Stock Replacement Strategy

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Dictionary Says

Definition of 'Stock Replacement Strategy'

An investment strategy that attempts to mimic the returns of a certain asset or group of assets by using a combination of different derivatives rather than buying the individual shares in the market. Traders will attempt to profit from the leverage found in options and futures because they can provide the same type of exposure to the underlying asset for a lower cost than if the trader were to buy the underlying assets outright.
Investopedia Says

Investopedia explains 'Stock Replacement Strategy'

An example of a stock replacement strategy would be to buy deep in-the-money options. The reason many traders use this strategy is because the delta of deep in-the-money options is close to 1, which means that the option will increase by $1 for every favorable $1 move in the underlying security. Buying in-the-money options allows a trader to have the same type of exposure to a stock for a lower cost than having to buy the shares. However, keep in mind that incorporating leverage creates a new set of risks, so it is a good idea to contact your financial advisor before incorporating a stock replacement strategy into your investment portfolio.

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'Stock Replacement Strategy'

  • Rolling LEAP Options

    http://www.investopedia.com/articles/optioninvestor/07/rolling_leaps.asp
    ... Substituting a financial derivative for a stock is known as a Stock Replacement
    strategy, and is used to improve overall capital efficiency. ...

  • The 4 Advantages of Options

    http://www.investopedia.com/articles/optioninvestor/06/Options4Advantages.asp
    ... properly. However, this strategy, known as stock replacement, is not only
    viable but also practical and cost efficient. (For more ...

  • Sara Lee Analyst Day Review

    http://stocks.investopedia.com/stock-analysis/2010/Sara-Lee-Analyst-Day-Review-SLE0921.aspx
    ... Capital Strategy. ... was named the interim CEO until a decision is made on a replacement. ...
    substantial capital to shareholders through more buybacks of stock and a ...

  • Industrial-Strength Dividends

    http://stocks.investopedia.com/stock-analysis/2009/Industrial-Strength-Dividends-WMIPPGGPCEMR0529.aspx
    ... The stock trades 25% higher today than its 52 ... in auto and other industrial replacement
    parts, and ... you reasonable dividends is always a strategy worth considering ...

  • Is It Time To Jump In The Pool?

    http://stocks.investopedia.com/stock-analysis/2010/Is-It-Time-To-Jump-In-The-Pool-POOL0917.aspx
    ... POOL. Pool Corp (NYSE:POOL) outlined its strategy at a ... A Market Downturn. Get Free
    Stock Analysis By ... with the balance split between replacement and refurbishment ...

  • ConocoPhillips' Upstream Report

    http://stocks.investopedia.com/stock-analysis/2010/Conoco-Phillips-Upstream-Report-COP0330.aspx
    ... Get Free Stock Analysis By Email. ... Upstream Goals ConocoPhillips strategy in the upstream
    is to achieve a reserve replacement rate of more than 100%, while ...

  • Johnson Controls Sets Up For 2012

    http://stocks.investopedia.com/stock-analysis/2011/Johnson-Controls-Sets-Up-For-2012-JCI-LII-UTX-LEA1026.aspx
    ... to favor new construction or replacement of existing ... Although this strategy is sound
    and appropriate given ... Use the Investopedia Stock Simulator to trade the ...

  • Should Investors Circle Back To Cubist?

    http://stocks.investopedia.com/stock-analysis/2011/Should-Investors-Circle-Back-To-Cubist--CBST-LLY-FRX-PFE-TEVA-OPTR-AZN0719.aspx
    ... would not rise to that of a replacement for Cubicin ... fuel a major rise in the stock
    price apart ... look overseas for diversification - but that strategy comes with ...

  • Would A Smaller HP Be A Better HP?

    http://stocks.investopedia.com/stock-analysis/2011/Would-A-Smaller-HP-Be-A-Better-HP--HPQ-DELL-LXK-CAJ-AAPL0707.aspx
    ... the relatively poor valuation on HP's stock and suggested ... most part it's a slow-growth
    replacement/upgrade market ... seem to be a great success strategy for larger ...

  • 2010: The Year In Med-Tech Deals

    http://stocks.investopedia.com/stock-analysis/2010/2010-The-Year-In-Med-Tech-Deals-COV-MDT-STJ-BSX-GE-TMO-BEC1229.aspx
    ... but it seemed to help Covidien's stock do a ... with interests in heart surgery, valve
    replacement, ablation, and ... the company took a different strategy to its M&A ...

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