Larry1234

We all know that options were earlier introduced for Hedging but due to its payoff profile, it attracts traders to come. Options is equally traded by arbitrageurs as well.

Is it time to sell Gold or to buy Gold or to forget about it? Gold fell $25 yesterday; it now stands at $1,575. The price could break all the way down to $1,000. But I don't expect it. Gold is not in a bubble. As you have seen, gold is neither over-priced nor under-priced. It buys about what it should buy. Maybe a little less. Maybe a little more. How do we know what gold "should" buy? We don't really. But gold is a natural thing.

More updates - Yuan reaches highest value in 19 years against U.S. dollar Nasdaq agrees to buy Treasurys-trading platform eSpeed Demand jumps for U.S. visa for skilled workers

Cyprus government officials are seeking easier bailout terms in talks with representatives of the European Union and International Monetary Fund on 2nd April. The Cyprus General Market Index fell 2.5 percent to 99.54. The country’s exchange opened for trading today after closing for more than two weeks. Under the agreement reached for the country’s banks, 40 percent of deposits above 100,000 euros held at Bank of Cyprus will be temporarily frozen to ensure the lender’s liquidity.

When we talk about the Even Driven Strategy, i feel its not helpful for a trader because many times I have seen that the event (news) is negative for the market, but still market moves upwards and vice versa. How do you use this strategy to make trading decisions ?

The growth in the average price of housing in 100 major Chinese cities accelerated in March, underscoring the challenge that policymakers face amid recent pledges by local governments to reinforce the central government's measures to rein in the market announced a month ago. A survey of property developers and real-estate firms showed the average price of housing rose 3.90% in March from a year earlier, the fourth straight month of annual gains after eight months of declines, data provider China Real Estate Index System said Monday. The rise is faster than the increases of 2.48% in February and 1.2% in January. The average housing price in March rose 1.03% from February to 9,998 yuan($1,607) a square meter, marking the 10th consecutive monthly gain. In February, prices rose 0.83% from the month before. Compared with the preceding month, housing prices in March rose in 84 cities and fell in 16 cities, the survey showed. In February, housing prices rose in 74 cities. In the second-hand home market in 10 major Chinese cities, average prices in March rose 2.81% to CNY23,689 a square meter from February, picking up from the 1.56% increase recorded in February. On a year-on-year basis, second-hand home prices rose 18.06% in March, accelerating from the 15.81% gain a month earlier. The jump was due to an increase in transactions as homeowners rushed to close sales in anticipation of a heftier tax bill. Beijing, Shanghai and Guangdong province said in recent days that they would enforce a 20% tax on profits from home resales, after the State Council, or China's cabinet, said earlier in March that cities will have to do so. Previously, buyers were taxed at only 1% to 3% of the gross transaction value on most occasions. Beijing added that it would limit single people registered to live locally to one home purchase if they don't now have a home and increase the minimum down payment for all buyers of second homes. Other cities such as Nanjing, Xiamen and Chongqing said they would maintain existing policies by tethering the pace of housing price increases to the pace of local household income growth. The local government measures were seen as less stringent than earlier anticipated, with property stocks rallying Monday after earlier concerns that the impact of the property curbs could be harsher were assuaged.

As I already mentioned Euro will depreciate in a short run. I am expecting Euro to hit 1.2700 in the month of April.

I hope it will touch 1600 level in First week of April

As we all know that we can can trade in Forex market 24/7, can you please tell me what is the good time in a day to trade forex when the lots of traders doing trading simultaneously ? (EST, Asian Time or European time)

Thank you. Your comments are invited to make the thread more successful.

Even if the data does not show any bubble for China, but lots of Economists are of the opinion of bubble in Chinese market and that is Chinese Housing bubble.

I guess Euro will depreciate in the near term compared to USD.

As we have seen that stocks continued mostly going up for the last couple of weeks. Gold bounced up and down...but held above $1,600. Most people would much rather have stocks than gold. Most of the time, they are probably right. Gold pays no dividends. Nor does it invent new things or open up new markets or any of the other things that make stocks go up. And now, most people seem to think that there is a recovery underway...and that the authorities have everything under control. So who needs gold? Last week, gold got a little boost when it became apparent that 1) Europe still faces huge and disturbing financial challenges, 2) governments are ready, willing and able to steal vast amounts of money from bank accounts, and 3) they are also preparing to put on capital controls to prevent you from moving your money to safety. Ultra-low interest rate policies - enabled by central bank buying of government debt - keeps interest payments low, for now. But low interest rates don't stay low forever. And as Greece, Spain, Portugal and other borrowers have already discovered, Mr. Market can be a real pain in the derriere. When he insists on higher rates of interest - fearing that he may not be repaid as promised - state budgets get shot to hell. Then, like Cyprus, the feds get desperate for money. They will go after it wherever and however they must. Which makes saving money dangerous as well as unrewarding. First, the feds suppress interest rates so you get no return on your savings. Then, when they get in a jam they Cyprus your savings directly. That's just one of the reasons we keep our eye on gold. In my opinion, Gold will always move northwards in the long run and is a perfect hedge for the inflation.

