What Is a Butterfly Spread? The term butterfly spread refers to an options strategy that combines bull and bear spreads with a fixed risk and capped profit. These spreads are intended as a market-neutral strategy and pay off the most if the underlying asset does not move prior to option expiration. They involve either four
What Is Bill-and-Hold Basis? Bill-and-hold basis is a method of revenue recognition whereby revenue is recognized at the point of sale, but the goods aren’t delivered to the buyer until a later date. Note that this deviates from the generally accepted accounting principle (GAAP), which is to recognize revenue for a transaction at the point
What Is a Buy-Up? A buy-up is a type of rebate associated with home mortgage loans. It involves the lender offering an upfront cash incentive to the borrower in exchange for accepting a higher interest rate on the loan. Generally, buy-ups are more advantageous to the borrower if they expect to resell the purchased property
What Is Buy and Hold? Buy and hold is a passive investment strategy in which an investor buys stocks (or other types of securities such as ETFs) and holds them for a long period regardless of fluctuations in the market. An investor who uses a buy-and-hold strategy actively selects investments but has no concern for short-term price movements and
What is Buy and Homework “Buy and homework” is a phrase popularized by former hedge fund manager and TV personality Jim Cramer. The phrase is meant to stress the importance of conducting regular research on individual stock picks and investment decisions. Key Takeaways “Buy and homework” is a phrase popularized by Mad Money host Jim
What Is a Buy and Sell Agreement? A buy and sell agreement (or buy-sell agreement) is a legally binding contract that stipulates how a partner’s share of a business may be reassigned if that partner dies or otherwise leaves the business. Most often, the buy and sell agreement stipulates that the available share be sold
What Is a Buyback? A buyback, also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market. Companies buy back shares for a number of reasons, such as to increase the value of remaining shares available by reducing the supply or to prevent other shareholders from taking a controlling
What Is a Buyback Deductible? A buyback deductible is an insurance contract provision that allows an insured party to pay a higher premium to reduce or eliminate the deductible that the insured would have to pay if a claim is made. A buyback deductible (also called a deductible buyback) can be an add-on to an existing
What Is a Buyback Ratio? The buyback ratio is the amount of cash paid by a company for buying back its common shares over a time period, usually the past year, divided by its market capitalization at the beginning of the buyback period. The buyback ratio enables analysts to compare the potential impact of repurchases
What Is a Buyer’s Call? A buyer’s call is an agreement between a buyer and seller in which the purchase of a commodity is at a specific price above a futures contract that is for the same grade and quantity. The agreement gives the buyer the option to fix the commodity price by either purchasing
