Traded Options II - Hedging, Risks and Taxation

Article Abstract:

Hedging involves buying and selling of call and put options. A call option is bought with a view to buy a stock cheaply, to insure against a rise in the stock and to provide gearing. A call option is sold to generate additional cash flow, to obtain price protection for failure sales and to protect profits against a short term price fall. A put option is bought to allow an investor to take a bearish view and to take a geared position. A put option is sold in order to increase income and to buy shares at a fixed price. Risk involved in trade option is the premium paid for the option. Profit and losses involved in trade options are deemed to be a capital nature. All profits are subject to capital gains tax. All losses are offset against profits in trade options.

Taxation, Options (Finance), Hedging (Finance), Securities

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Routine Planning for the Company Year-End

Article Abstract:

Tax planning for the company includes identifying claims in respect of past events and undertaking transactions with effects on future periods. For companies, the major claims are either to be made within two years or six years of the accounting period to which they refer. The two areas to be considered are: income to be taxed and deductions to be made. Deductions to be considered are: capital allowance on plant and machinery, initial allowance on acquisition of asset, charges on income, and level of service charge in the case of group of companies. If the taxable profit is thirty and fifty per cent, steps should be considered to reduce the profit to below thirty per cent.

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