Others

US Inflation Cools as July CPI Data Shows Stabilization

Updated On 12 August 2025
by
FOMC meeting september 2025

The latest Consumer Price Index (CPI) report, released by the U.S. Bureau of Labor Statistics (BLS) on August 12, 2025, indicates a continued cooling of inflationary pressures. The all-items CPI, often referred to as headline inflation, rose by 2.7% on a year-over-year (YoY) basis in July, unchanged from the previous month’s rate. On a month-over-month (MoM) basis, prices increased by 0.2%.

This data reflects ongoing progress toward the Federal Reserve’s 2% inflation target, down from peaks above 9% in 2022, though some underlying pressures persist.

Understanding the Key Metrics

The CPI measures the average change in prices paid by urban consumers for a basket of goods and services.

  • CPI-U: The Consumer Price Index for All Urban Consumers is the broadest and most commonly cited measure of inflation, covering about 93% of the U.S. population. It includes a wide range of expenses, from food and housing to transportation and medical care.
  • Core CPI: This version removes volatile food and energy prices to give a clearer picture of underlying inflation trends. In July, Core CPI rose by 3.1% YoY, showing that while headline inflation is moderating, prices for goods and services outside food and energy remain a factor.

Breakdown of Major Categories

CategoryMoM ChangeYoY ChangeNotes
Shelter (Housing)+0.2%+3.7%Remains a major driver of core inflation due to lingering rent and homeownership costs
Food0.0%+2.2%Food at home dipped slightly (-0.1% MoM) but overall stable
Energy-1.1%-1.6%Gasoline prices fell sharply (-2.2% MoM, -9.5% YoY) easing overall pressures
Medical Care+0.4%+3.5%Steady increases in healthcare services
Motor Vehicle Insurance+0.5%+5.3%One of the hotter areas, reflecting higher repair and claim costs
Core (ex-food/energy)+0.3%+3.1%Shows stickier inflation in non-volatile items

While some areas like energy are cooling, others like housing and insurance are keeping costs elevated for many households.

Comparison to Expectations and Trends

The July data largely met economists’ expectations, with headline CPI in line at 2.7% YoY and 0.2% MoM. However, core CPI came in slightly higher than anticipated (3.1% YoY vs. a forecasted 3.0%), signaling that underlying inflation is not cooling as quickly as hoped.

Inflation has been on a downward trajectory since mid-2022, but the pace has slowed recently, with rates hovering around 2.7–3.0% over the past few months.

How CPI is Calculated

The CPI data is released every month and is a statistical estimate based on a weighted average of prices.

The BLS collects around 80,000 price quotes monthly from retail stores and service establishments. These prices are compared on both a month-over-month and year-over-year basis.

The YoY comparison is generally considered more reliable for tracking long-term trends, as it removes seasonal fluctuations. For example, comparing July 2025’s prices to July 2024’s provides a more stable view than comparing July to June, which might be influenced by seasonal demand.

Implications for Everyday People and the Economy

Moderating inflation means your purchasing power is not eroding as quickly. Groceries, gas, and other essentials might stabilize or even drop in some cases. With headline inflation at 2.7%, closer to the Fed’s 2% goal, there is growing expectation for interest rate cuts soon, which could make borrowing cheaper for homes, cars, or credit cards.

However, sticky core inflation (driven by shelter and services) suggests challenges remain, especially for renters facing higher housing costs or drivers dealing with rising insurance premiums. Overall, this report is positive for economic stability but underscores the need to monitor categories that affect daily life.

CPI’s Influence on Federal Reserve Policy and Stock Markets

The CPI plays a pivotal role in shaping monetary policy and financial markets.

The Federal Reserve, the U.S. central bank, adjusts interest rates to achieve its dual mandate of maximum employment and stable prices. When inflation runs high, the Fed raises rates to cool the economy by making borrowing more expensive, reducing spending and investment. Conversely, when inflation moderates, as in the July report, the Fed may cut rates to stimulate growth by lowering borrowing costs, encouraging business expansion and consumer spending.

July’s CPI data, with headline inflation steady at 2.7% and core at 3.1%, has fueled market bets on a September rate cut, easing fears of tariff-driven spikes and increasing the odds of 75 basis points of cuts in the final three Fed meetings of 2025. While the slight uptick in core inflation may not halt cuts, it highlights the need for ongoing vigilance.

For U.S. stock markets, CPI data is significant because it signals potential Fed actions that directly impact valuations. Lower-than-expected inflation boosts investor confidence in rate cuts, leading to rallies as cheaper borrowing supports corporate profits and economic expansion.

High inflation readings, however, could prompt rate hikes, pressuring stocks by increasing costs and reducing growth prospects.

CPI often acts as a barometer for market sentiment, with softer data sparking broad gains in equities.

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

How Options Are Priced – A Simple Guide

Updated On 15 August 2025
by
Option Pricing: Components, Black–Scholes, Put–Call Parity, and Futures vs Spot

Options are not priced randomly. They follow certain principles and mathematical models that take multiple factors into account. Let’s break down the components and logic behind how options are priced, and also understand some important related concepts.

