicants have six-hours to complete the exam - conducted in two three-hour sessions comprising 130 questions per session. The passing score is 72%. The Series 66 or 63 and 65 exam(s) typically follow this exam.

SERIES 9

The Series 9 exam — the General Securities Sales Supervisor Qualification Examination — evaluates a registered representative's proficiency and knowledge of securities industry rules and particular statutory provisions applicable to supervising sales activities of options at a branch office. 

This exam comprises 55 scored questions with an additional five unscored "pretest" questions. Applicants have one-hour and 30-minutes to complete the exam. The passing score is 70%. 

SERIES 10

This exam comprises 145-scored questions with an additional 10-unscored "pretest" questions. Eligible representatives have 4-hours to complete the exam with a passing score of 70%. The Series 7 (or foreign equivalent) is a prerequisite for this examination. The Series 7 licensed representative must be associated with and sponsored by a FINRA member firm for eligibility to take the Series 10 or 9 exams. Along with the Series 9, the Series 10 exam is required to qualify for the Series 8 branch manager license. Either exam may be taken first, sequence does not matter

SERIES 24

The exam measures the degree to which each candidate possesses the knowledge needed to perform the critical functions of a general securities principal, including the rules and statutory provisions applicable to the supervisory management of a general securities broker-dealer. The Series 24 consists of 150 scored questions and an additional 10 unscored pretest questions. Candidates are given three hours and 45 minutes to complete the exam. The passing score is 70 percent.

SERIES 63

The Series 63 exam - the Uniform Securities Agent State Law - developed by NASAA and administered for NASAA by FINRA, evaluates an entry-level registered representative's proficiency in understanding the principles of state securities regulations reflected in the Uniform Securities Act with NASAA rule amendments prohibiting dishonest and unethical business practices. The exam provides state securities administrators a basis to evaluate an applicant's knowledge and understanding of state law and regulations. This exam is comprised of 60 scored questions and 5 unscored "pretest" questions. Applicants have one-hour and 15-minutes to complete the exam. The passing score is 72%. The Series 63 does not have any prerequisites and can be taken without being sponsored by a FINRA member firm. However, to transact securities business, an individual must also take and pass the Series 6 or Series 7 and be associated with and sponsored by a FINRA member firm.

SERIES 65

The Series 65 exam - the Uniform Investment Adviser Law - developed by NASAA and administered for NASAA by FINRA, evaluates an entry-level proficiency to provide investment advice to clients and in understanding the principles of state securities regulations reflected in the Uniform Securities Act with NASAA rule amendments prohibiting dishonest and unethical business practices. The exam provides state securities administrators with a basis to evaluate an applicant's knowledge and understanding of state law and regulations. This exam comprises 130 scored questions and 10 unscored "pretest" questions. Applicants have three-hours to complete the exam. The passing score is 72%.

SERIES 66

The Series 66 exam - the Uniform Combined State Law - developed by NASAA and administered for NASAA by FINRA, evaluates entry-level proficiency to provide investment advice and effect securities transactions for clients, as well as understanding the principles of state securities regulations reflected in the Uniform Securities Act with NASAA rule amendments prohibiting dishonest and unethical business practices. The exam provides state securities administrators with a basis to evaluate an applicant's knowledge and understanding of state law and regulations. This exam comprises 100 scored questions and 10 unscored "pretest" questions. Applicants have two-hours and 30-minutes to complete the exam. The passing score is 73%. The Series 7 is a co-requisite for this examination but either exam can be taken first and the Series 66 does not require FINRA member firm sponsorship. The Series 7 licensed representative, however, must be associated with and sponsored by a FINRA member firm.

ONLINE COURSES ARE AVAILABLE THROUGH OUR MAIN COURSE PORTAL HERE




Monday, January 2, 2017

Understand Bond Yields for the Series 7 - Nominal, Current and Yield to Maturity

Most bonds are fixed income securities. They pay a stated rate of interest to par. That fixed rate is the nominal yield. The nominal yield does not change during the life of the bond. It is also known as the coupon rate. 

Bond Pricing vs. Yield

If a bond is purchased at a discount, par or at a premium, the nominal rate stays the same and the actual interest payments received are not changed as well. 

Nominal Yield Example

If a person buys a corporate bond at a price of $98.50 and the nominal rate is 3%, the investor is actually paying 985.00 per $1000 bond. They will be paid 3% on the par value $1000 per year, but since only 985.00 was invested and they are getting $1000 back at maturity (all bonds mature at par), their YTM will be higher than 3%. If a bond is held to the end, the yield to maturity is it's true rate of return - not the nominal yield.

Current interest rates will dictate where the nominal rate is set. There are also other factors that will determine it. These include:
  • Maturity length and where the yield curve is
  • Bond Rating - an issuer with a lower credit rating will have to offer a higher nominal yield or issue the bond as an OID - Original issue discount
  • Interest Payment Frequency
  • Type of bond - Municipal, Corporate or other
  • Callable or non callable

Current Yield

A bond's current yield is not as important to an investor. It is not the actual interest rate received and it is not the overall yield to maturity. 

