Guide to World of Women NFTs

Guide to World of Women NFTs

Non-fungible tokens (NFTs) are increasingly catching the attention of investors who are looking to step beyond simply buying cryptocurrency. Many different NFTs have gained the spotlight in the decentralized finance (DeFi) space, whether they represent art, music, or other types of collectibles.

The World of Women NFT collection, designed by a female artist with a female-centric focus, is built on the Ethereum blockchain. The goal of the project is to inject more diversity and inclusion into the cryptocurrency space.

Before investing in a World of Women NFT, there’s much to know about this ambitious project and the digital art it has inspired.

•   What is World of Women?

•   How Does World of Women Work?

•   World of Women Value

•   How to Buy World of Women NFTs

•   World of Women vs. CryptoPunks

What Is World of Women?

The World of Women NFT collection is made up of 10,000 NFTs developed by French artist Yam Karkai. In founding World of Women, along with co-founder BBA (an acronym for Being Bored Ape), Karkai sought to empower women and increase their representation in the NFT and cryptocurrency spaces. The NFTs launched on July 27, 2021, quickly selling out after catching the attention of several high-profile celebrities and influencers.

What Is an NFT?

But what does NFT mean, exactly? An NFT is a type of digital asset. NFTs use blockchain technology, the same technology that powers different types of cryptocurrency, to operate. NFT assets can be sold through peer-to-peer platforms and are typically associated with artwork or digital imagery, though a video or audio file could also be an NFT.

To date, the Securities and Exchange Commission (SEC) doesn’t have any standard guidelines in place for determining if and when an NFT is considered a security. As of January 2022, World of Women NFTs and other NFTs do not fall under any regulatory guidelines established by the SEC or the Financial Industry Regulatory Authority (FINRA).

How Does World of Women Work?

The 10,000 illustrations that make up the World of Women NFT collection were designed by Karkai using Procreate and Adobe Photoshop. Each NFT is a unique piece of art designed to represent an individual woman. When someone purchases a World of Women NFT, they’re purchasing a piece of digital artwork.

These NFTs are officially sold out, but can be bought and sold on the secondary market through the OpenSea platform. You’ll need a compatible cryptocurrency wallet and the required amount of Ethereum to complete the purchase of a World of Women NFT.

In addition to owning the digital artwork itself, World of Women NFTs allow owners to collect royalties for the commercial use of those images. Specifically, owners can receive 50% royalties for any profits associated with commercial use of the NFTs. World of Women does require NFT owners to agree to its licensing terms as a condition of earning royalties.

World of Women also sets itself apart in terms of how it reinvest profits. The company uses part of its earnings to fund women-centered projects around the world, such as Too Young to Wed , She’s the First , and Rockflower . This is all part of the company’s efforts to empower women while supporting art that’s designed to appeal to people of all backgrounds.

World of Women Value

When World of Women NFTs made their debut, they had a minting price of 0.07 ETH, which was equivalent to roughly $130 U.S. dollars. As of January 2022, the floor price (or starting price) for a single World of Women was 7.37 ETH. The average all-time price is 2.17 ETH, with trading volume hovering between 46,000 and 47,000 ETH.

At the lowest point, World of Women NFTs trade at 0.01 ETH. The highest sale price recorded to date is 260 ETH. That NFT, Woman #9248, sold for the equivalent of $587,269.80 USD. One of cheapest options is Woman #3556, which has a most recent sales price of 0.01 ETH or $22.47 in USD. Total trading volume is around $10.73 million.

So what determines how much a World of Women NFT is worth? Several factors related to the design of the image can influence pricing, including:

•   Background color

•   Clothing

•   Skin tone

•   Facial features

•   Accessories

The rarer or more unique an image is, the more it’s likely to sell for. That’s also the case with other image-based NFTs, such as CryptoPunks. These NFTs, which launched in 2017, have reached astronomical valuations as collectors seek out the rarest or most unusual images. CryptoPunk #7523, for example, sold for $11.75 million at a Sotheby’s auction.

How to Buy World of Women NFTs

If you’re interested in collecting NFTs from World of Women, you can purchase them through OpenSea, which is a secondary market for trading NFTs. To purchase World of Women NFTs, you’ll first need to connect or create a compatible cryptocurrency wallet. From there, you can use different filtering options to find NFTs to buy.

