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Scalping With Treasury Bond Futures Trader Hennebry just sold 5 T-bond futures to ZZZ for 77 31/32. Now, a sell order for 5 T-bond futures reaches the pit and Hennebry buys them for 77 30/32. Thus, Hennebry just made 1/32 on each of the 5 contracts, for a dollar profit of 1/32% x $100,000/contract x 5 contracts = $156.25
60 trang | Chia sẻ: huyhoang44 | Ngày: 27/03/2020 | Lượt xem: 711 | Lượt tải: 0
A Strangle Example A stock currently trades at $44. The annual volatility of the stock is estimated to be 15%. T-bills yield 6%. An options trader decides to write six-month strangles using $40 puts and $50 calls. The two options will have different deltas, so the trader will not write an equal number of puts and calls. How many puts and cal...
51 trang | Chia sẻ: huyhoang44 | Ngày: 27/03/2020 | Lượt xem: 689 | Lượt tải: 0
You may invest in either a 10-year bond or a series of ten 1-year bonds. Both 10-year and 1-year bonds currently yield 10%. If you choose the 1-year bond strategy: After Year 1, you receive $50,000 in income and have $500,000 to reinvest. But, if 1-year rates fall to 3%, your annual income would fall to $15,000. If you choose the 10-year bond st...
43 trang | Chia sẻ: huyhoang44 | Ngày: 27/03/2020 | Lượt xem: 795 | Lượt tải: 0
The valuation equation has two parts One gives a “pseudo-probability” weighted expected stock price (an inflow) One gives the time-value of money adjusted expected payment at exercise (an outflow)
45 trang | Chia sẻ: huyhoang44 | Ngày: 27/03/2020 | Lượt xem: 764 | Lượt tải: 0
Future value Present value Annuities Rates of return Amortization
44 trang | Chia sẻ: huyhoang44 | Ngày: 27/03/2020 | Lượt xem: 814 | Lượt tải: 0
Priced analogously to calls You can combine puts with stock so that the future value of the portfolio is known Assume a value of $100
72 trang | Chia sẻ: huyhoang44 | Ngày: 27/03/2020 | Lượt xem: 687 | Lượt tải: 0
If an investor chooses to hold a one-stock portfolio (exposed to more risk than a diversified investor), would the investor be compensated for the risk they bear? NO! Stand-alone risk is not important to a well-diversified investor. Rational, risk-averse investors are concerned with σp, which is based upon market risk. There can be only one pri...
50 trang | Chia sẻ: huyhoang44 | Ngày: 27/03/2020 | Lượt xem: 1209 | Lượt tải: 0
A diagonal spread involves options from different expiration months and with different striking prices They are chosen diagonally from the option listing in the financial pages Diagonal spreads can be bullish or bearish
64 trang | Chia sẻ: huyhoang44 | Ngày: 27/03/2020 | Lượt xem: 1036 | Lượt tải: 0
Exchange rate risk – If an investment is denominated in a currency other than U.S. dollars, the investment’s value will depend on what happens to exchange rates. Country risk – Arises from investing or doing business in a particular country and depends on the country’s economic, political, and social environment.
29 trang | Chia sẻ: huyhoang44 | Ngày: 27/03/2020 | Lượt xem: 712 | Lượt tải: 0
Writing a Naked Microsoft Call Example (cont’d) A brokerage firm feels it is extremely unlikely that MSFT stock will rise to $35 per share in ten days. The firm decides to write 100 SEP 35 calls. The firm receives $0.05 x 10,000 = $500 now. If the stock price stays below $35, nothing else happens. If the stock were to rise dramatically, the firm ...
49 trang | Chia sẻ: huyhoang44 | Ngày: 27/03/2020 | Lượt xem: 854 | Lượt tải: 0
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