Covering your assets

Article Abstract:

Covered call writing is a viable technique for protecting equity portfolios from the vagaries of the stock market. While effective in flat, up and down markets, the technique also has its share of disadvantages. A major flaw is a limited total return on investment for the option writer. Likewise, some approaches to covered call writing can be misleading, such as calculating a 'fair value' for outstanding options or ranking buy-and-write opportunities by either their rate or downside protection.

Evaluation, Options (Finance)

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Intercorporate shareholdings and corporate control in the Japanese firm

Article Abstract:

Japanese firms rely heavily on intercorporate shareholdings to resolve major managerial conflicts caused by threats of external takeovers. A model was developed to analyze the relationship between intercorporate shareholdings on the Japanese equity market and overall corporate stability. The results showed that in certain circumstances, the informal and implicit nature of intercorporate shareholdings protects the interests of all participants, raises stock values and ensures stability.

Research, Japan, Foreign corporations, Corporate governance

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Seeking the silent bulls

Article Abstract:

It is a little known fact that the most common method of share acquisition is through the exercise of stock purchase options rather than open market purchases. Stock options are normally used as incentives for company executives, who usually exercise their options and sell the underlying stock. However, some executives exercise their option but do not dispose of the underlying stocks. This practice is attributed to the larger yield received for exercising one's option.

Analysis

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