Filtering options include:

•   Price

•   Status (i.e., buy now, auction, etc.): An NFT that’s listed as “Buy Now” or “Make Offer,” would allow you to purchase it at that moment for the listed price or offer a different price to the seller. Ones that are listed as “Auction” will only allow you to place a bid.

•   Design (including backgrounds, facial features, etc.): The design filter feature can help you gauge an NFT’s rarity, as it breaks down what percentage of the NFTs share similar features.

The timing for completing the transaction can depend on which option you choose. It’s also important to keep in mind that demand on the Ethereum blockchain can slow down processing. OpenSea charges fees to use the platform. The fee is equal to 2.5% of every transaction processed.

World of Women vs CryptoPunks

World of Women is a newer NFT option, while CryptoPunks NFTs have been around for several years. In terms of valuation, the recent sale of CryptoPunk #7523 illustrates just how valuable a single CryptoPunk can be. Here’s a closer look at how World of Women and CryptoPunks compare.

World of Women

CryptoPunks

Year Launched 2021 2017
Collection Size 10,000 images 10,000 images
Owners Around 5,000 Around 3,400
Image Theme Illustrations feature colorful images of women from different backgrounds Illustrations include a mix of pixelated images of men, women, zombies, and animals
Trading Volume Estimated at 45.9K Estimated at 791.8K
Highest Valued NFT Woman #9248, which sold for $587,000 in January 2022 CryptoPunk 7523, which sold for $11.75 million in 2021

The Takeaway

The World of Women NFT collection is another creative entry in a burgeoning digital market. While the entire collection is officially sold out, interested buyers can bid or buy a World of Women NFT on a secondary market, using Ethereum.

Understanding the difference between NFTs and cryptocurrency, as well as what it means to trade each of them, is useful info for anyone who is curious or considering expanding their investing horizons.

FAQ

Who is behind World of Women NFT?

World of Women NFTs were created by digital illustrator and artist Yam Karkai. Karkai co-founded the company along with Being Bored Ape (BBA) in order to empower women and encourage diversity in the NFT space.

When did World of Women NFTs launch?

World of Women NFTs launched on July 27, 2021 and sold out overnight after being mentioned by influencer Gary Vaynerchuk (GaryVee). Other fans of the NFT include actress Reese Witherspoon and YouTuber Logan Paul.

How can you buy a World of Women NFT?

You can purchase World of Women NFTs through the OpenSea platform. You’ll need to connect a compatible cryptocurrency wallet to make your purchase. NFTs are available with “Buy Now,” “Auction,” or “Make Offer” purchase options.


Photo credit: iStock/South_agency

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INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
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Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Ethereum vs Bitcoin

Ethereum vs Bitcoin: Similarities and Differences

More than 13 years ago, Bitcoin emerged as the first blockchain-based cryptocurrency — and Ethereum wasn’t far behind. While Bitcoin (BTC) was created as a store of value, Ethereum (ETH) was established as a more innovative platform aimed at revolutionizing the finance world through the use of smart contracts and DeFi apps.

Although the crypto market has since exploded — with thousands of different cryptocurrencies to choose from — Bitcoin and Ethereum are still the two market leaders. So it can be valuable to understand how they started, and what these two crypto greats each bring to the table for investors.

What Are the Key Differences Between Bitcoin and Ethereum?

BTC and ETH have many similarities. Both blockchains offer anonymous transactions, and neither is controlled by a central authority like a bank or government. However, there are some key differences to note. The primary purpose of ETH is not to create an alternative monetary system but to facilitate and monetize the operation of Ethereum’s DeFi capabilities, including smart contracts, dApps, NFTs, and even the creation of new coins via ICOs.

Blockchain Design

The main difference between BTC and ETH is their underlying technology and utility. Block times (how long it takes to produce a new block on the blockchain) are different, as are the programming languages.

And although both BTC and ETH can be used for value transactions, the Ethereum blockchain is programmable and was designed to have additional DeFi uses, such as contracts and applications.

Transaction Times

Bitcoin is known for its slow and expensive transactions. It takes around 10 minutes to complete a Bitcoin transaction, while an Ethereum transaction only takes 12 seconds.

Block Limit

Another limitation is Bitcoin’s block size — the amount of transactions that can take place on a single block. It takes about 10 minutes to mine a new block on the Bitcoin blockchain, and each block can contain 1 MB of information.

As a result, the Bitcoin blockchain can handle three to four transactions per second. The Ethereum blockchain, however, does not have a block limit. The miners decide how many transactions are put into a block, and currently, it can handle about 15 transactions per second.