1. Components Behind Option Pricing

The price of an option depends mainly on:

  • Price of the Underlying Asset – Whether it is a stock, index, or commodity.
  • Intrinsic Value – The part of the option price that comes from how much the option is “in the money.”
  • Time to Expiration – More time means more chances for the option to move in your favour.
  • Volatility – How much the underlying price is expected to move.
  • Interest Rates – Market interest rates also have a small but measurable impact on option pricing.

These components work together in a formula. The most popular formula is the Black–Scholes Model, which takes all these inputs to calculate a fair price for the option.

2. The Basic Option Price Formula

Option Price = Intrinsic Value + Extrinsic Value

  • Extrinsic value includes Time Value + Implied Volatility value.

If an option is at the moment of expiration, the time value becomes zero. At that point, the option price equals only the intrinsic value. This is because the “Theta component” (rate of time decay) has fully eroded.

3. Role of Theta – Time Decay

The Theta of an option measures how fast its price will fall as time passes, assuming all else remains the same.

The Theta of an option measures the rate at which its value declines each day as expiration approaches, assuming all else remains unchanged.

  • For option buyers, Theta is always negative, meaning your option loses value with time.
  • This time decay speeds up as expiry gets closer, which is why short-term options lose value quickly.

4. Volatility’s Direct Impact

Option prices are directly proportional to volatility.

High volatility = higher premiums, because there’s a greater chance for large moves that could put your option in the money.

Low volatility = cheaper premiums, as price swings are expected to be smaller.

5. Put-Call Parity and Arbitrage

For European-style options, there’s a mathematical relationship between the prices of calls, puts, and futures called Put–Call Parity:

Futures Price = Strike Price + Call Price – Put Price

A “synthetic future” is not a separate product you can buy or sell. It’s simply an options combination that behaves exactly like a futures contract:

  • Long Call + Short Put = behaves like Long Futures
  • Short Call + Long Put = behaves like Short Futures

Same strike, same expiry.

If this relationship is not true in the market, arbitragers can make risk-free profits.

Arbitrage is the practice of taking advantage of price differences for the same asset in different markets.

For example:

Case 1: Synthetic is Overpriced

  • Strike Price (K) = $100
  • Call Price (C) = $7
  • Put Price (P) = $4
  • Actual Futures Price = $102

From the formula: Synthetic Futures Price=K+C−P=100+7−4=$103

Here, the synthetic is $1 more expensive than the actual futures.

How to Arbitrage:

  1. Sell the synthetic (using options):
    • Sell the call at $7.
    • Buy the put at $4.
      (This behaves like shorting a futures contract.)
  2. Buy the actual futures at $102.

Why It Works:

  • The futures you bought and the short-futures-like options combo cancel each other’s price risk.
  • The $1 difference is locked in as profit, regardless of market movement.

Case 2: Synthetic is Underpriced

  • Strike Price (K) = $100
  • Call Price (C) = $6
  • Put Price (P) = $5
  • Actual Futures Price = $103

From the formula: Synthetic Price=100+6−5=$101

Here, the synthetic is $2 cheaper than the actual futures.

How to Arbitrage:

  1. Buy the synthetic (using options):
    • Buy the call at $6.
    • Sell the put at $5.
      (This behaves like going long on a futures contract.)
  2. Sell the actual futures at $103.

Why It Works:

  • Again, the long-futures-like options combo and the short actual futures cancel each other’s price movements.
  • The $2 difference is your locked-in profit.

6. Why Sometimes Calls Seem More Expensive Than Puts

It may look like calls are more expensive than puts at the same strike or vice versa.

But in reality, options are usually priced correctly according to put–call parity and the level of the synthetic futures price.

This is true even for weekly options. They are priced based on implied futures rather than directly from the spot price.

So, even if you are trading short-term options, futures pricing plays a role.

7. Why Futures Prices Can Be Higher Than Spot Prices?

Futures prices are often higher than spot prices when there’s still significant time to expiration. This happens because of cost of carry, which includes:

  • Financing cost (interest rate for holding the position until expiry).
  • Any other costs involved in holding the asset.

This difference between spot and futures price is known as contango.

As expiry approaches, futures prices converge with spot prices, and the difference disappears on the expiration day.

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

5 Possible Reasons Figma Stock Is Crashing After Its IPO

Updated On 5 August 2025
by
Figma, Inc. (NYSE: FIG), the design software powerhouse, made headlines with its explosive IPO debut on July 31, 2025, soaring 250% from its $33 offering price to close at $115.50, valuing the company at nearly $60 billion. However, just four trading sessions later, after reaching an intraday peak of $142.91, the stock dropped significantly to $79 by August 5, 2025 - a 45% slide from its peak.

Figma, Inc. (NYSE: FIG) – the popular design software company – made headlines with its blockbuster IPO on July 31, 2025. The stock jumped by 250% on its debut day, rising from its issue price of $33 to close at $115.50. At its peak, Figma’s valuation touched nearly $60 billion.

Also Read – Will the Figma (FIG) Rally Continue After a 250% Gain on Debut?

