The Israeli SpeculatorThe Israeli SpeculatorThe blog for the rational and skeptic investor. Philosophies about investing and trading NOT about lame techinques that work for no one. This is not your typical investing blog Articles
How To Reduce Risks In Synthetic Positions Part I
2007-04-21 00:00:00 In the last posts, I was writing about synthetic positions and how to make profit out of them. We have seen though that they entail risk of interest rates and dividend payouts. How can we eliminate the need to buy (or sell) the stock itself? Consider buying the following portfolio as we have discussed in the ... More About: Risk , Reduce , Part , Redu , Posi
How To Make Money Trading Options With Synthetic Positions - Part II
2007-04-21 00:00:00 This is the second part of the option trading with synthetic positions. If you haven’t read it, please read it now. In this post, i’ll discuss the common risks in taking such synthetic positions so you would know what to avoid. Consider the following example: A stock trading at 103, a 100 call option with 1 ... More About: Money , Make Money , Trading , Options , Part
How To Make Money Trading Options With Synthetic Positions - Part I
2007-04-21 00:00:00 Introduction With synthetic positions, we aim to make money not by trying to predict future movements, but by mis priced option prices. What does it mean to have a synthetic position? Consider the following example: A trader who purchases a call that expires in one month with a strike price of 100 and writes a put with ... More About: Money , Make Money , Trading , Options , Part
Black and Scholes - The Greeks Part I
2007-04-21 00:00:00 This is a continuation of the Black and Scholes post. After we have computed the fair price with the B&S formula, we can compute more parameters that are related to the formula. Consider the buyer of stocks. What is he worried about? Obviously, a market decline. Anyone who only buys the underlying has one real concern, ... More About: Greeks , Part , Hole
How to Estimate Future Volatility of a Stock Like The Pros
2007-04-21 00:00:00 Here is the method for estimating future volatility of a stock. Remember though that the method is not perfect, but by the law of averages, in the long run, it is a good estimate. The estimation of future volatility is essential for the Black and Scholes model Computing Historical Volatility: Suppose we want to compute the historical ... More About: Future , Stock , Mate , Like
Efficient Market Hypothesis Continued - Semi Strong Efficiency
2007-04-18 00:00:00 This is a continuation of the posts about the Efficient Mark et hypothesis. In the last post about the EMH, I talked about what is known as Weak Form Efficiency . The next category is known as the semi-strong efficiency. The semi strong efficiency basically assumes that the prices reflect all public information. Here are a ... More About: Semi , Tron
Black and Scholes - The Greeks Part III
2007-04-15 00:00:00 In this post I’ll discuss what is known as the theta. Another expression for the theta is time-decay. The effect of the theta on both put options and call options is the same. As each day passes, the option is worth less and less. This should be intuitively clear. As an option gets closer to ... More About: Greek , Greeks , Black , Scholes , Part
Black and Scholes - The Greeks Part II
2007-04-11 00:00:00 This is the continuation of the series about what is known as the “greeks”. In this post, I’ll talk about the Gamma of an option. Read about the delta here .For those who are wondering where all of this is leading if at all, I’m planning later on writing more methods rarely discussed, but those ... More About: Greek , Greeks , Black , Scholes , Part
The Box Technique - Part II
2007-04-10 00:00:00 This is part II of the last post on reducing risks with synthetic options. In the last topic we talked about the the box technique. As we have said earlier, with the box technique, we don’t buy anymore the stock, just a combination of options on different strike prices. Let’s consider again the following portfolio long ... More About: Tech , Technique , Part , Ique , Nique
How To Reduce Risks In Synthetic Positions Part I
2007-04-09 00:00:00 In the last posts, I was writing about synthetic positions and how to make profit out of them. We have seen though that they entail risk of interest rates and dividend payouts. How can we eliminate the need to buy (or sell) the stock itself? Consider buying the following portfolio as we have discussed in the ... More About: How To , Risk , Reduce , Part , Redu
How To Make Money Trading Options With Synthetic Positions - Part II
2007-04-07 00:00:00 This is the second part of the option trading with synthetic positions. If you haven’t read it, please read it now. In this post, i’ll discuss the common risks in taking such synthetic positions so you would know what to avoid. Consider the following example: A stock trading at 103, a 100 call option with 1 ... More About: How To , Money , Make Money , Trading , With
How To Make Money Trading Options With Synthetic Positions - Part I
2007-04-07 00:00:00 Introduction With synthetic positions, we aim to make money not by trying to predict future movements, but by mis priced option prices. What does it mean to have a synthetic position? Consider the following example: A trader who purchases a call that expires in one month with a strike price of 100 and writes a put with ... More About: How To , Money , Make Money , Trading
Black and Scholes - The Greeks Part I
2007-04-05 00:00:00 This is a continuation of the Black and Scholes post. After we have computed the fair price with the B&S formula, we can compute more parameters that are related to the formula. Consider the buyer of stocks. What is he worried about? Obviously, a market decline. Anyone who only buys the underlying has one real concern, ... More About: Greek , Greeks , Part
How to Estimate Future Volatility of a Stock Like The Pros
2007-04-04 00:00:00 Here is the method for estimating future volatility of a stock. Remember though that the method is not perfect, but by the law of averages, in the long run, it is a good estimate. The estimation of future volatility is essential for the Black and Scholes model Computing Historical Volatility: Suppose we want to compute the ... More About: How To , Future , Estima , Stock , Mate
Black & Scholes For Dummies - How To Do It Manually And With Excel
2007-04-04 00:00:00 This post is about simply making the formula work. First manually, then with excel. At the end of this post there is an excel file I had put. Why you need to know how to make the formula work yourself? Because this way, you’d understand the mechanism better, and it’s weakness. So without further ado, the ... More About: How To , Dummies , With , Black , Scholes
A Monkey Plays The Stock Market - Do Hedge Fund Managers Do The Same?