Bitcoin Fundamentals

Although Bitcoin (BTC) has now become a household name, many people have not purchased Bitcoins because they either don’t understand the technology, or they think it is too difficult to figure out.

At a very high level, Bitcoin (BTC) is a virtual or digital currency that is created and secured using advanced cryptography — essentially, in this case, the solving of complex mathematical problems. Bitcoin can be stored, sent, and spent just like any other form of currency (with limitations), and it can now be used to buy many things from a coffee at Starbucks® to a mansion.

Bitcoin is based on blockchain technology. A blockchain is a a transparent, digital ledger of transactions. In the case of Bitcoin and many other cryptocurrencies, this ledger is public, meaning anyone can look at it to see past transactions. It’s also considered a distributed ledger, because it’s maintained by a global network of nodes, or miners, who compete to verify Bitcoin transactions and earn rewards.

Bitcoin is created through the process of keeping this ledger running and secured. Individuals around the world, or miners, solve complex mathematical equations, to ensure that the Bitcoin blockchain is accurate and up to date. As a reward for doing this work, the miners receive newly minted Bitcoin as well as transaction fees. This is called a proof-of-work (PoW) consensus mechanism.

PoW has been widely criticized as being unsustainable because it requires vast amounts of energy to run computer networks — known as mining rigs — to validate transactions and mint new BTC.

Other types of cryptocurrencies use different methods to create coins and keep their blockchains running.

The total number of Bitcoin that can ever exist is 21 million, and as of March 2022, nearly 19 million have been mined. Approximately three to four million Bitcoin have been lost forever, due to people losing their private keys.

It is estimated that there are over one million unique individuals mining Bitcoin around the world. After all the Bitcoins have been mined, miners will continue to receive transaction fees to incentivize them to keep the network running.

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How Bitcoins Are Used

Each Bitcoin is made up of 100 million Satoshis (named for Satoshi Nakamoto, a pseudonym that reflects the person or group of people who developed Bitcoin in 2009). To use Bitcoin for transactions, you’ll need to have a crypto wallet, which allows you to safely store your crypto.

A crypto wallet doesn’t actually contain your Bitcoin or other cryptocurrencies. These digital wallets are simply where you store and secure your proof of ownership using pairs of public and private keys that give you, and only you, access to your crypto.

The private key should never be shared with anyone and is only used when you are sending or selling your Bitcoin. Your wallet should also have a public key, which is where Bitcoins are sent when you buy or are gifted with them. If you tell someone your public key, they can go onto the Bitcoin blockchain ledger and view any past transactions you’ve made.

If you invest in Bitcoin through an exchange (a digital platform that puts buyers and sellers together to make a trade), you may not have access to your private key. This is why exchanges can be vulnerable to hacks. For this reason, it may not be a good idea to store large amounts of Bitcoin on exchanges, but you can decide based on which type of exchange or app you use to trade BTC. You can send and receive Bitcoins using your wallet, or your public and private addresses.

Who Controls the Bitcoin Blockchain?

In 2008, a person or group that went by the name Satoshi Nakamoto proposed the idea of blockchain technology, and in early 2009 he/they launched it. However, he/they doesn’t/don’t own Bitcoin. In fact, due to the way it’s designed, no individual or group entity owns or controls the Bitcoin blockchain because it’s decentralized.

Bitcoin isn’t controlled by a corporation, individual, or government. Instead, the blockchain continues to run through its network of miners. Changes and upgrades to the code can be proposed, and in order for them to be adopted, all of the miners need to implement them.

This is because the same software has to work consistently for all developers in order for Bitcoin to be maintained. The decentralized nature of Bitcoin is perhaps one of its most appealing features, and it helped set the stage for the emergence of decentralized finance or DeFi, which is disrupting the models and institutions of traditional finance as we speak.

Historical Highlights

When it first launched, Bitcoin didn’t have a price. It wasn’t until someone was willing to purchase (transact) it that it began to establish a dollar value. In 2009, the first Bitcoins were sold, giving each Bitcoin a price of $0.0009.

The first Bitcoin product transaction happened in May of 2010, when someone purchased two pizzas with 10,000 BTC. Those bitcoins would be worth millions of dollars today. Since then, the price of Bitcoin has risen and fallen dramatically due to supply and demand, but overall the trend has been towards greater adoption and (mostly) higher value.

There have been a few major Bitcoin crashes, mostly sparked by hacking and illegal activities. The highest price to date was over $68,000 in November 2021.