However, just four trading sessions later, after reaching an intraday peak of $142.91, the stock dropped significantly to $79 by August 5, 2025 – a 45% slide from its peak.

This sharp correction has made investors ask one key question – Why is Figma’s stock dropping?

Here are five possible reasons behind this sudden drop:

1. Post-IPO Profit-Taking

Figma’s IPO saw overwhelming demand, with subscriptions exceeding 40 times the available shares. This demand pushed the stock to an intraday high of $142.91. However, once trading began, early investors and institutions quickly started booking profits.

Only 7% of the company’s shares were available for trading (free float), making the stock more volatile. In such cases, even modest selling can trigger sharp price swings. This is a classic example of a “buy the hype, sell the news” pattern, often seen in popular tech IPOs.

2. Overvaluation Concerns

After its debut, Figma was trading at a forward price-to-sales (P/S) ratio of over 60x. For context:

  • Microsoft trades at about 14.1x
  • Datadog trades near 17.8x

What is Price-to-Sales (P/S)?
It’s a metric used to compare a company’s stock price with its sales. A high P/S means investors are paying a premium for every dollar of revenue – which is only justified if the company grows rapidly and profitably.

Even after dropping to $79, Figma’s valuation still looks expensive when compared to its peers. While it grew revenue by 46% year-over-year, some investors are questioning whether that’s enough to support such a high price.

3. Competitive Pressures and AI Disruption

Figma is a market leader in design software with over 40% market share, serving major clients like Google and Netflix. However, the company’s IPO filing mentioned increasing competition, especially from AI-powered design tools.

Startups like Lovable and Bolt are using generative AI to create design systems more efficiently. Meanwhile, giants like Canva and Microsoft are expanding their presence by integrating design tools into existing software platforms.

Some tech analysts believe AI could even replace traditional design tools, allowing developers to convert code directly into designs. Figma has launched Figma Make to stay ahead, but investor concerns about its long-term competitive edge may be weighing on the stock.

4. Macro Market Turbulence

Figma’s decline is also linked to wider market conditions. Around the same time, the NASDAQ Composite and other tech-heavy indices experienced notable pullbacks, driven by:

  • Uncertainty over President Trump’s tariff policies
  • A general sell-off in high-growth tech stocks

Even though Figma’s business remains strong, the timing of its listing overlapped with broader negative investor sentiment in tech. As a result, it may have been caught in a sector-wide correction.

5. Looming Insider Selling Pressure

A major concern for investors is the upcoming expiration of the IPO lock-up period, set for January 2026. Currently, most of Figma’s shares are held by insiders, including venture firms like Sequoia Capital and Index Ventures, whose stakes are collectively worth around $24 billion.

Although insiders cannot sell now, the fear of future selling often pushes current investors to exit early- adding psychological pressure to the stock.

If a large number of shares are released into the market when the lock-up ends, it could increase supply significantly, putting downward pressure on prices.

Also Read – Bullish Launches $724M IPO – BLSH Targets NYSE Listing

Is the IPO Boom Slowing Down?

Despite Figma’s correction, the overall IPO market remains very active in 2025. So far, 123 tech companies have gone public, raising a total of $19.7 billion, which is 48% higher than last year.

But investors seem to be becoming more cautious and selective. They’re still excited about new listings – but only when valuations are seen as reasonable and the growth story is convincing.

Figma’s 250% debut-day gain was historic, but the subsequent 45% drop is a reminder that post-IPO volatility is common, especially in richly valued tech stocks.

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

Bullish Launches $724M IPO – BLSH Targets NYSE Listing

Updated On 5 August 2025
by
Bullish IPO: A New Crypto Player Eyes NYSE Listing with Ticker “BLSH”
Total Potential Raise$724 million
Base Offering20,300,000 shares (up to $629.3M at $31)
Underwriters’ Option3,045,000 shares (up to $94.4M at $31)
Total Shares Offered23,345,000
Price Range$28.00–$31.00 per share
Ticker SymbolBLSH
ExchangeApplied to list on NYSE
Offering TypeOffer for Sale (OFS)
Lead UnderwritersJ.P. Morgan, Jefferies, Citigroup

Cayman Islands-based Bullish, a global digital asset platform backed by billionaire investor Peter Thiel, announced the launch of its initial public offering (IPO) roadshow on August 4, 2025, aiming to raise up to $724 million. The company has applied to list its shares on the New York Stock Exchange (NYSE) under the ticker symbol “BLSH”, marking a significant step in bridging the crypto and traditional financial markets.

Also Read – The Very First Post You Should Read to Learn Cryptocurrency

The IPO includes an offer of 20.3 million ordinary shares in a price range of $28 to $31 per share, potentially raising $629.3 million at the top end. Bullish has also granted underwriters a 30-day option to purchase up to an additional 3.045 million shares, which could add $94.4 million in proceeds, bringing the total potential raise to $723.7 million (rounded to $724 million).

Bullish’s IPO signals crypto’s mainstream push, with BLSH poised to attract investors seeking exposure to digital assets.

This is an Offer for Sale (OFS), meaning the proceeds will go to existing shareholders rather than the company itself. However, Bullish noted that the funds may still support “general corporate purposes,” including potential acquisitions.

