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Finance GlossaryBox Spread
Box Spread
Definition of Box Spread
A box spread is a trading strategy that involves buying a bull call spread and a matching bear put spread. The components of a box spread are designed as so:
- Bull call spread : two call options with a lower and upper strike price
- Bear put spread : buying and selling puts at different strike prices of the same underlying asset with the same expiration
Related Terms
Gold Futures
Gold futures are commodity derivatives that derive their value from gold bullion. A trader who buys a gold futures contract acquires the right and obligation to buy gold at a later date and price that’s pre-agreed. Gold futures in India are eligible for physical delivery once the terms of the contract are successfully fulfilled.
Futures
Futures are derivative contracts that serve as an agreement and obligation between two parties to buy or sell underlying securities at a pre-agreed price and date. Underlying securities in futures can be stocks, bonds, interest rates, currencies, and commodities.
Comparable Company Analysis
Comparable Company Analysis (CCA) is a method used to evaluate a company’s value by comparing its essential metrics like EBIT, EBITA, and more with other companies.
The underlying assumption of CCA or “Comps” is that publicly traded companies from the same sector or industry will have similar metrics that are comparable.
The underlying assumption of CCA or “Comps” is that publicly traded companies from the same sector or industry will have similar metrics that are comparable.
Quarterly Results
Quarterly Results refer to the financial statements released by publicly listed companies every three months, covering a specific quarter of the fiscal year. These reports include income statements, balance sheets, cash flow statements, and key metrics like revenue, net profit, earnings per share (EPS), expenses, etc. They offer investors and analysts a snapshot of operational performance, growth trends, and future guidance, enabling better assessment of the company’s financial health and strategic direction compared to annual reports.
Net Worth
Net Worth represents the overall financial value of an individual or company after subtracting total liabilities from total assets. It shows the true financial position at a given point in time and is commonly used to assess financial strength and stability.
Block Trade
A block trade is a substantially large buy or sell order for a stock, commodity, or other security. Block trades are typically done by institutional investors like hedge funds, mutual funds, and others to mask the true size of the transaction.
Shares change hands between companies after the price of the security is privately negotiated. Most block trades are routed through investment banks and executed outside the conventional market.
Shares change hands between companies after the price of the security is privately negotiated. Most block trades are routed through investment banks and executed outside the conventional market.
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