As of March 16, 2022, one BTC was worth about $39,615.

The Future of Bitcoin

Although Bitcoin has become more widely used over the past decade, it has a long way to go before it becomes a mainstream currency. In the long run, it may become more of a financial asset than a means of purchase.

Its limited supply and decentralized nature make it more similar to gold than to a government-issued fiat currency. Currently, some investors are wary of Bitcoin’s high transaction fees, volatility, and lack of regulation. While work is being done to improve these issues, what will ultimately become of Bitcoin is yet to be seen.

Ethereum Fundamentals

Launched in 2015 by Vitalik Buterin, Ethereum (ETH) is also built using blockchain technology, but as an open-sourced computing platform. Ether (ETH) is the native token.

The platform enables the formation of decentralized applications (dApps) and smart contracts — a digitally facilitated agreement between two parties that’s written in code into the blockchain technology. The code automatically executes the terms of the contract when specific conditions are met by all parties. The chief innovation of smart contracts is that there is no third-party required to enforce the terms of the agreement.

Similar to the Bitcoin blockchain, the Ethereum blockchain can also be used for payments and monetary transactions. Ethereum tokens are the cryptocurrency used for transacting on the Ethereum blockchain.

How Ethereum Is Made

Similar to Bitcoin mining, Ethereum uses a proof-of-work (PoW) algorithm — coded transactions for each new block of data confirmed by miners — to keep its blockchain running and to create new tokens. However, Ethereum has announced a plan to migrate to a proof-of-stake (PoS) algorithm.

With PoS, users can validate blocks of transactions based on how many coins they hold. The more ETH you hold as a miner, the greater your mining control.

Unlike Bitcoin, the total number of ETH is not fixed. Instead, the amount mined grows and shrinks based on demand. Currently there is a limit of about 18 million ETH that can be mined each year, simply based on the amount of time it takes for miners to confirm transactions.

Buying and Using Ethereum

The process of using Ethereum is similar to Bitcoin. You hold an Ethereum wallet and transact using public and private keys.

One key difference between BTC vs. ETH is that you need to hold ETH in order to execute transactions on the Ethereum blockchain. Because every Ethereum transaction consumes computational resources, transactions come with a cost. Gas is the fee needed to conduct an Ethereum transaction.

Ethereum fees can only be paid in Ether (ETH), the native currency of Ethereum. ETH Gas prices are denominated in a unit known as gwei, which is a term used to refer to an amount of ETH equal to 0.000000001 ETH.

Ethereum’s Team

The founder of Ethereum, Vitalik Buterin, first started working in the industry in 2011 when he founded Bitcoin Magazine. He published a paper proposing Ethereum in 2013 and launched the blockchain in 2015.

As an open-source, programmable blockchain, Ethereum welcomes input from contributors around the world. However, they do maintain a small team of developers within the Ethereum Foundation, which supports the project through research and education.

Pricing

As of March 16, 2022, one BTC was worth $39,615 and one ETH was worth $2,679. Although BTC is worth more than ETH, the two cryptocurrencies follow a very similar price trajectory. As one of the largest cryptocurrencies and nearly as famous as Bitcoin, when Bitcoin goes up or down in value, Ethereum tends to follow.

Which to Buy? Bitcoin or Ethereum?

With first to market advantage, Bitcoin continues to hold the largest share of the cryptocurrency market. There is something to be said for brand recognition and reputation. However, that doesn’t mean that Bitcoin necessarily has the best technology, that it will prevail in the long run, or that it’s the only cryptocurrency you might purchase.

Most of the digital currency exchanges, wallets, and other products surrounding cryptocurrencies support both Bitcoin and Ethereum. Nobody knows which coin will grow more in value over time.

With its quicker transaction times and smart contract abilities, the Ethereum network may have some DeFi advantages over Bitcoin. However, debates about whether to cap the total amount of Ethereum, and the merits of moving Ethereum to a PoS protocol, may cause volatility in the coming years.

The bottom line is that investors may find BTC or ETH equally appealing (or not), depending on their own goals and views of the future of crypto.

The Takeaway

When comparing Ethereum vs. Bitcoin, the question is not which of these two leading cryptocurrencies is better, but rather what are the strengths and differences they each may offer investors? While ETH and BTC are both digital currencies, i.e. both are decentralized and operate using distributed ledger technology (a.k.a. blockchain), the underlying architecture and the goals of each project are completely different.

