Capital Decay

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Dictionary Says

Definition of 'Capital Decay'

An economic term denoting the amount of revenue that is lost by a company due to obsolete technology or outdated business practices. Capital decay is a growing problem for firms, as the rate of technological development continues to increase. This financial malady can cause firms without current technology to struggle to keep up with competitors.

Investopedia Says

Investopedia explains 'Capital Decay'

Capital decay was the boon of many firms in the early twentieth century, when modern production methods first came into use. When Henry Ford began to employ the assembly line for car production, firms that used the same employee to build an entire car suffered from capital decay and either went out of business or sold out to Ford or another competitor.
Search results for

'Capital Decay'

  • S&P 500 Options On Futures: Profiting From Time-Value Decay

    http://www.investopedia.com/articles/optioninvestor/02/071702.asp
    S&P 500 Options On Futures: Profiting From Time-Value Decay. ... if the market moves
    against you, so it is important to have sufficient capital to stay with the ...

  • Practical And Affordable Hedging Strategies

    http://www.investopedia.com/articles/optioninvestor/07/affordable-hedging.asp
    ... In the example, buying puts at higher strike prices results in less capital at risk ...
    Time Decay: Like all long option positions, every day that an option moves ...

  • Options Greeks: Theta Risk and Reward | Investopedia

    http://www.investopedia.com/university/option-greeks/greeks4.asp
    ... by John Summa (Contact Author | Biography) Time value decay, the so ... For option buyers,
    therefore, the pain of slowly eroding your trading capital sours the ...

  • The Importance Of Time Value In Options Trading

    http://www.investopedia.com/articles/optioninvestor/02/021302.asp
    ... capital. But these straight option buyers miss many of the best features of stock
    and commodity options - such as the opportunity to turn time-value decay into ...

  • Gamma-Delta Neutral Option Spreads

    http://www.investopedia.com/articles/optioninvestor/07/gamm_delta_neutral.asp
    ... With this spread, we will be exploiting the decay of theta to our advantage ... credits,
    the strategy we've detailed would require about $32,000 in capital to set ...

  • Option Spreads: Vertical Spreads | Investopedia

    http://www.investopedia.com/university/optionspreadstrategies/optionspreads2.asp
    ... conserved capital allows for greater diversification, for instance. And with credit
    spreads (which will be discussed next), which profit from time value decay, ...

  • Tax-Loss Harvesting: Reduce Investment Losses

    http://www.investopedia.com/articles/taxes/08/tax-loss-harvesting.asp
    ... Equities.) Income Threshold Another limitation is that as of 2011, a capital loss
    by ... forward for use on future tax returns, creating only a slight decay in the ...

  • Covered Call Strategies For A Falling Market

    http://www.investopedia.com/articles/08/covered-call-strategy.asp
    ... Because the goal of the investor is to minimize time decay, the LEAPS ... of the underlying
    covered call strategy must be higher than the cost of borrowed capital. ...

  • Options Greeks: Inter-Greeks Behavior | Investopedia

    http://www.investopedia.com/university/option-greeks/greeks7.asp
    ... Delta Values w/ No Time Value Decay. 0, 58.63, 38.05. ... But the fall in Delta is higher
    for the at- and out-of-the-money calls. Assumes no time value decay. ...

  • Leveraged Investment Showdown

    http://www.investopedia.com/articles/optioninvestor/07/sources-leverage.asp
    ... the initial premium, the leverage provided, and the rate of time decay. ... at lower
    interest rates than margin loans, resulting in greater capital efficiency and ...

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