The company operates a regulated spot and derivatives exchange in Germany, Hong Kong, and Gibraltar, focusing on institutional-grade liquidity. Bullish also owns CoinDesk, a leading crypto media brand, and provides market indices and data services through its CoinDesk Indices and CoinDesk Data divisions.

The offering is being led by J.P. Morgan, Jefferies, and Citigroup, and taps into growing institutional interest in regulated crypto infrastructure – similar to recent listings by players like Circle.

Bullish has filed a Form F-1 with the U.S. Securities and Exchange Commission (SEC). The offering is subject to market conditions and regulatory approval.

If fully subscribed, Bullish could be valued at around $4.23 billion, positioning BLSH as a potential bellwether for crypto on Wall Street.

Bullish’s IPO reflects crypto’s ongoing push into mainstream financial markets. As the roadshow unfolds, final terms will be determined, making this one of the most closely watched IPOs in the digital asset space this year.

Also Read – 8 Important Facts About Stablecoins You Need to Know in 2025

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

Will the Figma (FIG) Rally Continue After a 250% Gain on Debut?

Updated On 1 August 2025
by
Figma FIG NYSE Debut

Figma Inc. (NYSE: FIG) went public on July 31, 2025, pricing at $33 and raising approximately $1.22 billion by selling around 36.94 million shares. Demand was enormous – oversubscribed about 40×.

The stock opened at $85, hit an intraday high of around $124.63 (nearly +277%), and closed at $115.50, representing a 250% gain and boosting Figma’s market capitalization to roughly $67 billion by day’s end. This sets a new record for U.S. IPOs raising over $500 million.

The stock is trading at $127 in pre-market at the time of writing, up 9.96% from yesterday’s closing price of $115.50.

Financially, Figma’s Q1 2025 revenue was $228.2 million, up 46% year-over-year, with net income of $44.9 million. It reported 13 million monthly active users and claimed usage by ~95% of Fortune 500 companies. At its IPO price, the valuation was $19.3 billion, comparable to the previously proposed $20 billion acquisition by Adobe – an earlier deal terminated due to regulatory concerns in late 2023. Figma received a $1 billion breakup fee from Adobe.

Circle Internet Group (CRCL) IPO: A Crypto Counterpoint

CRCL's USDC

Circle, issuer of the USDC stablecoin, launched its IPO on June 5, 2025, pricing at $31, raising around $1.1 billion, and oversubscribed approximately 25×. It opened near $69, closed the first day at $83.23 (a 168% gain), and hit $123.49 the next day (~300% gain), before trading near $150+ within weeks.

Also Read – The Very First Post You Should Read to Learn Cryptocurrency

Figma’s IPO action is somewhat similar to the CRCL IPO launched in 2025, which also raised over $1 billion and had a strong debut and investor craze. Both IPOs were significantly oversubscribed, reflecting strong market demand during the 2025 tech IPO resurgence.

Adobe’s IPO: Perspective from the 1980s

Adobe Systems went public on August 20, 1986. Its split-adjusted IPO price was around $0.17, closing at $0.22, a modest ~29% gain. In contrast to Figma’s dramatic trajectory, Adobe’s debut was more restrained, reflecting different market dynamics in the 1980s. Adobe eventually grew to a behemoth – $158 billion market cap – through gradual expansion via its software suite.

Adobe’s failed bid to acquire Figma in 2022 highlights the shift: Figma’s standalone valuation post-IPO (~$67 billion) significantly surpasses the scuttled deal value, underscoring the company’s modern strength.

Figma vs. Circle vs. Adobe: Summary Table

MetricFigma (FIG)Circle (CRCL)Adobe (1986)
IPO Price$33$31~$0.17 (split-adjusted)
First-Day % Gain~250% (closed $115.50)~168% (closed $83.23)~29%
Peak Intraday Gain~277%~300%+ (two-day high ~$123)—
Capital Raised~$1.22 billion~$1.1 billionSmall, modest float
Oversubscription~40×~25×Nan
Revenue ModelSaaS (Design platform)Stablecoin interest/reservesTraditional software sales

Can Figma’s Rally Persist?

Drivers That Support Continued Momentum
  • Massive demand & tight float: The 40× oversubscription and limited share supply sustained the initial pop.
  • Strong fundamentals: Reliable revenue base, significant MBU growth (~13 M users), and major enterprise penetration (~95 % of Fortune 500) provide a stable foundation.
  • AI powered innovation: Launch of tools like Figma Make, Dev Mode, Figma Sites, and Buzz provide differentiation in AI-enhanced design workflows.
  • IPO market revival: Figma joins a string of successful tech IPOs in 2025, signalling renewed investor appetite.
Risks That Could Trim Gains
  • High valuation: The ~$67 billion cap equates to ~11× next‒twelve-months revenue – premium for SaaS.
  • Lock‑up expiry: Around 180 days post-IPO (~late January 2026), insider sales could increase supply and pressure prices.
  • Competitive dynamics: Adobe’s entrenched position and emerging AI-backed design offerings could challenge growth.
  • Economic headwinds: Macroeconomic risks – tariffs, rising rates, or market volatility—may impact market sentiment.

