Recent content by btud

Your formula is meaningless, as it does not account for volatility. An option premium has to be higher when the volatility of the underlying price is higher.

It all boils down to how you evaluate if an option is overpriced or not. That is: you first need a model. Price the option with your model, compare the theoretical value with the market value. If the market value is higher, short it. If it's lower buy it. Then pray your model is good.

Quantitative Easing is not immediately inflationary. In fact more important than Fed "creating money supply" are the commercial banks. The commercial banks are in fact the true driver of inflation. They are really the ones which inject the fed new money into the real economy. If the banks just...

The gain is proportional with the amount of cash you have. So, to answer your question, no. People with a lot of $$ gain the most, and those with little, the least. The rich still win in the end :cool: Of course those people with a lot of money, and no stocks love the fact that the market is...

In a very broad sense, when asset prices decline, money gains in value. Here is an example: Suppose A has $1000 in 10 x $100 shares and B has $1000 in cash. Suppose that shares decline to $40. A's $600 loss is distributed equally between all cash $$ holders in the economy. In our example, the...

They aren't talking of the 2008 stock market crash because they're all too busy talking of the coming new and bigger 2009 stock market crash.:D

I tend to agree with that. This is almost similar with what happend with the CDS on subprime dept. The same banks that held subprime debt were buying CDS's to "hedge", so they all could say they were safe. But those selling CDS's were banks themselves, who themselves held subprime debt. In...

As I said, there may be other reasons which may prevent a CB from actually debasing the currency (collateral effects, inflation, triggering a collapse which cannot be stopped, etc.). But again, if a CB "really wants", it can devalue its currency with any amount. Let's say BOE suddenly decides...

There are two types of CB intervention: a/ Those that try to support their own currencies (e.g. Bank of England in 1990's; Australian bank now) and b/ Those that try to weaken their own currencies (e.g. Bank of Japan) Type a interventions may work, or may not work. An example of great...

Whole market is down. Add to that the fact that people are nervous about earnings being released soon. How can it be other than down in this context.

The trillions pumped don't do shit right now because they're just being hoarded by banks, and not let to circulate and really feed the credit markets. It's like pumping into a leaking tire. Unless you fix the leak, it won't inflate.

No depression. Hard shakup, cleaning of the mess. But no depression. It's clear that people are diveded in two groups. One group - the deflationists - thinking we're going to see another great depression, and another - the inflationists - which think we're more or less close to the bottom. So...

LOL A normal market is when the Dow Jones hovers a range of 1000 points in a few months, rather than a day :D

Yes Gringinho, people making these kinds of projections seem to ignore technological progress. As we develop sustainable green techs, the "ecological footprint" of each individual will decrease. Also, even more people ignore the fact that all processes in nature are exponential. That is human...

1/ Absolutely no. I have read somewhere that the earth has the potential to feed about 100 billion people, with current technology. 2/ Oil is certainly in decline. As the prices climb (and they will climb towards 300 probably in the next few years), and as technology for alternative energy...