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  • Writer's pictureTrusha Desai

Geeky Greeks (not the yogurt kind)

Accounting, GST, taxes, bookkeeping

Chart courtesy

As Spring has sprung and cherry blossom vie with magnolia and tulips for predominance, we are at the close of another weekly options trading day on the $DOW. Did we win? Did we lose? Did we leave with pocket change? Or were we simply assigned? It all depends on our underlying, our bid, our strike, and the all-important Greeks. Whether Delta (rate of change of the option price vis-à-vis the underlying’s price) is your prime focus, or Theta (time sensitivity) and Vega (sensitivity to volatility), it is ideal to look at all the Greeks or as many as you are familiar with, and open your position accordingly. And close it pronto, in a hurry, when the underlying price changes dramatically.

Options have a greater risk possibility than any other financial trade. With stocks, if you have a dividend yield of some sort, there is a high probability of a steady quarterly / monthly / annual income. With bonds, there is the possibility of a steady stream of interest income, provided we have not been too greedy and opted for high yield. With both bonds and stocks, there is a chance of capital gain at some point in the lifetime of the investment or investor … whichever expires earlier. For there is not much of a point in a grow-and-hold investment strategy if you are not going to be around to reap the fruit and all your progeny and heirs will be slapped with is estate duty. Please obtain tax advisory services before you invest. We have over ten years of experience in efiling Canadian personal taxes.

This is merely a dip into a vast mine of information, please obtain advice from your financial planner. We do detailed investment analysis and with over fifteen years of international investment experience, are in a position to provide you with a second opinion. We prepare extensive Capital Gain schedules (Schedule 3, T5018) for Canadian personal

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