While Bitcoin (BTC) was created as a means of payment and a store of value, the main purpose of ETH was to support and monetize the operation of Ethereum’s DeFi capabilities, including smart contracts, dApps, NFTs, and more. Could the evolution of the Ethereum platform to a proof-of-stake system — sometimes called Ethereum 2.0 – shift its long-held position as the #2 crypto on the market? It’s hard to say, but something that investors and crypto analysts will be watching closely.

Photo credit: iStock/Ridofranz



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INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

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businessman at desk

Guide to Direct Listings: How They Work & How They’re Different From IPO

When you hear of a company “going public”, they might be doing so through a direct listing.

Direct listings, also known as the direct listing process (DLP), direct placement, or direct public offering (DPO), have existed for some time, but in December 2020 the SEC revised the rules around this action, allowing companies to raise capital during a direct listing. The New York Stock Exchange had previously experimented with allowing the raising of capital during direct listings of companies.

What is a Direct Listing?

A direct listing is one method by which a company can list shares of stock on a public exchange such as the New York Stock Exchange (NYSE) or Nasdaq, also referred to as going public.

The other way is through an initial public offering, commonly referred to as an IPO.

Direct Listing Example

Some companies that have recently had direct listings are ​​Asana, Palantir, Thryv, Roblox, SquareSpace, and ZipRecruiter.

Initial Public Offering

When a company offers shares of stock to the general public for the first time, it’s known as an initial public offering (IPO).

Before an IPO, a company is “private,” which means that shares of stock are not available for sale to the general public. Also, a private company is not generally required to disclose financial information to the public.

To have an IPO, a company must file a prospectus with the SEC. The company will use the prospectus to solicit investors, and it includes key information like the terms of the securities offered and the business’s overall financial condition.

[ipo_launch]

IPO Example

Companies that have gone public with IPOs include Bumble, Rivian, JD Logistics Inc, Volvo, BioNTech SE, and Zoom Video Communications Inc.

Direct Listing vs IPO

While some listing choices involve selling shares of stock to investors, IPOs and direct listings have many differences. The main difference between the two is that with an IPO a company issues and sells new shares of stock, while with a direct listing shareholders sell existing shares.

How a Direct Listing Works

A direct listing is fairly straightforward. If a private company is interested in going public but isn’t necessarily looking to raise additional capital, they may choose to do a direct listing. With a direct listing, anyone who owns shares in the company can sell them directly to the public. Holders may include investors, promoters, and employees.

By choosing a direct listing over an IPO, a company can avoid using an underwriter, which saves money. Further, because no new shares are created with a direct listing, existing shares won’t get diluted. Stock prices are determined by the market, according to supply and demand. (For this reason, the more recognizable the company, the more potential there could be for investor interest in its shares.)

How an Initial Public Offering Works

Initial public offerings are a popular choice for companies looking to raise capital. The company works with an underwriter (typically part of an investment bank), who helps navigate regulations and figure out the initial price of the shares. They may also purchase shares from the company and sell them to investors (such as mutual funds, insurance companies, investment banks, and broker-dealers) who will in turn sell them to the public.

One benefit of working with an underwriter is the greenshoe option. This is an agreement that a company can enter into with the underwriter in which the underwriter has the right to sell a greater number of shares during the sale than they originally intended to, if there is a lot of market demand. This can help the company gain additional investment.

Working with an underwriter creates some security for the company, which is one reason so many companies go the route of the IPO.

Pros and Cons of Direct Listings

There are both benefits and downsides for companies and investors when it comes to direct listings vs. IPOs. This chart outlines the main points, which we delve into below.

Pros of Direct Listings

Cons of Direct Listings

Less expensive than an IPO Potential for initial volatility
No lock-up periods Risk that shares won’t sell
Liquidity for existing shareholders No help from underwriters
No stock price guarantee

Pros of a Direct Listing

A direct listing has some benefits for both the company and shareholders.

✔️ Less expensive than an IPO for the company

Unlike IPOs, direct listings do not require underwriters, since no new shares are being created. Typically, an underwriter charges a percentage fee of between 3% and 7% per share. This can add up to hundreds of millions of dollars. In addition, underwriters often purchase shares below their decided-upon market value, so companies don’t receive as much investment as they may have had they sold those shares to retail investors.