A bond's current yield can be found by dividing the coupon or nominal by the current market price of the security. It is not an overly important yield to investors - as it is always changing and is most important if someone is pricing the bond to sell. If an investor is holding the security to maturity - then the current yield is not a big concern.

A debt that is priced above par (premium) will have a lower current yield vs. the nominal. A 7% corporate debenture priced at $102 will have a current of 6.86% ($70 divided by $1020). Discounted bonds will have a higher current yield than it's coupon rate.

Yield To Maturity

To most investors, the yield to maturity is the most accurate and best measure of a bondholder's overall rate of return. 

YTM uses all the components of a bond investment to come up with a true overall yield on the security. The formula and calculation is based on the bond reaching maturity. As with most bonds, default is rare, so the real risk lies with the following:
  • Is the bond callable?
  • What price is it callable at?
  • When are the call dates?
  • Interest rates rise and bond is sold (result in loss in most cases)
  • How long is the maturity? - A bond with a Yield of 4% for 2 years is usually better than a length of 10 years in a normal or upsloping yield curve.

GET YOUR SERIES 7 LICENSE HERE ONLINE - 100% PASS GUARANTEE! 


Monday, December 26, 2016

Series 63 Online Pass Guarantee Training Course - Series 63 Licensing

Pass the Series 63 exam with a fully guaranteed pass or no pay policy.

Series 63 - The online training includes 5 sections covering the exam, chapter quizzes and 7 full, accurate and updated Series 63 Tests.

Student progress is tracked and exam test scores are logged, so you can always see where you are at. We are also available to advise you on whether you are ready to sit for the 63. You can view a sample of the delivery and course topics by visiting the on line link below.

Other licenses available. If you have American Investment Training books and cd study prep - the online course section using the links ahead can be a great supplement to your study. If you are using other books (perhaps inferior or out of date), then the virtual courses can be exactly what you need to pass your exam!

Online topics include:
  • Introduction to the Series 63
  • Uniformed Securities Law
  • Securities Definitions
  • Registrations of Brokers and Securities
  • SEC Law
  • More
NO SPONSORSHIP FROM A BROKERAGE FIRM IS REQUIRED


BEGIN HERE:

Series 63 - Series 7 - Series 65 and more.......

https://learning.firesolutions.com/form/3155



Wednesday, November 30, 2016

Series 7 Independent Broker - Become a Series 7 Broker - Sponsorship

Become an Independent Stockbroker or Financial Adviser

Learn how to get sponsored for the Series 7 exam. How to become an independent broker. Complete breakdown of all licenses. Product education and much much more.

Get the "How To become a successful broker and adviser" Ebook. Originally written in 1999. Thousands sold. UPDATED for 2016. Know what you need to know! - download it now. Use it ongoing.....

If you are starting a broker or advisor career, this book will help you. This industry is too large to rely on myths or what one particular brokerage firm is telling you. We work with hundreds of them - training their brokers and employees for the Series 7, Series 6 and other exams. Most firms are not all the same. Your career goals and specialties may not be the same.
Features include:
  • Introduction to a career as a stockbroker and financial advisor
  • How companies hire
  • Firms to avoid
  • Discussion of all licenses and ones you should consider
  • Working as an Independent Broker
  • How Large firms and small work
  • Insurance and Investment Product Carriers
  • and More career information....
  • Series 7 Sponsorship
  • Series 6 Sponsor

Series 7 - Series 65 - Series 66 - Series 63


Or to get licensed NOW:

Monday, October 17, 2016

New York Insurance Live and Health Insurance Course - Life, Health Exam Online Licensing


We are fully accredited provider of insurance pre-license education course ware for New York. Because our training is entirely online and the lessons can be taken when you have time, our courses are perfect for today's hectic schedules.

We offer comprehensive training to help you ramp up your insurance career in New York. Be sure to check with your state to make sure you are meeting the requirements in New York prior to enrolling.

The Online Prep Course will allow you to learn and remember the critical insurance vocabulary, concepts and products that will be tested on your State Licensing Exam. You'll find no fluff, no nice-to-know, no war stories just the essential information that you will need to obtain your license. This crucial knowledge is presented in easy to read, user-friendly language that is devoid of legal complexities and legislative mumbo-jumbo. We've even taken care to clearly define the insurance terms before we use them.
Your state insurance regulators built an Exam Content Outline which dictates the information which we must include in the Online Course and Resource Guide. Parts I through III of the Course and Resource Guide make up the 'national core' portion (useful in any state). Part IV is the State Law section of your course.
The New York Life and Health Resource Guide mirrors the content, sequence and style of the Online Course. It fleshes out the subject matter, serves as a useful reference and provides a format that can be easily highlighted to organize and reduce the tedium of note taking. Our team of editors includes classroom instructors, insurance company trainers and testing engineers who have actually built insurance exams for use across the country. The Sagamore editorial team has as its motto, 'Dull is a 4 letter word.
If you should fall short on your first attempt to pass the State Exam, you are encouraged to send your results to your instructor. He will analyze your scores and develop a personalized review plan to organize your study and deliver it to you by email. You can then focus your efforts on the material that is most likely to produce a passing score on your next attempt.