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

4 Possible Reasons Why NEGG Stock Crashed Nearly 20%

Updated On 30 July 2025
by
The Shipping Corporation of India Limited – stock latest AUDITED FINANCIAL RESULTS news

Newegg Commerce Inc. (NEGG) stock shocked retail investors today with a sharp drop of nearly 20%, falling from an opening price of $46.98 to an intraday low of $41.01, before stabilizing slightly. After a powerful rally in recent weeks, this sudden crash has raised many questions in the minds of traders and long-term investors.

Let’s take a closer look at the 4 most likely reasons behind today’s fall:

1. Selling Pressure from the $55 Supply Zone

NEGG latest chart by trading view - support and resistance

One of the most probable technical reasons for NEGG’s sharp fall is strong selling pressure from the supply zone around $55. The stock recently touched a high of $56.77, which falls right into this zone.

Historically, NEGG had formed a crucial support in the $50–$60 range. But after it broke down from this range earlier, the same zone has now turned into a resistance. As the stock retraced back to that level with a parabolic structure, it gave swing traders and short-term holders the perfect chance to sell and exit.

This kind of resistance-based selling is common after vertical rallies, especially in stocks with high volatility like NEGG.

2. Parabolic Rally Followed by Exhaustion

NEGG had been consolidating for a long time, and once it broke out, the movement was nothing short of parabolic. But when stocks rise too fast, they often run out of momentum just as quickly.

This rally lacked consistent volume spikes or major news-based triggers. So, when the price reached overextended levels, exhaustion selling kicked in – driven by both retail and institutional traders trying to book profits before a possible correction.

3. Broader Market and Sector Rotation

The internet retail sector as a whole has seen some weakness recently. Even large-cap players have faced pressure due to mixed earnings and slower e-commerce growth projections.

In such a scenario, speculative or mid-cap retail stocks like NEGG tend to fall faster, especially when overall investor sentiment turns cautious.

Investors are also rotating money into safer sectors such as energy, utilities, or dividend-yielding assets-leaving tech and e-commerce under pressure.

4. No New Fundamental Trigger to Sustain the Rally

While there was buzz around insider buying, and a temporary momentum spike followed it, there’s been no concrete news related to revenue growth, partnerships, or new launches from the company.

That means the recent rally was largely speculation-driven, and when such stocks don’t follow up with strong news or numbers, they often face sharp corrections – just like we saw today.

What Next for NEGG?

Even though the fall was sharp, some traders still believe NEGG could move higher in the coming weeks. But the path may not be easy. Given the past price behavior, expect a bumpy ride with ups and downs along the way.

The stock will likely face strong resistance in the $50–$55 range again, and unless there’s a solid fundamental trigger, the rally might remain limited.

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

How does the stock price go up when the company goes up?

Updated On 28 July 2025
by
Company goes up, stock price goes up - how does that work?

As Jeff Bezos, the founder of Amazon, once said

“The company is not the stock, and the stock is not the company.”

This means that a company’s actual business and its stock price may seem related, but they are not always the same. They are connected, but not equal.

Let’s break this down in simple terms.

IPO vs Stock Market – What’s the Difference?

When a company offers its shares to the public for the first time, it’s called an IPO or Initial Public Offering. This happens in the primary market.

Here, the company directly receives money from investors. In return, investors get ownership in the form of shares. This is how the company raises capital to fund its business.

But once the IPO is over and the company is listed on a stock exchange like NSE, BSE, NASDAQ, or NYSE, any shares you buy are usually from other investors – not the company itself. This buying and selling happens in the secondary market.

So, in the stock market, you are mostly trading ownership with other people, not giving money to the company.

What Makes the Stock Price Go Up or Down?

After the IPO, the company’s stock price is driven by investor demand. This demand depends on how investors feel about the company’s performance and future potential.

If a company is:

  • Making good profits
  • Launching new products
  • Expanding into new markets
  • Managing its operations well

Then more people want to buy its shares, and the stock price usually goes up.

On the other hand, if the company is:

  • Facing losses
  • Losing market share
  • Involved in controversy
  • Or showing weak future prospects

Then investors may sell their shares, and the stock price falls.

This is why a company’s real-world success or failure affects how people value its shares in the market.

Important to Remember

A company’s stock price reaching zero does not always mean the company is bankrupt. It may just mean investors have lost confidence in its future.

Similarly, a stock trading at five hundred rupees or dollars does not always mean the company is truly worth that much. It could be due to hype, speculation, or unrealistic expectations.

A Simple Analogy – Student and Teacher

Think of a company as a student, and the investors as teachers.

Just like teachers give marks based on a student’s performance, investors assign a stock price based on the company’s financial health and future potential.

  • If the company performs well, investors give it a higher “mark” in the form of a rising stock price.
  • If the performance is poor or uncertain, the price drops—just like getting lower marks.

