SteelPath offers a selection of MLP mutual funds - the MLP Alpha Fund, the MLP Income Fund, and the MLP Select 40 Fund - so you can find the right MLP investment option for your needs.

1. Mlp investments, mlp investing, mlp, mlp funds - Steelpath
Author : Jim Knight
SteelPath offers a selection of MLP mutual funds - the MLP Alpha Fund, the MLP Income Fund, and the MLP
Select 40 Fund - so you can find the right MLP investment option for your needs.
Address :
2100 McKinney,14th Floor
Dallas, TX 75201
Contact us at : 888-614-6614
How Does Short Selling Affect the Market
Before embarking on a discussion on how short selling affects the market, it is important to clarify
what short selling is.
Short selling can be defined as “the practice of selling assets, usually securities, which have been
borrowed from a third party (usually a broker) with the intention of buying identical assets back at
a later date to return to the lender.” In other words, the short seller benefits from a decline in the
value of the assets between the dates of selling and repurchase. (Note: There are some costs
associate with borrowing the assets and paying any dividends declared on those assets within that
period.)
On the other hand, if the assets increase in value, the investor loses money. This is because,
unlike earlier, he will have to spend more to acquire those assets than he got by selling them.
This strategy of “shorting” or “going short” is the exact opposite of the strategy of “going long”
where the investor profits from an increase in asset value.
There is another version of short selling, an extreme version if you will. It is called “naked short
selling”. This is “the practice of short-selling a financial instrument without first borrowing the
security or ensuring that the security can be borrowed, as is conventionally done in a short sale”.
Naked short selling has been illegal in the US since 2008.
Now, since short selling is posited on asset prices falling, the practice has often been blamed for
stock market crashes. The London banking house of Neal, James, Fordyce and Down collapsed in
June 1772, precipitating a major banking crisis which included the collapse of almost every private
bank in Scotland and a major cash squeeze in London and Amsterdam, the leading financial
centers during those days.
One of the earliest such instances on the US was the Wall Street Crash of 1929 which led on to
the Great Depression. This led Congress to enact the uptick law banning short sellers from selling
shares during a downtick – the short had to be either at a price above the last traded price of the
security, or at the last traded price if that price was higher than the price in the previous trade. It
remained in effect till 2007.

2. In September 2008, a flurry of short selling, especially naked short selling, contributed to
excessive market volatility, leading to a three-week ban on shorting for 799 financial companies.
During this period, Germany, Ireland, Switzerland and Canada banned short selling leading
financial stocks, and France, the Netherlands and Belgium banned naked short selling leading
financial stocks. Australia went for a complete ban on the activity.
The stock markets are not the only ones affected by short selling. The collapse of the Dutch tulip
market in 17th century and the “breaking” of the Bank of England by George Soros when he sold
short more than $10 billion worth of pounds sterling are also examples of the extreme effects of
short selling.
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What are Stock Options and How Do They Work
It is easy to understand how stocks work in the ordinary sense – you buy low and sell high to
make money. Options, on the other hand, present some difficulty in understanding. So, here’s a
primer on what stock options are and how they work.
An option is a contract giving its owner the right to buy or sell an asset at a fixed price on or
before a given date. In case of stock options, this asset is a number of stocks of a particular
company, usually 100. Note that it gives the “right”, but is not an “obligation”. In other words, the
owner may choose not to exercise that right.
At this point, it may be advantageous to learn about some of the vocabulary associated with
options:
1. Strike or exercise price – the fixed price specified in the contract.
2. Expiration date – the date beyond which the option cannot be exercised.
3. American/European option – An American option may be exercised anytime before the
expiration date, but a European option can be exercised only on the expiration date.
There are two kinds of options – call and put.
Call option – This gives the owner to buy 100 stocks of a particular company at a particular price
within a particular period. For example, if the owner purchases a Microsoft call option with a strike
price of $100 and an expiration date of 20 February, he gets the right to buy 100 stocks of
Microsoft at the rate of $100 per stock on or before 20 February. Therefore, if the market price of
Microsoft stock on that date is more than $100, he has got a good deal and the option is said to
be “in the money”.
Therefore, it is obvious that he is going to exercise that option. On the other hand, if the market
price is less than the strike price, the option is said to be “out of the money”. In such a situation,
the owner will not exercise the option and his loss will be the purchase price of the option, which
is substantially less than the stock price.
Put option – This gives the owner to sell 100 stocks of a particular company at a particular price
within a particular period. For example, if the owner purchases a Microsoft put option with a strike
price of $100 and an expiration date of 20 February, he gets the right to sell 100 stocks of
Microsoft at the rate of $100 per stock on or before 20 February. Therefore, if at any time on or

3. before 20 February the price of the stock is less than $100, he can buy 100 stocks from the
market and sell them using the option.
Therefore, when the market price is below the strike price of a put option, it is said to be “in the
money”. If the market price is higher, then any stock already purchased can be sold for the
market price instead of exercising the option, which is said to be “out of the money”.
This is a basic overview of what stock options are and how they work.
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