![]() The SharePlus guarantees your investment and gives you returns of up to 25%*" (I'm not sure what the asterisk next to the 25% is for). Standard Bank's website describes SharePlus as being a "24 month investment account that provides returns linked to the growth in the ALSI40, the top 40 shares on the JSE by market capitalisation. That's not to say it wont outperform, even products that face structural headwinds can outperform, and of course sometimes it's me getting it wrong. I'd earn a miserable call rate of interest for a few days before investment commences and if there's any delay afterwards (minor).Īnd last but not least, I do my investing in JSE shares myself, and I think there are better counters to be investing in than an ALSI40 bundle. I'd be taking on an additional layer of credit risk, as I'd now be exposed to credit risk of the ALSI40 companies, as well as to the credit risk of Standard Bank. Tax - do returns count as income (interest?) or capital gains? (sounds like it counts as interest for purposes of tax - consultant wasn't clear on it - they'll give you an IT3B). Giving up excess returns and the dividends is too high a price for me. I don't place a lot of value on a 2 year capital guarantee, as my investment horizon is some 50 years. (although it'll be different going forward). You lose out on the dividends, as the ALSI40 excludes dividends. OK, I wont be investing in this either (note that some of this writeup is based on a conversation with a Standard Bank consultant, who may not have had an intimate knowledge of the product): After doing a writeup on the Investec S&P500 Growth ESP, a reader asked me to share my thoughts on the Standard Bank SharePlus product. However, if a stock is owned for more than one year when a protective put is purchased, then the gain or loss on the stock is considered long-term regardless of whether the put is exercised, sold at a profit or loss or expires worthless.21 June 2012. If a stock is owned for less than one year when a protective put is purchased, then the holding period of the stock starts over for tax purposes. If a stock is held for more than one year before it is sold, then long-term rates apply, regardless of whether the put was sold at a profit or loss or expired worthless.Ī “protective put” implies that stock was purchased previously and that puts are being purchased against an existing stock position, and protective puts can affect the holding period of the stock for tax purposes. A “married put” implies that stock and puts are purchased at the same time, and married puts do not affect the holding period of the stock. The following topics are summarized from the brochure, “ Taxes and Investing” published by The Options Industry Council and available free of charge from “Protective puts” and “married puts” involve the same combination of long stock and long puts on a share-for-share basis, but the names imply a difference in timing of when the puts are purchased. Investors should seek professional tax advice when calculating taxes on options transactions. As a result, the tax rate on the profit or loss from the stock can be affected. There are important tax considerations in a protective put strategy, because the timing of protective put can affect the holding period of the stock. In a protective put position, the negative delta of the long put reduces the sensitivity of the total position to changes in stock price, but the net delta is always positive. ![]() Out-of-the-money long puts tend to have deltas between zero and -50%. In-the-money long puts tend to have deltas between -50% and -100%. Similarly, a $1 stock price rise causes an at-the-money long put to lose about 50 cents per share. Rather, puts change in price based on their “delta.” The delta of a long at-the-money put is typically about -50%, so a $1 stock price decline causes an at-the-money long put to make about 50 cents per share. Put prices generally do not change dollar-for-dollar with changes in the price of the underlying stock. And, when the stock price declines, the long put increases in price and earns a profit. When the stock price rises, the long put decreases in price and incurs a loss. The value of a long put changes opposite to changes in the stock price. Although value of the two parts, the long stock and the long put, change in different directions, in the language of options, a protective put position has a “positive delta.” The total value of a protective put position (stock price plus put price) rises when the price of the underlying stock rises and falls when the stock price falls.
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