✔️ No lock-up periods for shares

IPOs are also subject to lock-up regulations that a company may want to avoid. If a company goes through an IPO, existing shareholders are generally not allowed to sell their shares to the public during the sale and for a period of time following the sale. These lock-up periods are required in order to prevent stock prices from decreasing due to an oversupply. The direct listing model is essentially the opposite, in which existing shareholders sell their stock to the public and no new shares are sold.

✔️ Provides liquidity for existing shareholders

Anyone who owns stock in the company can sell their shares during a direct listing.

Cons of a Direct Listing

There are also some potential drawbacks when it comes to direct listings.

❌ Potential for initial volatility

With an IPO, underwriters help bring in investors and can help avoid volatility during and after the shares get listed. A direct listing proceeds without that assistance.

❌ Risk that shares won’t sell

With a direct listing, the amount of shares sold is based solely on market demand. Because of this, it’s important for a company to evaluate the market demand for its stock before deciding to go the route of a direct listing. Companies best suited to direct listings are those that sell directly to consumers and have both a strong, recognizable brand and a business model that the public can easily understand and evaluate.

❌ No help from underwriters with marketing and sales

Underwriters provide guarantees, promotion, and support during the listing process. Without an underwriter involved, the company may find that shares are difficult to sell, there may be legal issues during the sale, and the share price may see extreme swings.

❌ No guarantee of stock price

Just as there is no guarantee that shares will sell, there is also no guarantee of stock price. In contrast, having an underwriter can help manage potentially extreme price swings.

What to Know About Investing in a Direct Listing

As with any potential investment, interested investors need to do their own research on a company and truly evaluate it before buying in.

You’ll want to look at a balance sheet and other financials, learn as much as you can about the management team, take a broad view of the competitive landscape, and review the company’s prospectus. The more background you get on the company, the more comfortable you will feel with your decision.

The Takeaway

Direct listings are an appealing alternative to IPOs for private companies who want to go public, thanks in part to lower costs and reduced regulations. A direct listing may also be appealing to retail investors who want to purchase shares from companies that are going public.

For investors looking to keep up on the latest IPO and direct listing news — and possibly invest in IPOs — the SoFi Invest® online stock trading app can be a useful tool. The investing platform lets you research and track your favorite stocks, and view all your investing information in one simple dashboard. With a few clicks on your phone, you can buy and sell stocks, and trade ETFs and other assets.

Find out how to get started with SoFi Invest.

FAQ

Can anyone buy a direct listing stock?

Yes, investors can buy a direct stock listing as they would any other stock listed on an exchange.

What companies are direct listing?

Over the years there have been many companies who did a direct listing, including Ben & Jerry’s, Spotify, Slack, ​​Asana, Palantir, Thryv, Roblox, SquareSpace, and ZipRecruiter.

Is a direct offering good for a stock?

Since direct listings bypass the middleman and eliminate the need for underwriters, they can be less expensive for a company vs. IPOs.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. IPOs offered through SoFi Securities are not a recommendation and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation.

New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For SoFi’s allocation procedures please refer to IPO Allocation Procedures.


SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

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Free Margin Defined & Explained

Free Margin, Defined & Explained

Free margin is equity in a trader’s account not reserved for margin or open positions, which can be used to open new trades. Free margin is also the amount your existing holdings can move against you before you face a margin call.

Changes in market values can impact this important margin balance when trading foreign exchange (“forex” or FX) and other derivative instruments. Here, we’ll dive deep into what you need to know.

What Is Free Margin?

Free margin is the equity in a forex trading account that is not invested in open positions. It is also known as “usable margin” since you can open new positions with your free margin balance.

Margin works differently in forex versus with trading stocks. Margin in stock trading means you trade with borrowed funds and owe interest on the loan. Margin in forex is simply a deposit set aside to cover the potential for very large losses when you trade large amounts of currency.

Free margin in forex tells you how much wiggle room you have on your current holdings before you get hit with a margin call. A margin call can occur when your account’s margin level dips below 100%. You can also face a stop out call when your margin percentage declines below 50%.

Free margin also indicates how much you can withdraw from your account if you have no hedged positions.

How Does Free Margin Work?

In general, margin can be categorized as “used” or “free.”

Used margin is the total amount of all the required margin from all your open positions. Free margin is the difference between equity and used margin — the available margin not taken up by current positions. You can use free margin to open new positions in the forex market.

Within the forex market, free margin is a constantly changing balance. The prices of currency pairs move throughout the day, so the free margin on your account will also fluctuate. Traders must constantly monitor their margin levels during the trading day. The forex market trades 24 hours a day for five and half days a week, so changes can also happen in the overnight hours.

