What is American Option: Definition & Meaning Explained

Free Cash Flow

In accounting and earnings reports, free cash flow refers to the amount of money a company has after paying its maintenance expenses, salaries, utility expenses, and other operating expenses as well as capital expenditures.

The formula to calculate free cash flow: Operating Cash Flow − Capital Expenditures

Free cash flow is an important metric, especially for investors because it is a direct indicator of the financial competence of a company. For example, the amount of FCF a company has can decide whether it has enough cash to offer dividends, expand business, buy back shares, etc.

Iron Condor

The Iron Condor is an options trading strategy wherein the trader will buy two calls and two puts each with different strike prices but the same expiration date. It is a version of the Butterfly Option Strategy. If the underlying asset averages out or in other words, closes between the middle strike prices, then the Iron Condor generates the maximum profit.

Ex-Dividend Date

The ex-dividend date is the trading day on and after which a new buyer of the stock is not entitled to any dividends. Most traders say that a stock has gone ex-dividend when this happens.

Traditionally, the ex-dividend date is set a day before the record date when a company evaluates its records for existing shareholders. If a trader buys a stock that has gone ex-dividend from a seller, the one who'll get dividends is the seller.

Margin Funding

Margin funding is a feature offered by brokers that allows users to borrow funds from the broker to increase purchasing power for trading or investing in financial markets. Margin funding is effectively a loan and as a result, there’s collateral to be pledged in the form of shares either already owned to about to be bought. Thus, margin funding amplifies profit and loss.

Bought Out Deal

A bought-out deal is a stock offering where an investment bank buys the entire issue of shares from a company. In turn, the investment bank will attempt to sell the shares to other investors. A deal of this kind has two benefits:

The company need not worry about subscription as the investment bank will purchase the entire offering
The investment bank can negotiate with the company and get the shares at a discount

That said, there are risks to a bought out deal like:

It is up to the investment bank to sell the shares to investors in order to recoup the principal or make a profit
The investment bank also runs the risk of receiving no interest in the shares from other investors
Guarantee purchase

If the issue size of the bought-out deal is large enough, the investment bank may team up with others to fulfil the purchase.

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American Option

American Option

Definition of American Option

Free Cash Flow

Iron Condor

Ex-Dividend Date

Listing Date

Margin Funding

Bought Out Deal

Invest & Trade with a Trading
Platform That's #MadeForTrade

American Option

American Option

Definition of American Option

Free Cash Flow

Iron Condor

Ex-Dividend Date

Listing Date

Margin Funding

Bought Out Deal

Invest & Trade with a Trading Platform That's #MadeForTrade

Invest & Trade with a Trading
Platform That's #MadeForTrade