Rate of Return Stops and Capital Return Transactions

Abstract

A method and system for managing and selling investments via electronic means. An investor can establish sell order criteria based upon a preset desired rate of return. The broker thereby monitors the investment and automatically sells it on behalf of the investor once the prescribed sell order criteria are met. The investor can effectively lock in a rate of return prior to its sale without monitoring. Also provided is a method and system for returning to the investor a portion of the initial investment. Once the investment reaches a predetermined value, three simultaneous events occur. A portion or all the initial invested capital is returned to the investor for purposes of reinvestment. The investment instrument is transferred to the broker as collateral, given that its value appreciated relative to the initial purchase amount. Yet the investor still owns the “rights” to the capital appreciation for the life of the investment.

1 . A computer implemented method for managing an investment comprising:
 receiving, by a computer system, a desired first rate of return for at least one derivative;   receiving, by the computer system a desired second rate of return for at least one asset associated with the derivative;   determining, by the computer system, whether a first trigger event for a future trading period has occurred based on the first desired rate of return;   determining whether a second trigger event for the future trading period has occurred based on the second desired rate of return; and   performing a transaction associated with the derivative and the asset based on at least one of the first trigger event or the second trigger event.   
     
     
         2 . The method of  claim 1  wherein the first desired rate of return is the same as the second desired rate of return. 
     
     
         3 . The method of  claim 1  wherein the derivative is selecting from the group consisting of:
 option; 
 Exchange Traded options; 
 Exchange Traded Funds (ETF's); 
 futures contract; warrant; 
 convertible bond; and 
 financial contract. 
 
     
     
         4 . The method of  claim 1  wherein the asset is selected from the group consisting of:
 stock; 
 Exchange Traded Funds (ETF's); 
 bond; 
 currency; 
 index; and 
 mutual fund. 
 
     
     
         5 . The method of  claim 1  wherein the first trigger event occurs when the current market rate of return for the derivative is greater than the first desired rate of return. 
     
     
         6 . The method of  claim 5  wherein the transaction is selling the derivative. 
     
     
         7 . The method of  claim 1  wherein the second trigger event occurs when the current market rate of return for the associated asset is greater than the second desired rate of return. 
     
     
         8 . The method of  claim 7  wherein the transaction is exercising the derivative to purchase the associated asset. 
     
     
         9 . The method of  claim 1  wherein the first desired rate of return and the second desired rate of return are adjusted for a factor selected from the group consisting of:
 transaction costs; 
 management expenses; 
 tax consequences; 
 dividends; 
 DRIPS's; and 
 bond coupons.