Journal of a Novice-Level Speculator

Ha, good question. I've asked myself the same. In that sense I wouldn't mind not passing the first time and just taking level 1 again in June, giving me a year for level 2.

I've been in the business for several years and I had already been taught much of what was on level 1 - which was good, because I decided in September to actually sit for the Dec. exam.

I'll figure something out...I have lots of time on my hands these days.
 
Today I learned a bit about delta hedging. I am still not too clear about how delta hedging is possible with long stocks and short call. I just can't see the increase in the value of the call when the price of the underlying goes down, since the call seller already got the premium.

I also learned about the Black-Scholes-Merton model and its limitation, the greeks and how it correlate with the price of the call/put option, the forward put-call parity (c+((X-F)/(1+R)^T))=p), the Black Model, and swap pricing and valuation.

Just one more session to go and I'll finish the derivative section. I still have yet to work on some questions. Hopefully I'll be able to do that tomorrow.

As for trading, I am planning to take a long position in the USD, but I am just waiting for an opportunity. I have to make sure I time this perfectly so that I could add more onto it as it move in my favour.

PA
 
Hi,

About the call, you have to wonder if the seller of the call wants to buy it back, does he pay the same premium ?

+ (Premium N) - (Premium N+1) = ?


Good Luck for your "challenge"
 
OP I think you don't know anything

the reason I think you don't know anything is based on your posts

first of all you keep wasting time on internet

second, you keep beating around the bush (no not the ex president bush)
you are now doing WWHHHAAATTTTT ?

getting some license ???

fourth, even though answer lies in charts, you spend least amount of time on them

fifth, you were told to KISS it yet you keep on making it complicated

sixth, you wouldn't know good advice if it bit you on the ass
 
Quote from Pension_Admin:

Today I learned a bit about delta hedging. I am still not too clear about how delta hedging is possible with long stocks and short call. I just can't see the increase in the value of the call when the price of the underlying goes down, since the call seller already got the premium.
More...

You have to understand that much of the value of an option is derived from the level of volatility priced into that option.

If an option is priced correctly at inception, "technically" it should expire worthless (this is the case with all insurance). Volatility is a key component to this pricing, which is why you hear about it so much.

If the underlying stock moves according to its historical volatility, then essentially "nothing happened" with the stock, in terms of the option and its price. It expires worthless.

However, if the underlying stock starts to move *more* than it had up to pricing, that represents a new level of volatility. This new (higher) level of volatility expands the value of the option.

With delta hedging, the goal is to capture this small increase in the value of the option just experienced by the expansion of volatility. Work through the examples and do the math and you'll see that it does in fact work.
 
Quote from mikasa:

OP I think you don't know anything

the reason I think you don't know anything is based on your posts

first of all you keep wasting time on internet

second, you keep beating around the bush (no not the ex president bush)
you are now doing WWHHHAAATTTTT ?

getting some license ???

fourth, even though answer lies in charts, you spend least amount of time on them

fifth, you were told to KISS it yet you keep on making it complicated

sixth, you wouldn't know good advice if it bit you on the ass
More...

I just want to welcome you to my journal. It is as it displayed in the title, this journal is of a novice-level speculator.

If you would like to read a journal of someone successful, you may want to read the journal by Robert Weinstein, NoDoji, lescor and Neke's journal.

However, I would appreciate any advice you could give, rather is it related to ORB, prior day range breakout, mean reversion, consolidation breakout, multiple time frame analysis, reversal, strategies diversification, or S&P following, please feel free to do so.

I just want to let you know I am under financial constrain and the most effective use of my time at this point is to upgrade my employment skills, get a job, and fund my account to trade ES.

Thanks for the brutal and honest posting!

PA
 
Quote from mikasa:

OP I think you don't know anything

the reason I think you don't know anything is based on your posts

first of all you keep wasting time on internet

second, you keep beating around the bush (no not the ex president bush)
you are now doing WWHHHAAATTTTT ?

getting some license ???

fourth, even though answer lies in charts, you spend least amount of time on them

fifth, you were told to KISS it yet you keep on making it complicated

sixth, you wouldn't know good advice if it bit you on the ass
More...

Obviously a troll.
 
I think I understand now. The short call offset the loss of the long stock position by allowing the call seller to purchase the premium back at lower price.

Thank you Soweeak and cgeorgan for helping me understand dynamic hedge.

PA
 
Last night I decided to go long on the USD/JPY. Luckily I got out with a scratch and lost only $0.02.

I don't quite know the fundamental right now, but I got feeling that gold may hit $1,200 again. USD/CAD may see it at parity. EUR/USD may climb back to $1.50. They all going to go where people are least expected and get their stop taken out.

PA
 
Today I spent most of my time applying for jobs. I started to see more job postings, but then the computer skills requirement has also risen. It has risen so much that I am having difficulty meeting the requirement for some junior roles. This is a wake up call to upgrade my computer skills.

I also spent some time on studying. I finished the derivative section. The last session was tough. The currency swap and equity swap are really confusing and I got a strong feeling that a question on currency swaption will be on the exam. Tomorrow I will work on some questions.

I also try to short EUR/USD a few times. 3 scratches costing me $2. It doesn't seem right, so I am going long.

PA
 
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