Calculating Free Margin

This is the formula for calculating free margin:

Free margin = equity – used margin

Calculating Equity

This is the formula for calculating equity:

Equity = account balance + unrealized profits – unrealized losses

Free Margin Example

Let’s say you have a forex trading account with 100:1 leverage. Your margin deposit is $100. That means you can trade an amount up to $10,000. Now say you take a $20 position at 100:1 leverage. Your position size controls $2,000 of currency value. That $20 position is locked by your broker. The remaining $80 is your free margin. You can use up to that amount to trade more currency pairs in the FX market.

If the market moves to your benefit, your portfolio’s equity increases. You will have more free margin available as your holdings move in your favor. Free margin declines when the market moves against you, though.

Free Margin vs Used Margin

Free Margin

Used Margin

The amount of margin available to open new positions The amount held in reserve for existing positions
Also known as usable margin An aggregate of all the required margin from open positions
The difference between equity and used margin Equity minus free margin

Margin vs Free Margin

Margin

Free Margin

A good faith deposit with a broker when trading forex The amount existing positions can move against the trader before the broker issues a margin call
Collateral to protect the broker from excessive losses by the trader Total margin minus used margin
The amount of money reserved when you open a new position When free margin is zero or negative, new positions cannot be opened

Free Margin in Forex

Free margin is important to understand in forex trading. Volatility in your balances can be high due to the amount of leverage employed. Some traders have leverage ratios up to 500:1, while risk-averse traders can simply trade with only their margin. Trading with only your margin means you are not using leverage.

Free margin in forex tells a trader how much more money they can use to open new positions. It is also a risk management indicator, in that it can be seen as a kind of buffer amount before a margin call or forced liquidation is issued.

The Takeaway

Free margin in forex is the equity in a trader’s account that is not reserved in margin for open positions. It is considered the margin available to use for new trades and the amount your current positions can move against you before you get a margin call or automated stop out.

Free margin is an important term to know when trading in the forex market. Forex, with its often high degree of leverage and wide trading hours, can be more complicated than trading stocks and exchange-traded funds (ETFs).

If you have the experience and risk tolerance and are ready to try out trading on margin, SoFi can help. With a SoFi margin account, you can increase your buying power, take advantage of more investment opportunities, and potentially increase your returns.

Get one of the most competitive margin loan rates with SoFi, 10%*

FAQ

Can you withdraw a free margin?

Yes. Free margin in forex is the amount available to withdraw from your trading account if you have no hedged positions. If you have hedged positions, the amount you can withdraw is your equity minus margin hedges.

Is margin money free?

Margin in forex is your good faith deposit. It is considered collateral you post to trade on leverage. It does not cost you anything since you do not pay interest on that amount or on the amount of assets you control when trading with leverage. Margin is broken down into “used” or “free.” If you have open positions, then not all your margin is free.


Photo credit: iStock/kupicoo

*Borrow at 10%. Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see SoFi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information.
SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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What Is Historical Volatility & How Do You Use It?

A Guide to Historical Volatility

Historical volatility (HV) measures the range of returns on a market index or security over a given time period. When an asset’s historical volatility is going up, that means its price is moving further away from its average (in either direction) more quickly than usual.

A stock’s historical volatility is typically one standard deviation using daily returns, and it’s one factor that investors often look at to gauge the risk of a potential investment. An asset’s historical volatility is different from its implied volatility. Read on to learn what historical volatility is, how historical volatility works, and how to calculate historical volatility.

What Is Historical Volatility?

Historical volatility is a statistical measurement of the price dispersion of a financial security or index over a period. Investors calculate this by determining the average deviation from an average price. Historical volatility typically looks at daily returns, but some investors use it to look at intraday price changes.

Analysts can use any number of trading days when calculating historical volatility, but typically options traders focus on a time period between 10 and 180 days. Options traders use historical volatility and implied volatility when analyzing trading ideas.

Investors typically express historical volatility as a percentage reflecting the standard deviation from the average price, based on past price behavior, but there are also other methods they can use to determine an asset’s historical volatility. Unstable daily price changes often result in high historical volatility readings.

How Historical Volatility Works

Historical volatility takes past price data to calculate an annualized standard deviation value that measures how much past prices deviate from an average price over a given period. When a stock sees large daily price swings compared to its history, it will typically have a historical volatility reading. Historical volatility does not measure direction; it simply indicates the deviation from an average.