Also Read – Understanding the Basics of Buying, Selling, and Stop Hunting in Financial Markets

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

Important Margin-Related Terms in Indian Stock Market That You Must Know

Updated On 24 July 2025
by
Complete Guide to Margin in the Indian Stock Market – Understand SPAN, Exposure, Initial, Peak, and Other Important Margins in Simple Words

Margin is the money or securities you must deposit to take or hold a position in the stock market, especially in the futures and options (F&O) segment. It is not the full value of the trade, but a fraction of it. This allows traders to use leverage, meaning they can take larger positions using a smaller capital base.

  • Margin is the money you put upfront to take a trade. Think of it as your security deposit.
  • Leverage is the additional buying power that your broker provides based on the margin you maintain. It’s like a loan that lets you control larger trades with less money.

Types of Margins in Indian Capital Markets

1. SPAN Margin (Standard Portfolio Analysis of Risk)

SPAN margin is the minimum margin required to cover expected losses from a one-day move in your position. It is calculated by the exchange using a risk-based system. It varies based on the risk and volatility of each contract.

Example: If you buy 1 lot of NIFTY futures, the SPAN margin may be ₹50,000. This value is not fixed and may change with volatility.

2. Exposure Margin

This is charged over and above SPAN to cover unexpected or extreme market movements. It serves as an additional buffer against market risk.

Example: If the SPAN is ₹50,000 and the exposure margin is ₹30,000, you need ₹80,000 in total to initiate the trade.

3. Total Initial Margin

This is the sum of SPAN Margin and Exposure Margin. You must have this total amount in your account before taking an F&O position.

Formula: Total Initial Margin = SPAN Margin + Exposure Margin

4. Premium Margin (for Options Buyers)

When buying options, you don’t need to maintain SPAN or exposure margin. You only pay the full premium upfront, which is called the premium margin.

Example: If a call option has a premium of ₹200 and the lot size is 50, your premium margin would be ₹10,000.

5. Mark to Market (MTM) Margin

MTM margin represents the daily gain or loss based on the difference between your entry price and the day’s closing price.

This margin is applicable to futures and also to short (sold) options positions. However, options buyers don’t face daily MTM charges, as their maximum loss is limited to the premium paid.

Example: If you buy NIFTY futures at ₹20,000 and it closes at ₹19,950, you lose ₹50 per unit. This loss is debited from your account that day.

6. Additional Margin

SEBI or exchanges may impose additional margins during volatile market conditions or special events. This is a temporary measure but mandatory when applied.

Example: During events like Union Budget or elections, an additional 10% margin may be imposed to curb speculation.

7. Special Margin

This is imposed on specific stocks or segments that show unusual price or volume movements. It aims to control speculative activity or price manipulation in that particular stock.

Example: If a small-cap stock suddenly rises 70–80% in a few sessions without fundamental news, a special margin may be applied.

8. Maintenance Margin

After taking a position, this is the minimum balance that you must maintain in your account. If your margin balance falls below this level, you will get a margin call to deposit more funds.

9. Margin Shortfall

This occurs when you fail to maintain the required margins (initial and MTM). A margin shortfall may lead to penalties, interest charges, or forced closure of your positions by the broker.

10. Delivery Margin

For F&O contracts that result in physical delivery, exchanges may require an extra delivery margin near expiry. This ensures that both buyer and seller are capable of fulfilling the delivery obligation.

11. Peak Margin

Introduced by SEBI in 2021, peak margin is the highest margin requirement at any point during the trading day. Brokers must collect this maximum margin from clients, reducing the ability to offer excessive intraday leverage.

12. Intraday Margin

Earlier, brokers offered high intraday leverage for trades that were squared off within the day. But under SEBI’s peak margin framework, this is now restricted. Brokers can no longer offer excessively low intraday margins unless the client has funded the position sufficiently.

13. VaR Margin (Value at Risk)

This applies to the cash (equity) segment and represents the margin needed to protect against losses in 99% of trading scenarios. Stocks with higher volatility attract higher VaR margins.

14. ELM (Extreme Loss Margin)

Also applicable in the cash segment, ELM covers rare or extreme events that go beyond the VaR calculation. Exchanges collect both VaR and ELM together.

Total margin in the cash segment = VaR Margin + ELM

15. Pledged Margin

If you don’t have enough cash, you can pledge your shares to generate margin. This is called Margin Against Shares (MAS). However, a haircut is applied to the pledged value, meaning you don’t receive 100% of the value as usable margin.

Example: If you pledge ₹1,00,000 worth of shares and the haircut is 20%, you will get ₹80,000 as usable margin.

Summary Table

Type of MarginApplies ToPurpose
SPAN MarginF&OCovers expected daily market risk
Exposure MarginF&OExtra buffer for unexpected moves
Total Initial MarginF&OSPAN + Exposure
Premium MarginOptions BuyerFull premium payment only
MTM MarginFutures, Short OptionsDaily settlement of gains/losses
Additional MarginAllExtra margin in volatile situations
Special MarginAllStock-specific speculative control
Maintenance MarginAllMinimum balance to hold positions
Margin ShortfallAllWhen margin requirement is unmet
Delivery MarginF&OFor physical delivery contracts
Peak MarginAllMax margin during the day
Intraday MarginIntraday TradesShort-term trades (restricted now)
VaR MarginCash SegmentRisk margin based on price movement
ELMCash SegmentExtra buffer for rare price swings
Pledged MarginF&OMargin from pledged shares

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

6 Main Methods a Company Can Issue Shares

Updated On 9 July 2025
by

To grow their operations, expand into new markets, or develop new products, companies often need additional capital. One of the primary ways they raise this capital is by issuing shares. Depending on their financial goals and legal structure, companies have multiple methods available to issue these shares. Each method has its own rules, process, and audience.

