Wait, what is the point of buying a prepaid forward again?

vendredi 27 février 2015

Suppose a stock pays no dividends, then the prepaid forward price = current stock price.



Why would I buy a prepaid forward instead of just outright buying the stock?



They both cost the same.



If I owned the stock from now until time t, the expiration date of the prepaid forward, then if the stock price were to jump significantly before the time t I could sell the stock and make a profit. If I merely owned the prepaid forward I can't do that.





Wait, what is the point of buying a prepaid forward again?

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