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Phil's Favorites

Fix the Money

October 7th, 2008 4:09 am

In the search for the root causes of the global financial crisis, Tim Iacono at The Mess That Greenspan Made, looks at the lack of sound money.

No, we need to fix the money. Literally.

Yes, there's a reason there are still so many Ron Paul for President signs up in peoples' front yards even though the Texas Republican long ago gave up his bid for t

more from Ilene

Trading Goddess

December 31st, 1969 7:00pm

The Options Report

By Andrew Wilkinson and Rebecca Darst

No end in sight as declines at European bourses replicate 1987 crash

October 6th, 2008 2:24 pm

Today’s tickers: Today’s tickers: : VIX, RIO, C, XLF, STJ, SWY, EAT, PX & JBHT

VIX – CBOE Volatility index. – Options volume is pretty heady in the fear gauge today, which stands at elevated crash-time readings. You have to look back on a monthly or weekly chart to see levels above a reading of 50. Today the VIX is 18% higher at 53.28, which has seen the call side of the options market most heavily traded today. It looks like some profit taking may have been behind the 35 call strike where 23,000 out of the 25,700 lots traded was sold at the bid. Open interest here of 74,142 contracts has been declining over the last week indicating some bright investor may have reached their goal. At the October 37.5, 50 and 55 strikes more buying was evident as investors clamored for protection higher up the ladder. It appea

more from Andrew

Stock and Option Trades
(Advanced option strategies)

Fuzzy Math!

August 3rd, 2008 9:36 am

Have you ever seen literature from a fund posting attractive gains and comparing its performance to that of the benchmark S&P 500? Have you ever investigated how the figures listed were calculated? If not, you will definitely want to read on! Let's take a fairly representative example. Fund Manager Joe Bull, for example, is very good at generating profits in bull markets. Let's say Joe Bull made 20% in each of the years 2004, 2005, 2006 and 2007. But Joe Bull does not have the toolset to survive bear markets and finds in 2008 that he is down 30%. What has Joe Bull's return been over 5 years? It turns out, the answer to that questions depends greatly on what Joe Bull wants to report as his return! Why? Because little regulation exists to prevent Joe Bull from choosing any number of mathematical approaches to calculate his return! For example, fund manager Joe could simply take the average of his returns over 5 years. This would be calculated as the sum of 2 more from Option Trades

Option Sage
(Strategy and Education)

Trivia Time!

August 18th, 2008 11:38 pm

Let's say you decide to deposit $100,000 into a brokerage account. You decide you will check your portfolio on a weekly basis. Now let's further assume that the first week has passed and you are about to log in to your account. But before you do, you are told that one of two things has happened in the past week.

[1] Your portfolio went up $10,000 and then dropped $10,000

[2] Your portfolio went up 10% and then dropped 10%.

So, the trivia question is: In case [1], what should you expect your account value to be and is that the same figure as in case [2]?

If you answered $100,000 in case [1], you would be absolutely correct! If you answered that this is the same as in case [2] you would be absolutely incorrect! Why? Well let's take a look at what happens when the portfolio rises 10% first; it goes from $100,000 to $110,000. But then we're told it drops 10%. 10% of $110,000 is $11,000 more from Option Sage

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