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Larry1234

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Everything posted by Larry1234

  1. Larry1234
    Everybody loves a free lunch, myself included, and many in Japan would like free sushi too. Despite the short term boost in Japanese exports and Nikkei stock prices, there are no long-term free lunches (or free sushi) when it comes to global financial markets. Following in the footsteps of the U.S. Federal Reserve, the Bank of Japan (BOJ) has embarked on an ambitious plan of doubling its monetary base in two years and increasing inflation to a 2% annual rate. By the BOJ’s estimate, it will take a $1.4 trillion injection into economy to achieve this goal by the end of 2014. Lunch is tasty right now, as evidenced by a tasty appetizer of +3.5 % Japanese first quarter GDP and this year’s +46% spike in the value of the Nikkei. Japan is hopeful that its mix of monetary, fiscal, and structural policies will spur demand and increase the appetite for Japanese exports, however, we know fresh sushi can turn stale quickly. In my opinion, even though the Japanese economy and stock market have rebounded handsomely in the short-run, there is never a free lunch over the long-term. Unchecked policies of money printing, deficits, and debt expansion won’t lead to boundless prosperity. Eventually a spate of irresponsible actions will result in inflation, defaults, recessions, and/or higher unemployment rates. Unsustainable monetary and fiscal stimulus may lead to a tasty free lunch now, but if investors overstay their welcome, the sushi may turn bad.
  2. Larry1234
    Let us not digress from topic i.e. "Option Greeks" for which this thread has been created. Let discuss more about it and its usefulness in emerging and developed markets.
  3. Larry1234
    Thanks a lot for the info.
  4. Larry1234
    That's true, if we have the information (news) available with us without any delay, we will definitely able to maximize our gain and minimize our loss.
  5. Larry1234
    I believe it depends upon the risk appetite of the trader whether he / she wants to short options or not.
  6. Larry1234
    If we all remember that, In 1998, the dollar dropped against the yen by almost 15% from peak to trough. The intensity of that market dislocation, and the sweeping global events that led to it, offer a warning about disruptions to the global financial system from the yen’s current downturn. The currency’s violent snapback 15 years ago, occurring at the height of the Asian financial crisis. As with now, Japanese authorities believed strongly in 1995 that the yen was overvalued. With the dollar dropping as low as Y79.92 in April that year, Japan’s powerful export sector was suffocating while the economy strained under the costs of the Kobe earthquake. So the Bank of Japan boosted its routine “Rinban” bond-buying operations while Tokyo sought and received Washington’s blessing for a weaker yen. A massive reversal ensued. By August 1998, the dollar had almost doubled in value to a peak of Y147.62. The yen-weakening policy kept Japanese exporters happy and pleased the U.S. Federal Reserve because it put a lid on inflation. But it also unraveled the “Asian miracle.” Businesses in Thailand, Korea, Indonesia and other “tiger” economies came under increasing pressure as Japan’s competitiveness improved. And as their external trade balances deteriorated, speculators targeted these countries’ pegged currencies, eventually triggering a domino collapse that would envelope the whole world. Meanwhile, the short-selling bets that traders had placed against the falling yen were planting the seeds of their own destruction. With Japan’s struggling economy paying the lowest interest rates in the world, global investors had piled into the so-called yen carry trade. They borrowed cheaply in yen and invested the proceeds in higher-yielding currencies such as the Thai baht and Russian ruble. But when the crisis unfolded and investors closed out those positions, they had to buy back the yen to repay their loans. In October 1998, after Wall Street banks bailed out Long-Term Capital Management and unwound its global portfolio of risky bets, these periodic “short-covering” rallies morphed into one all-encompassing stampede. Is Japan now setting up a similar global disruption? Its central bank is about to unleash an unprecedented wave of money into the global system and traders, anticipating its effect, have driven the yen down 22% since its peak in September.
  7. Larry1234
    Updates India's consumer inflation eases to 9.39% India's consumer price index declined in April, the second consecutive month of easing. The consumer price index fell from 10.39% in March to 9.39% in April. Economists praise Mexico's financial reform plan Economists who focus on Latin America are enthusiastic about the potential for Mexico's financial reform package to significantly boost employment and gross domestic product. Making more credit available to small and medium-sized businesses is central to the effort. Germany seeks renewed talks over Turkey's EU membership German Foreign Minister said negotiations over Turkey's application to join the EU should resume. Largely because of German opposition, talks on the possible membership of Turkey in the EU have achieved little progress since they began in 2005. More Chinese automakers open operations in U.S. Chinese automakers are moving to the U.S. by the dozens and investing in Detroit to become a part of the U.S. auto industry. The new Chinese firms are keeping a low profile, unlike Japan's Toyota and Honda, which triggered public resentment when they began competing aggressively with Chrysler, Ford and General Motors in the U.S. in the 1980s. IPOs in U.S. on track for biggest year since 2007 At the current pace of capital-raising, the U.S. initial public offering market is headed for its best year since before the financial crisis. IPOs listed in the U.S. have raised $16.8 billion from investors this year, according to data provider Dealogic. That's ahead of the $13.1 billion raised during the same period in 2012.
  8. Larry1234
    Hello Option Tiger, I agree with you but shorting (selling) a deep out of the money is call / put make sense when we are trading in an options.
  9. Larry1234
    Is it free of cost ?
  10. Larry1234
    You can book the profit by selling the call of the same expiry (i.e. July 20) date and same strike (i.e. 600).
