Hey all,
I’m an avid stock market follower but for some reason this basic answer is stumping me.
Suppose Johnny wants to buy Stock A, but Stock A costs like $540. Johnny only has $2160 and wants to get way more than just 4 shares.
What’s the name of the derivative that is basically a contract pegged to that stock that’s 1% of it’s total value? Like instead of $540, he can pay $5.40 and if it goes to $580, his shares would be worth $5.80 each and he could sell for $0.40/per.
If there isn’t a derivative like that already in existence, why not? Regulatory issues? Lack of interest? Logistical problems?
I figured with all the options and derivatives we have these days, this would be a rather popular option to offer.
I guess one would need to make it an ETP, then let it trade like a futures contract, right? Or possibly a market maker could simply “fund” the creation of such an option and once enough players entered the given market for that contract, it would buy/sell on its own right?
I figured this would be most akin to an ETP, but it seems like ETPs are pegged exclusively to a fund of some sort or in the rare nuanced cases, some measure of an index (S&P500) like the VIX.
Could I create the “StockAoption” and “InverseStockAOption” for this?
Just spitballing here. Any and all responses/feedback would be appreciated.
Submitted February 23, 2018 at 06:07PM by Randomshortdude http://ift.tt/2onVi2f
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