2007-04-02 00:00:00 In the past, mathematicians coined the phrase “Monk ey Typing Shakespeare”, which meant that in the long run, everything will happen. Even if you put a monkey and let it type whatever he wants, eventually, all the greatest novels would be written by that monkey. Not only the greatest novels, even all the greatest but not ... More About: Fun , Stock Market , Market , Monkey
Blogs I Found Useful On The Net
2007-04-01 00:00:00 Here is my weekly list of blogs I have found useful on the net. Naturally, they all got something to do with the theme of this blog. The first one is a site with a lot of examples that is very educational about trading options. A lot of information. Check it out at http://www.1option.com/ The second one is ... More About: The Net , Blogs , Blog , The N , Useful
Does Adding Ads Mean Whoring Your Blog?
2007-04-01 00:00:00 Recently, I have added Google ads (not too hard to notice). I have to admit, I was not too happy about it. Since I am a part time student (writing my thesis currently), there is a certain integrity of free knowledge. That’s why I won’t charge for anything I write in here and I ... More About: Blog , Your , Ring
Has The Iranian President Played His Cards Right? The Israeli View
2007-04-01 00:00:00 My favorite off-topic subject, Iran , refuses to get out of the headlines. I said in earlier posts, that the Iranian President is no madman, but I do think he played his cards wrong. He got a few things going on for him, among many, the classic European impotence when it comes to calling on ... More About: Israel , Card , Play
Make Money Online
2007-04-01 00:00:00 I am sure some of you readers out there, who have blogs and put a real effort to put free quality material, as I try to do, want a little incentive for your hard work. A good site, which I regularly visit is John Chow’s site. John Chow dot Com is a blog that helps you make ... More About: Money , Make Money , Make Money Online , Online , Make
Efficient Market Hypothesis Continued - Weak Efficiency
2007-04-01 00:00:00 In the last post, I talked about the three main categories of the Efficient Mark et hypothesis. In this post I’ll talk more about the weak form efficiency. To recap, the weak form efficiency basically says that current prices, reflect all past prices’ information. This means that techniques such Technical Analysis and Chart Reading can’t work. Consider ... More About: Efficiency , Conti
Latex is Not Working Right Now
2007-04-01 00:00:00 For some reason, my latex plugin is not working right now. For those who are trying to read my free Option Pricing For Dummies, I am sorry and just to let you know, I’m working on it. More About: Work , King , Right , Late , Working
Financial Biases - What You Need to Watch Out For
2007-03-29 00:00:00 Whether you are presented with some research claim or about to do some research yourself with financial data, there are certain biases you need to watch out for if you want to get accurate results. Not only that, when presented with financial research, you need to look into the little details, to see if the ... More About: Watch , Financial , What , Hat , Bias
Buying Winners and Selling Losers? Does it Work?
2007-03-26 00:00:00 A popular view held by behavioural economists and psychologist alike is that people overreact to information. De Bondt and Thaler, two researches, suggested because of this a strategy of buying past losers and selling past winners that will achieve abnormal returns. They showed that over 3 to 5 years holding periods, stocks that performed ... More About: Buying , Selling , Work , Winners , Winner
Israeli Stock Market Weekend Review 03/23 - TA25 Recovers With a 1.69% Retu
2007-03-24 23:00:00 It has never been quiet in the political side. In the shadows of political investigation, among them fraud, of several top political figures such as the Minister of Treasury, Mr. Hirshenson, it seems that the stock market has become a different entity. I can see two possibilities for this. The first, is the total ... More About: Israel , Stock Market , Market , Review , With
Israeli Stock Market Weekend Review
2007-03-20 00:00:00 What a week it was! TA25 is currently at a level of 952 points. For those who have short memories let me recap the recent events briefly. It all started when the chairman of the Bank of Israel , Stanley Fisher, threatened to resign over salary negotiation failure for his staff at the bank. Not only ... More About: Stock Market , Market , Review , Stock
Sports and The Stock Market, Is There a Connection?
2007-03-20 00:00:00 In tribute of the upcoming qualifying games for the European Championship in football (soccer if you are American), which will be held in 1 week, here is the answer: Yes there is a connection. In what way? Remarkably, if the match is important, the returns of losing team’s stock market, on average, is lower! I ... More About: Sports , Sport , Stock Market , Market , Connection
What?s The Deal With Implied Volatility
2007-03-12 00:00:00 You have probably heard the term “Implied Volatility” tossed around a lot when it comes to option trading. If you did not know what it means, this post is for you. The landmark Black and Scholes equation, developed in the 70’s, gives a “fair” price of an option. You just plug in the interest rate, time ... More About: With , What , Hat , Deal , Lied
China Blocked My Blog!
2007-03-11 00:00:00 Apparently, my blog is blocked from my Chinese viewers. Makes me wonder why? Am I not worthy to the Chinese? True, I talk a lot about capitalism but I have nothing against communism. I hereby open a campaign to let me back into the Chinese market! All jokes aside, check to see if your site ... More About: China , Locked , Blog , Bloc , Block
Iran Tries To Blame Israel (again)
More articles from this author:2007-03-11 00:00:00 It appears that Iran has tried to put the blame on Isra el again on the disappearance of a top Irani General. Who would want to defect from Iran? After all, they are a peaceful country where no harm would be done to you if you go against the government. The latest speculation though is that the ... More About: Again , Blame 1, 2, 3, 4 |
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