This article explains the six main methods through which companies can issue shares, written in simple and clear language.

1. Public Issue (IPO and FPO)

A public issue is the most common and widely recognized method of issuing shares. In this method, the company offers its shares to the general public through a stock exchange.

When a company offers its shares to the public for the first time, it is known as an Initial Public Offering or IPO.

If the company is already listed and decides to issue more shares to raise additional capital, it is called a Follow-on Public Offer or FPO.

Companies choose this route when they want to raise a large amount of capital and get listed on the stock exchange. Public issues are strictly regulated by government bodies like SEBI in India or the SEC in the United States to ensure transparency and investor protection.

2. Private Placement

Private placement is a method where a company issues its shares to a selected group of investors rather than to the general public. These investors may include banks, mutual funds, venture capital firms, or high-net-worth individuals. This method is faster and involves less regulatory compliance than a public issue, making it an attractive option for companies that need quick funding.

In India, the number of investors in a private placement is legally restricted to not more than 200 in a financial year. Companies usually choose this method when they want to raise funds efficiently without the delays and costs associated with public offerings.

For example, MSEI is planning to raise ₹1,000 crore by issuing 500 crore shares through private placement.

3. Rights Issue

In a rights issue, the company offers new shares to its existing shareholders in proportion to the number of shares they already own. This means that if a shareholder owns 100 shares, and the company announces a 1:5 rights issue, they have the right to buy 20 additional shares.

The shares are usually offered at a discounted price to encourage existing shareholders to invest more in the company. This method allows companies to raise additional funds while ensuring that control and ownership remain with the current investors. It is a fair and transparent method to raise capital without diluting existing ownership too much. Many companies prefer this method during expansion or restructuring phases.

4. Bonus Issue

A bonus issue is a method where the company issues additional shares to existing shareholders without charging them anything. These shares are given free of cost and are usually issued from the company’s accumulated reserves or retained earnings. The bonus shares are distributed in a specific ratio, such as one bonus share for every two shares held.

Although no fresh capital is raised through a bonus issue, it serves as a way to reward existing shareholders and increase the total number of shares in the market. This can also improve the stock’s liquidity, making it more attractive to small investors.

For instance, if a company announces a 2:1 bonus issue, shareholders will receive one extra share for every two shares they already hold.

5. ESOP and Sweat Equity

Companies often offer shares to employees and key personnel through methods like the Employee Stock Option Plan (ESOP) or sweat equity. In an ESOP, employees are given the option to purchase shares of the company at a fixed price after a certain period. This serves as a long-term incentive and helps retain talented employees.

Sweat equity refers to shares issued to employees or directors in return for their contribution in the form of skills, expertise, or intellectual property rather than cash. These methods not only build employee loyalty but also align their interests with the company’s long-term growth.

Many startups use ESOPs to attract and motivate top talent when they are unable to offer high salaries.

6. Preferential Allotment

Preferential allotment is a method in which shares are issued to a specific group of individuals or institutions at a pre-agreed price. Unlike private placement, which is limited in number, preferential allotment is often used for strategic purposes such as mergers, acquisitions, or raising capital from known investors.

This method requires approval from shareholders through a special resolution and follows regulatory procedures to ensure transparency. Companies prefer preferential allotment when they want to bring in strategic partners or promoters without going through the lengthy process of a public issue.

For instance, a company might issue shares to a private equity firm as part of a strategic alliance

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

When Does No Tax on Overtime Start & How Does It Work?

Updated On 8 July 2025
by

The “No Tax on Overtime” provision, part of the recently passed One Big Beautiful Bill Act (H.R. 1), is making headlines for its potential to increase take-home pay for millions of American workers. Signed into law by President Trump on July 4, 2025, the bill eliminates federal income tax on overtime earnings and tips for qualifying individuals starting January 1, 2025.

This article explains how the bill works, who qualifies, and what changes workers and employers should expect.

What Is the “No Tax on Overtime” Bill?

The “No Tax on Overtime” proposal grants a federal income tax deduction for overtime pay, targeting non-exempt employees under the Fair Labor Standards Act (FLSA). These workers typically receive time-and-a-half for hours worked beyond 40 in a workweek. The provision is a key part of H.R. 1, also known as the One Big Beautiful Bill, spearheaded by the GOP and endorsed by President Donald Trump.

The bill includes provisions for a deduction of up to $12,500 for single filers and $25,000 for joint filers on eligible overtime income. These deductions apply to tax years 2025 through 2028 and phase out for individuals earning over $150,000 and couples over $300,000 annually.

