Mit x Dollar bewegt [der Investor] einen Gegenwert von y Dollar.
| 06:54 Oct 29, 2007 |
| German to English translations [PRO] Bus/Financial - Finance (general) | |||||||
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| 3 | leveraging |
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| 3 | control |
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Answers
6 hrs confidence: 
leveraging Explanation: what else? -------------------------------------------------- Note added at 8 hrs (2007-10-29 15:53:56 GMT) -------------------------------------------------- I don't see how you could do this without borrowing, either explicity like a hedge fund or implicitly through margin trading (see e.g. the title of this article o margin trading: http://stocks.about.com/od/advancedtrading/a/Martrade010305.... |
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1 day 7 hrs confidence:
control Explanation: With an investment of $x, the holder controls $y They talk about derivatives, in this case options. To simplify, a basic example: A stock trades at $50 a share. You expect the stock to rise within the next three months, but don't wish to spend the full $50. Instead, to gain 'leverage', you buy a 3 month forward call at the $50 'strike price', which gives you the right (without the obligation) for three months to get the $50 price no matter how much the stock advances. The call may cost $5-$6 depending on the stock's volatility. Prior to the date of expiration (after 3 months) the stock trades at $75. When "in the money", the 'call option' will trade dollar for dollar with the stock. You paid $6 dollar for the option, when the stock moves, e.g., to $75, the option is worth at least $25. Minus the $6, your profit is $19. With an actual cost of $6, you "control" (essentially own for 3 months) $50 worth of stock. That's what the pros call it. Conversely, if the stock drops to $45 at expiration, the call will be worthless and you lose the $6 forever. |
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