Theta tells time

If you have an investment strategy of buying calls, it suggests that you are bullish on the stock. What would your strike price be? What would your expiration date be? Keeping in mind the Greeks, such as theta (time value) and our understanding thereof, we may decide to buy calls that expire three months, six months or a year from the current date. We needs must remember that call options that have a twelve-month expiration period maybe expensive.

When we think of such longish expiration periods, we wonder what is the reasoning and rationale behind weekly options? Who would ever buy weekly calls? Or do they write weekly covered calls?

When we attempt to study the volume and open interest of option trades, we are unable to decipher without stock trader backing whether the day’s volume focused on purchase or sale of the option under consideration. We can study the volume of a stock and estimate whether the stock was overwhelming bought or sold at particular periods of the day. There are even more sophisticated investment instruments available that will advise us of the dollar volume being traded during differing periods of the day. This information is not readily available for options.

Therefore, when we attempt to invest after-tax income in options, we must remember that our investment may result in a complete loss. We may be marginally fortunate if we walk away with a minimal loss if we perceive that our anticipated bull has turned into a bear for psychological, emotional, financial or economic reasons. Moreover, unlike securities which may provide us with a steady(?) dividend income, no dividend income is obtainable from stock options.

I do extensive investment analysis of your portfolio. I also provide a second opinion on your investments after analysis. I have long-term experience in preparing convoluted capital gains (losses) schedules for taxation purposes.

Please reach out for your professional bookkeeping, payroll, management consulting, capital gains, personal and corporate tax requirements to me ceo@TrushaDesai.com #TrushaDesai.com

Cash Flows like a Brook

As we are almost at the six-month mark of 2016, we can look at the past fifteen years of this millennium, and pause: did the hype of the year 2000 and all its resultant technological ramifications come to pass? Or did we just wing it, thanks to the like of Microsoft, Google and hundreds of thousands of computer programmers around the world?

Perhaps this is why we need to put pause on our worries for tomorrow. What we really need to do is plan, target, and achieve. It may not be necessary to achieve all that we targeted or planned, but it probably moves us from the stationary position. Once we have momentum, we can gain acceleration. Therefore, when the Federal Reserve’s Chair, Janet Yellen announces today that companies are making fewer investments while there is a lukewarm economic prognosis, interest rates will be held steady, we need to understand how a tepid economy will affect us directly.

How does that affect us on a micro-level? We might decide to sock away that mason jar of change into an interest-bearing savings account for year-end and religious festivities. Or we may decide to stash away that extra chunk of change in our chequing account into a savings account for tax liabilities. Or we may decide on (yet another) staycation this summer. Or else, we may simply do a reverse mortgage (if we are fortunate enough to hold real estate) or draw on that line of credit or carry our credit card balance to the max. This is when we realize that cash flow on a personal and business level is an extremely sticky phenomenon and we must siphon a few months’ cash requirements in a touch-me-not account.

In as brief a manner as possible, I would like to state that I am a Certified QuickBooks ProAdvisor, I have experience in porting various software to QuickBooks Online. I can obtain a wholesale rate for you, should you decide to switch. I am highly proficient at other software too. I specialize in year-end reconciliation, GST reporting and payroll. I can assist with your investment analysis, provide a second opinion on your investments. I do strategize innovatively so that your business can flourish. And yes, cash flow is my business. I specialize in cash flow management and forecasting.

I do hope that today’s blog will prompt you to peek at my website and we may strike a mutually symbiotic professional relationship. #TrushaDesai.com

#businessplanning #strategy #smallbusiness #financialcoaching

Bond away

Chart courtesy thismatter.com

When the stock market is in a bullish frenzy, we are all in the game of nabbing capital gain (so that at the end of the year we can write off losses ~ if that is our protocol). We ignore the dividend yield and dividend growth strategies that we had carefully crafted, for gain is instant gratification while dividends are only a quarterly or monthly (or perhaps an annual) phenomenon. For who knows whether the dividend yield that is posted will change in either direction before the next dividend is announced: if yield goes up, we spend it all on a dinner, if gain goes down, we buy frozen dinners and glare at the reality television shows that yesterday were our favorites.

Through all these roller coaster rides of stocks, commodities, currencies, futures, options, we forget the inherent safety net (other than cold hard cash) of bonds.

We have looked at ladders, we have studied ask yields and ask prices, but have we wondered why there are some bonds that do not have corresponding bid yields and bid prices? Ask yields are a conglomerate of the posted interest and ask price. Therefore, other than going for a high-risk, high-yield strategy of what is commonly termed “junk bonds”, we might invest in ETF’s (Exchange-Traded Funds). However, with ETF’s mushrooming in every corner of the investment world, we must study their MER’s (Management Expense Ratios), distribution yields and performance. As always, we must remember that all investment strategies carry risk: and bonds may provide a safe haven, in terms of a hedge, when the rest of the portfolio crashes (or hopefully not).

Please contact your investment adviser for more discussion and recommendations. We are available to provide you with a second opinion and investment analysis. We prepare extensive Capital Gain schedules (Schedule 3, T5018) for Canadian personal taxes. #TrushaDesai.com

#financialplanning #investments #financialcoaching