When a stock’s historical volatility is rising or above average, it means daily price changes are larger than normal. When it is lower than average, a stock or index has been relatively calm.

How Historical Volatility is Calculated

The historical volatility formula is typically a standard deviation measurement. It takes a stock’s daily price changes and averages them over a period. There are several steps to calculating historical volatility:

1.    Collect historical prices

2.    Calculate the average historical price over a period

3.    Find the difference between each day’s price change versus the average

4.    Square those differences

5.    Find the sum of those squared differences

6.    Divide those differences by the total number of prices (this finds the variance)

7.    Calculate the square root of the variance

The historical volatility formula is a tedious step-by-step process, but most brokerage platforms automatically calculate it. Many brokers even offer historical volatility charts. With a historical volatility chart, you can easily compare changes through time. For example, if a stock reacted sharply to an earnings release, the historical volatility charts will show a jump immediately after the earnings date while implied volatility might drop sharply after the earnings report.

How to Use Historical Volatility

Traders sometimes use historical volatility to help set stop-loss levels. For example, a day trader might take three times a stock’s daily average range – a measure of historical volatility – to set a stop price. This is known as volatility ratio trading.

Traders also use historical volatility when analyzing a stock, fund, or index to get a sense of its riskiness. High or low historical volatility stocks are not inherently bullish or bearish. Day traders might seek high historical volatility stocks as candidates for high-profit trading opportunities (but they also come with high loss potential).

You can also use historical volatility to help determine whether a stock’s options are expensive to help determine an options trading strategy. If implied volatility is extremely high when compared to a stock’s historical volatility, traders may decide that options are undervalued.

Historical vs Implied Volatility

Like historical volatility, it measures fluctuations in an underlying stock or index over a period, but there are key differences between the two indicators. Implied volatility is a forward-looking indicator of a stock’s future volatility.

The higher the historical volatility, the riskier the security has been. Implied volatility, on the other hand, uses option pricing to arrive at a calculation and estimate of future volatility. If implied volatility is significantly less than a stock’s historical volatility, traders expect a relatively calm period of trading, and vice versa.

Typically, when implied volatility is low, options pricing is low. Low options prices can benefit premium buyers. Sometimes investors will use a graph to determine how an option’s implied volatility changes relative to its strike price, using a volatility smile.

Historical Volatility

Implied Volatility

Measures past price data to gauge volatility on a security Uses forward-looking option-pricing data to gauge expected future volatility on a security
Higher historical volatility often leads to higher options pricing and higher implied volatility Imminent news, like a company earnings report or a key economic data point, can drive implied volatility higher on a stock or index
Traders can use historical volatility to help set exit prices Traders can use implied volatility to find stocks expected to exhibit the biggest price swings

The Takeaway

Historical volatility is a useful indicator for both institutional and retail investors looking to get a feel for the level of recent fluctuations in a stock or index has been in the recent past. It measures a security’s dispersion of returns over a defined period. Implied volatility is a similar tool, but it is forward-looking and uses option pricing to arrive at its output.

Options trading and the use of historical volatility is helpful for some advanced traders. If that sounds like you, an options trading platform like SoFi could be worth considering. Its intuitive and approachable design offers investors the ability to place traders from the mobile app or desktop platform. Plus, there are educational resources about options available in case you want to answer a question or learn more about a certain topic.

Trade options with low fees through SoFi.

FAQ

What is considered a good number for historical volatility?

It depends. While one stock might have a high historical volatility reading, perhaps above 100%, another steady stock might have a low figure around 20%. The key is to understand the securities you trade. Historical volatility can be an indicator of a stock’s volatility, but unforeseen risks can turn future volatility drastically different than the historical trend.

What is a historical volatility ratio?

The historical volatility ratio is the percentage of short-to-long average historical volatility on a financial asset. You can interpret the historical volatility ratio by looking at short versus long historical volatility. If short volatility on a stock drops below a threshold percentage of its long volatility, a trader might think there will be a jump in future volatility soon.

This is similar to analyzing volatility skew in options. It is important to remember that the interpretation and technical rules of historical volatility can be subjective by traders.

How is historical volatility calculated?

Historical volatility calculations require finding the average deviation from the average price of an asset over a particular time. An asset’s standard deviation is often used. Historical volatility is usually stated as one standard deviation of historical daily returns.

Many trading platforms automatically calculate historical volatility, so you don’t have to do the calculations manually.


Photo credit: iStock/Eva-Katalin

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
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