  11. Larry1234
    Updates on Market Activity Japan rises most among mostly upbeat Asian-Pacific markets Trading in Indian bonds skyrockets China reportedly stops some bond trading on inter bank market
  12. Larry1234
    More Updates BoE holds benchmark rate at 0.5% and keeps QE steady As expected, the Bank of England has maintained its key interest rate at 0.5% and has kept quantitative easing unchanged. Most analysts don't expect the central bank to make significant policy changes until incoming Governor Mark Carney takes over in July. First-time jobless claims continue decline Initial unemployment claims decreased last week to a five-year low as layoffs eased to a pre-recession level, the U.S. Labor Department says. About 323,000 claims were filed, the fewest since January 2008. The four-week rolling average, seen as a better labor-market indicator, declined by 6,250, to 336,750. Yen hits 4-year low Japan's yen fell to a four-year low of 100 to the U.S. dollar as Prime Minister Shinzo Abe's stimulus policies aimed at driving inflation up to 2% start to deliver results. Corporate giants began reporting sharply improved earnings this week.
  13. Larry1234
    Hello Hari, thanks a lot for the link. As I have read the book Financial Risk Management by J.C. Hull so I am very much aware with option greeks. IMO I don't think retails investors (in emerging economies) use option greeks before taking a trading call. I am not sure about Europe and USA.
  14. Larry1234
    Hello Henry, Thanks a lot for your contribution. In this thread, we are discussing the advantages to Japan due to QE. Japan is facing a problem of deflation for the past couple of years. They are also facing ageing population problem. Bank of Japan recently announced the printing of more money just to increase the inflation. Is it going to help them in the short term or long term ? What do you think ?
  15. Larry1234
    Thanks a lot BlueHorseshoe.
  16. Larry1234
    Option price consist of two factors - (1) Intrinsic Value of option (2) Time value of option We can say death by thousand cuts is same as time value of option.
  17. Larry1234
    Do you think that retail investors use option greeks ?
  18. Larry1234
    Hi Bobcollett, Trading is not my primary profession but I keep tracking economic news. I have a keen interest in option trading and macro economics.
  19. Larry1234
    No, I have not. Can you please tell me what it is ?
  20. Larry1234
    Major Updates from Other Sources Australian hiring picks up Australia's employers hired 50,100 workers in April, more than four times the 12,000 increase that economists expected, the Bureau of Statistics said. The unemployment rate edged down to 5.5% despite the fact that many of the jobless are starting to look for work again. Mexico's finance minister calls for reform to boost lending Mexican Finance Minister Luis Videgaray has announced a long list of financial reform aimed at increasing bank lending and making credit less expensive. The package has been endorsed by all major political parties. It will be presented to Congress when the next session begins in September. WEF: Volume of exchange-traded derivatives climbed in Q1 The World Federation of Exchanges says derivatives traded on exchanges increased in the first quarter compared with Q1 of 2012. Volume declined last year compared with 2011. "Uncertainty continues, which means there's a greater need for hedging," said Romain Devai of the WFE. JPMorgan reports warning from energy regulator The Federal Energy Regulatory Commission informed JPMorgan Chase in March that the U.S. regulator could recommend bringing an enforcement case, according to a regulatory filing from the bank. The claim could include "alleged violations of FERC rules and the rules of certain independent system operators," JPMorgan's filing says.
  21. Larry1234
    As rightly pointed out by You that the downside risk in option is limited if we have taken a long position in the same. Buying a Put Option - Bearish on the market Buying a Call Option - Bullish on the market Apart from this, one can formulate option strategies to earn risk free profit but these opportunities are very few in the market. Feel free to ask if anybody has a query.
  22. Larry1234
    Can somebody post advantages and disadvantages of bitcoins ?
  23. Larry1234
    Updates Asia-Pacific tries to cope with flood of foreign cash For months, policymakers have been trying to curb the effect of a tidal wave of money pouring into Asian-Pacific economies, driving up the value of local currencies. New Zealand confirms it has been selling its currency to slow the strengthening of the kiwi. Australia has reduced interest rates to a historic low to weaken its dollar. U.S. foreclosures hit lowest level in 6 years Residential foreclosures declined 23% last month compared with April 2012. One in 905 housing units received a foreclosure notice, the smallest proportion since February 2007. Chinese consumer inflation increases China's consumer price index reached 2.4% last month, compared with 2.1% in March. Rising prices for fresh vegetables, because of scarce rainfall and unusually low temperatures, were a major factor. China's inflation target for the year is 3.5%. U.S. produces almost as much oil as it imports The U.S. is producing the most oil in 21 years, with the amount almost equal to imports. As the production gap narrows, futures prices of imported Brent crude and the traditionally less costly West Texas Intermediate crude are moving closer together. On Wednesday, the spread fell below $7.72 per barrel, the smallest number since December 2011.
  24. Larry1234
    Prime Minister Shinzo Abe’s new government has embraced a revolutionary economic-policy approach that engages several initiatives, some of which were once deemed implausible, unthinkable, or even undesirable. From the doubling of the money supply to additional fiscal stimulus and wide-ranging structural reforms, the new policy paradigm is nothing less than one of the boldest economic-policy experiments in Japan’s post-war history. Already, financial markets have responded with alacrity. The Japanese equity market is up an impressive 55 percent since hints of the paradigm shift started hitting investors’ radar screens. At the same time, the Japanese yen has depreciated sharply, including by more than 20 percent against the struggling euro. The full article can be read at the given link - External Realities May Ruin Japan?s Economic Experiment: Mohamed El-Erian | Economy Watch Opinions are invited.
  25. Larry1234
    More Updates Anti-EU party scores big win in local U.K. elections EU tells France to cut spending and revamp labor market Buffett discusses departure from Berkshire Some bond investors trust Bernanke more than Greenspan Franklin Templeton forms share class for employer-sponsored plans
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