Cyprus is expected to complete capital control measures on Wednesday to prevent a run on the banks by depositors anxious about their savings after the country agreed a painful rescue package with international lenders. Cypriots have taken to the streets of Nicosia in their thousands to protest at a bailout deal that they fear will push their country into an economic slump and cost many their jobs. European leaders said the deal averted a chaotic national bankruptcy that might have forced Cyprus out of the euro. For more details - Capital controls being readied to avert bank run - Cyprus Mail

This thread is created to discuss Options Greeks (Delta, Gamma, Theta, Rho & Vega) not the Greeks in Eurozone.

Good one, Mysticforex

The EUR/USD pair went nowhere during the session on Tuesday. The 1.2850 level is significant support level, and as a result we are not ready to start selling this market quite yet. It should be noted that while the markets had a nice “risk on” feeling to them in general, the Euro could not capitalize. This is probably because there is now a new concern with Europe. The biggest problem with Europe right now is the fact that they are using the depositors to bail out the banks in Cyprus. With that being the case, we suddenly have to start asking questions of the peripheral countries and whether or not deposit will be protected there in cases of bank failures. There are certainly enough week banks in places like Spain, Portugal, Ireland, and Italy to make traders concerned about the European Union in general. If that’s the case, we may see money flowing into the United States from across the Atlantic Ocean.

One of the good news for the US is that the Chinese government will allow its currency, the renminbi, to float on international markets sometime within the next five years, after more than a decade of stable currency policies, which have been routinely criticized overseas, particularly by the U.S. China would have no choice but to reform its interest-rate system if they wished to cement the yuan as a global currency, insisting that the current system could not last forever. China would become a net exporter of capital as currency restrictions are relaxed. The Chinese government introduced policies that will allow foreign financial companies to invest yuan raised offshore in its domestic markets. Presently, the yuan is tightly controlled and can only trade 1 percent above or below the guidance set by the central bank every day on the mainland. The yuan was kept stable for a decade, before China allowed its currency to strengthen 21 percent from July 2005 to July 2008. Appreciation was then halted again for almost two years during the global financial crisis and the currency has advanced 10 percent against the dollar since controls were loosened on June 19, 2010. Do you think Is the RMB (Chinese Yuan) Displacing the USD in Asia? any thoughts ????

Democracy in China - I guess its a long way to go. But I am sure of one thing that the United States would definitely welcome a democratic China. Its because a democratically governed China would share mutual interests with the United States and the international community, including human rights and the adherence to the rule of law. As with other peoples, the Chinese want to live in a free society and choose their own government. The immediate impact of democracy in China would presumably terminate the instances of unjustly imprisoned dissidents. However, the past shows that such humanitarian objectives are not Washington’s primary interest. Beyond civil society concerns, economic and strategic interests play a bigger role in shaping White House policies toward China. Issues such as the growing U.S. trade deficit with China, the artificially undervalued Chinese yuan and Beijing’s increasing military budget cause the most anxiety in Washington. U.S. policy toward China must avoid the dangers of an all-inclusive policy, assuming that the democratization of China is the universal remedy. In the economic sphere, a democratic China might be a more accessible trade partner and comply with its World Trade Organization obligations. Beijing would stop manipulating its currency and entertain U.S. advice to boost domestic consumption. With stout anti-piracy laws and intellectual property protection, U.S. exports to China would thrive and the trade deficit may even turn into a surplus. Building on the democratic peace theory, Washington can claim that the democratization of China could eliminate the threat of military confrontation. President Obama’s recent “pivot” to the Asia-Pacific would thus not need to be a policy of veiled containment, but rather a policy of bilateral cooperation in the region. But unfortunately, democracy is not a panacea. In fact, a democratic China may not be much different from today’s China. Before accepting a democratic China into the international system, it would behoove Washington to soften its superpower mindset toward Beijing. A democratically governed China would likely still have great power ambitions and Beijing could legitimately claim the role of the “second superpower” in the next decade. Democratization would upgrade China’s political power and credibility in the international community. The United States and the European Union would forego the leverage of confronting China about its policies, as China’s laws would be the result of a popularly elected government. A democratic Chinese government would face significant obstacles, some unforeseen, that have toppled regimes or caused civil wars in the past. Indeed, China’s Communist Party claims that political liberalization would lead to “chaos.” At the same time, the party feels compelled to imitate democracy, creating a liberal facade to justify its rule. Whether real or imagined, Chinese democracy may not bring the effects everyone hopes for.