A separate bill, the Overtime Pay Tax Relief Act of 2025 (H.R. 561), proposed a partial deduction capped at 20% of wages, but it has not passed. Similarly, Senate Bill S. 1046, which proposed a full exemption, was not incorporated into the final version of H.R. 1.

Importantly, while overtime pay becomes exempt from federal income tax, FICA taxes (Social Security and Medicare) still apply.

What Is the “One Big Beautiful Bill”?

Passed by the House on May 22, re-approved on July 3, and cleared by the Senate on July 1, 2025, with Vice President JD Vance casting the deciding vote, the One Big Beautiful Bill Act is a sweeping tax and budget reform law. It delivers several key campaign promises from the 2024 Trump campaign, including:

  • No federal income tax on tips and overtime
  • A deduction for certain Social Security income (not a full exemption)
  • An extension of the 2017 Tax Cuts and Jobs Act provisions
  • Auto loan interest deductibility
  • Adjustments to Medicaid and border security spending

Republican lawmakers, including House Ways and Means Chairman Jason Smith, call it the largest tax cut in U.S. history. However, nonpartisan estimates from the Tax Policy Center and Tax Foundation suggest the total cost could reach $3 to $5 trillion over the next decade, with concerns over the potential deficit impact and inequities in the tax code.

How Will the Bill Affect Your Paycheck?

Eligible workers will begin earning tax-free overtime starting January 1, 2025, but changes in paycheck withholding may not occur immediately. The IRS is expected to update federal withholding tables by 2026. Until then, employees will need to claim the deduction when filing their 2025 tax returns in early 2026.

To illustrate the impact:

A worker earning $20 per hour, who works 10 overtime hours weekly at $30/hour, earns $300 in weekly overtime – or $15,600 annually. At a 22% tax bracket, this worker currently pays around $3,432 in federal income tax on that amount. Under the new law, up to $12,500 of that can be deducted, reducing federal income tax liability by about $2,750, depending on their tax situation.

However, Social Security (6.2%) and Medicare (1.45%) taxes will still apply, reducing net savings somewhat.

Employers are required to separately track and report overtime earnings on W-2 forms. Payroll systems will need updating, and HR departments should prepare to explain these changes to employees. Note that state income taxes will still apply unless states pass their own exemptions (Alabama, for instance, has one expiring in June 2025).

Are Tips Included?

Yes. The no tax on tips provision allows eligible workers to deduct up to $25,000 in tip income per year ($50,000 for joint filers), subject to the same income thresholds and time limits (2025–2028). This applies to:

  • Employees (e.g., restaurant servers, salon workers)
  • Gig workers and independent contractors who receive qualified tips

Again, while tips are exempt from federal income tax, they remain subject to FICA taxes, and the deduction does not apply to non-cash tips or service charges.

Employers must report tips separately on W-2s. Independent contractors must track tips for Form 1099-NEC or 1099-K. Critics argue that this could lead to administrative burdens and even “tip inflation” or classification abuse by businesses.

When Does No Tax on Overtime Start?

The law takes effect for taxable years beginning January 1, 2025, and applies through December 31, 2028, unless extended by Congress.

Although the bill is now signed into law, most workers will only notice the benefit when filing their 2025 tax returns in early 2026. The IRS is expected to issue revised withholding guidance by late 2025 or early 2026.

Employers and payroll providers should begin tracking eligible income streams—overtime and tips—separately to ensure compliance with W-2 reporting standards and support accurate tax filings.

Has the Bill Been Passed?

Yes. The No Tax on Overtime and No Tax on Tips provisions are now law under the One Big Beautiful Bill, signed by President Trump on July 4, 2025. The Senate approved the package by a 51–50 vote on July 1, with the House concurring on July 3. IRS implementation guidance is expected in the coming months.

Frequently Asked Questions (FAQ)

Is overtime currently taxed in the U.S.?

Yes. Before 2025, overtime pay is taxed like regular wages—federal income tax, Social Security, and Medicare apply. Starting in 2025, federal income tax will no longer apply to qualifying overtime income, but FICA taxes remain.

Who qualifies?

Non-exempt workers earning less than $160,000 (or $300,000 for joint filers) with a valid Social Security number qualify. Highly compensated employees and independent contractors are not eligible for the overtime tax break.

Will part-time workers benefit?

Only if they work more than 40 hours in a week and are classified as non-exempt under the FLSA. Most part-timers won’t see significant changes.

What’s in the Overtime Tax Relief?

The bill provides an annual deduction on overtime earnings: $12,500 for individuals, $25,000 for joint filers, phasing out beyond $150,000/$300,000. It does not eliminate all taxes on overtime—payroll taxes still apply.

Do states offer similar exemptions?

Most states do not. Alabama implemented a temporary exemption through June 2025, and others like Connecticut and Delaware are considering similar measures. Federal law does not override state income tax unless states act independently.

Conclusion

The No Tax on Overtime and No Tax on Tips provisions are now officially part of U.S. tax law, promising real benefits for hourly and tipped workers. Although full withholding changes may not show up in paychecks until 2026, the law retroactively applies to all qualifying income from January 1, 2025. Employers and workers alike should prepare now by tracking income accurately and consulting tax professionals to maximize savings.

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.