Bear call spreads, or bear call credit spreads, are options strategies employed by options traders who expect the underlying assets price to decline in the future. So, it’s a bearish approach because the expectation is about a decrease in the price for underlying assets. Further, it’s a credit spread because the net premium received is …
Bull put spread is an options strategy; it’s suitable for the traders that want to limit their loss. However, it comes with restricted profitability. In this article, we shall discuss detailed characteristics of the strategy, including opening the position. An investor uses a bull put spread when they believe the underlying asset will rise moderately …
Credit spreads and debit spreads are the strategies to trade-in options. In the title context, the spread is a difference between receipt and payment of the premium on writing/purchasing options. So, if the receipt is higher than payment on exchange of options, it’s called credit spread. On the other hand, if payment is higher than …
Credit Spreads vs debit spreads: What are the Differences? Read More »
Options are a derivate instrument, and their value is dependent on the underlying assets. It’s used to realize speculation on the movement of an underlying asset. If the price of the underlying asset moves in expectation of the buyer of the options, it generates a financial return for them. The other side movement can lead …
What are credit spread options? Butterfly and Condor strategy of options Read More »
Definition Credit spread refers to the yield differences between two bonds of the same maturity and different credit quality. One of the bonds is typically set as a benchmark. For instance, one bond can be a US Treasury bond (benchmark), and the other can be a corporate bond; there is an expected yield difference between …
What is Credit Spread? Definition, Formula, Example, Interpretation, and More Read More »
Companies issue convertible debt that may come with embedded conversion features. These debt instruments are useful for issuing entities to raise capital. Investors can enjoy additional benefits of embedded conversion features as well as convertible debt features. Let us discuss the extinguishment of debt with an embedded conversion feature and its accounting treatment. Debt with …
Accounting for Extinguishment of Debt with an Embedded Conversion Feature Read More »
Convertible debt comes with a conversion feature for investors to buy stocks of the issuer. The investors can enjoy the benefits of fixed-income instruments and later can subscribe to shares of the issuing company. Issuers can attract investors by attaching the stock warrants to the convertible debt as well. The feature further acts as a …
Accounting for Convertible Debt Issued with Stock Warrants Read More »
Detachable warrants act as freestanding instruments that companies use to attract investors. Generally, companies attach stocks with debt instruments such as bonds to attract investors. Detachable warrants offer several benefits to the issuers. The accounting treatment of detachable warrants largely depends on the classification of the warrants into liability or equity. Let us discuss what …
Fintech is one particular field that has seen exponential growth in the recent past. In this article, we briefly describe the top 10 best books about Fintech that you should be aware of. So let get started! Disclosure: This article includes affiliate links. As an Amazon associate participant, I earn a small commission on any …
In layman’s terms, both the warranty and guarantee may seem similar. However, both of these terms differ in definition, accounting treatment, and the obligation for all parties involved. Let us discuss the definitions and see the key differences between a warranty and a guarantee. Warranty – Definition A warranty is an assurance to a customer …