Let us talk about the option strategies on S&P 500 for the month of march. I believe S&P should touch 1650 level in march so I am bullish but still confused which strategy is better ?

Generally Option greeks are used by Portfolio managers while re balancing the portfolio. Apart from this, they use this to make their portfolio delta and gamma free.

Why do you think that China is a Ponzi scheme. I would rather say US is Ponzi scheme. They are issuing new debts just to repay the earlier one and the interest on earlier debts.

I am saying China a bubble. Its because China has a housing problem. But this problem is much different than the one we had here in the USA or the one in the EU. Let me talk about the same in details - when U.S. housing prices were rising, the government actively took part in inflating the real estate bubble by pushing rates lower and offering zero-down loans (subprime) to middle to low-income buyers. Yes, who cares that you earn the median income of just $45,000 a year, you can get your $450,000 dream house in Sedona, Arizona. Coming to the China's housing bubble, its definitely a non - bubble because the government here is actively trying to pop it and housing prices are rising but the rise is under control. This is especially true in second and third tier cities, ie: not Shanghai, Hong Kong, Guangzhou and Beijing. There’s also nothing close to a mortgage backed securities bubble and no sub-prime lending. In the latter part of the 1990s, China’s real estate prices were inflating above China’s disposable income. By 2001, disposable income per capita moved steadily ahead of housing prices. The government has engineered a cyclical downturn in the Chinese real estate market instead of a structural collapse. In Asian housing markets, that means a trimming of at least 20%. In some cities, 40%. But in the process, no one was foreclosed upon. Banks didn’t go belly up. Unemployment did not increase. “You don’t see the same amount of bank stress that you see in the U.S. because the debt levels are significantly lower, both for the builders and for the buyers,”. China banks have a limit to what they’ll lend for housing. Currently, buyers need to put between 20% and 30% down on the value of a house before securing a loan. In the U.S., when the housing bubble popped, we all know what the down payment requirement was. Today, it is closer to 20%. Chinese people are savers. Americans are not. Americans don’t have 20% to put down on a house. So the market remains sluggish as a result. China housing was running out of control pre-2008 crisis. The government decided to do something about it in 2010 and put in place a number of restrictive policies that prohibited speculation. By mid-2012, real estate investors left the market. Now, says So, the market has bottomed. Transaction volume is picking up and prices are starting to rise again. Property tax legislation has been put on hold. “We don’t think the government is going to take their foot off the break too quickly. This is a hot market, no doubt. A lot of urbanization is yet to come.” China is about 50% urbanized. In Russia, it is 73%. In Brazil, 87%. Right now, many China investors are paying closer attention to second and third tier cities away from the busy, saturated coast. That’s where a lot of the government’s fixed asset investment has been going. As a result, there’s been tons of overspending. These are the areas in western China, in the inland part of the country, where you are hearing about “ghost cities”: residential apartments with no buyers. That hasn’t killed too many developers, however. The home builders in Asia tend to be gigantic. In troubled times such as these, they gobble up smaller construction companies. Banks have yet to feel any severity from non-performing debt stemming from their property builder clients. Large scale development companies have been able to handle the vacancies. We see two trends in China real estate right now. The consumption story in China will help commercial retail office space. For investors, So says mainland China provides more reward for the risk. “There’s not a lot of value in Hong Kong. If you’re buying things cheaply elsewhere, Hong Kong gives you protection. It’s the financial capital of Asia. We’d never be out of Hong Kong even with the government there wanting to cool off the housing market. It wouldn’t surprise me to see prices decline,” he says. What’s a place go for in Shanghai? That depends on where you’re living. In glamorous Xintiandi, an affluent district in Shanghai, a 3,500 square foot apartment will run you between $5 million and $6 million. It’s a market made primarily of rich Chinese and those from Hong Kong and Taiwan who see Shanghai as a discount market. The middle class is getting pushed out. “It’s a world class city and that tends to happen in places like that. We’ve seen it in New York, Paris, London. The middle income move to the outskirts or settle for smaller properties even though they could do much better further out,” says So. “If you move to a second tier city you’d pay about $150,000 for a more normal-sized 1,000 square foot apartment.” And even that’s expensive. Per capita income in China is around $6,500. That makes a property like that 20 times income. In the U.S., housing prices are around five times per capita income of $49,000 This can be a bubble in China.

Its only 1 week left in the month of March, S&P 500 is trading at 1556.89, so I think this week again it will move towards northwards and able to sustain at 1600 before April starts. Talking about Dow Jones, its trading at 14512 (22nd Mar close) so I think it will hit 15K in this month. So I am bullish on both of this for this month.

Hi Niko, Can you explain the graph ?