A New Video by an Experienced Investor Delves Into Options

Many investors stick to bonds or mutual funds, and those can be appropriate investments for many purposes. On the either hand, it can also pay to understand when it might make more sense to look into assets of other kinds.

In particular, a variety of derivatives allow for things to be accomplished that would be more or less impossible for those who stick to the financial instruments they are based upon. Options, for example, provide investors with leverage that even an especially generous margin account will not normally enable.

Unfortunately, many investors feel intimidated by options and other derivatives, a situation that is not helped by the reputation they have for being difficult to master. A video by Markus Heitkoetter online, however, makes it clear that any investor with a bit of confidence and a willingness to learn should have no trouble.

Betting That a Stock Will Move at Least a Certain Amount in a Particular Direction

As most investors already realize, there are two basic types of options. Each has its own purpose and the two can also be combined to achieve particular goals:

  • Call options provide their owners with the ability to buy a certain amount of stock at a predetermined, unvarying price, wherever that issue might currently be trading.
  • Put options do the same with regard to selling, once again at a set price that does not change after the option has been written.

The Two Factors That Determine the Current Price of an Option Contract

The value of any given option also depends upon two factors, although how much each contributes to its current price can vary in fairly subtle ways. These factors are:

  • The strike price relative to the price at which the option is currently trading and the style of the derivative in question.
  • The expiration date by which the option must be exercised if the owner wishes to do so at all.

Any option that can currently be exercised to produce a profit should always be worth at least a similar amount of money. An option with some time remaining before its expiration date can be worth a significant amount of money even when it is still on the wrong side of its strike price. This reflects the fact that things can still change in the meantime.

Sub-Prime Mortgages, Direct Lenders, and Figuring Out all the Craziness

Subprime mortgages have caused needless heartache for many homeowners because they were not implemented properly or they were abused. It all seems like a crazy mess. Given the state of the real estate market for millions of Americans just a few years ago (and still being strongly felt today), it is not hard to see some skepticism. So, what is all this craziness? How can aspiring homeowners get a grip on an industry that seems too busy for its own good?

The Sub-Prime System

Firstly, this article can’t solve everything. But, it can offer just a splash of insight into direct lending and sub-primes. The sub-prime mortgage market is essentially a scaled system that looks at borrower’s credit. Why it was such a problem in the past was that it allowed virtually anyone to get a loan (this is the essence of it). The system scaled itself out of relevance in 2009. In 2017, sub-prime mortgages are mortgages appropriated to credit history and borrowing history based on bankruptcy, credit score, etc.

Direct Lending

Direct lenders are companies that avoid a lot of the bank-related red tape. To get a mortgage, most people go through a bank that uses this sub-prime format. But, their credit does not fit because the subprime mortgage industry has tightened up.

Instead of opting to never own a house, they have an alternative choice- a direct lender. A sub-prime lender has many financial sources and channels that a borrower may contend with. When borrowers work with a direct lender, they only have one- the lender. It is a way for them to connect directly to the financial source without the burdensome red tape that is often present in the subprime system.

For more information on direct lending, see Dustin Dimisa on Twitter. He writes about this constantly and has developed a spectacular program called Consumer Connect. Clients can receive direct loans from direct lenders with full transparency. They can avoid a lot of the large and encompassing aspects of mortgage lending that can weigh down owning a home. With Consumer Connect, it is possible for people to realize their dream of home ownership with as little complex and needless red tape as possible.