I used to write a post regarding Trump and Kim Jun Un more than half year ago. Despite I did not hold positive impression on the two but neither did I have negative comment on them. The recent development and the Trump-Kim(or Kim-Trump if you like) summit demonstrates my view on the two are correct.
Among some seem to be inappropriate administrative orders like the latest custody of the illegal immigrant families with children and parents apart, Trump was bold enough to do things his predecessors, both Republican or Democrat, dared not to do. He really shook the world and casted a new atmosphere in the global affairs.
Yet I am by no means his fan but just trying to be neutral on commenting what he has done, to America and the world. His slogan in his presidential election campaign was America Great Again. In a certain extent, America does stand firmer than it did in most of the international affairs. Whether these measures are correct or not depend on one's standpoint though. One big thing he did it right is that he sees through what mistakes the past administrations made and is bold enough to rectify them, one by one.
Again when I said he did it right is purely from the stand point of an American president whose role is to maximize the interests of the America despite it might at the expense of the other nations. When there is only the choice of a lesser evil devil then he really made a right decision indeed.
His latest controversial action is inevitably the trade war against China and even the U.S.'s allies. It seems he puts the Country against most economies but when trade deficit is mounting and increasing year over year. In America's perspective something must be done to reduce, if not eliminate, it. In fact trade deficit is only a name but he is defending the America's world technological advancement, financial dominance, military leadership and last but not least the U.S. dollar empire. These are the things that he, being an American president, must do yet his predecessors did not. Now he is doing it. Bravo! Donald! Having said so, don't get me wrong that I agree on what he did but I just admire Trump whom is willing to do the dirty jobs that his predecessors failed to.
Kim is another miracle maker. No more than half year ago the North Korea was still an evil nation with all bad names on it but just one summit Kim turned it around. Trump once said Xi Jin Ping is a poker master but if it is not just a compliment then Trump must has overlooked this chubby young man. In my previous post I already commented that Kim is smart to develop the nuclear deterrence to protect his nation (of course his ruling as well). Had he not has nuclear weapons in hand I don't think Trump would spare a second to meet with him. However, more amazingly Kim not only uses nuclear weapons to protect but also to occupy the center of the stage of world affairs. Not only caught billions of eyes on the Summit but Kim will remain an influential person on the topic along the path of denuclearization for quite some time. One will not be surprised to hear his name again and again in the news broadcast.
Kim is also so smart to leverage his influence by partnering with the super powers. By staying close to the U.S. he can demand more aid from China. The frequent visit to Beijing maximizes his bargaining power against the U.S. and having good relationship with Russia is a very good backup card. Kim plays so well among these powers and each of them want so bad to be able to be the boss of this small nation. Who gains most? You bet!
Trump and Kim enlighten the dull world order with a fresh touch. The world affairs became a bit of stagnant in this decade without much changes except the Brexit which once stirred the world in a certain extent but as the process runs into the routine path on operations then the world has lost interest on it already.
I am sure the lovely duo will brighten our eyes with more surprises to come. I also expect their new movements will finally set a new world order too.
2018年6月21日 星期四
Index option trading with statistic
It was said that, for amateur players, option trading is the fairest game especially in the derivative products because the trader can choose the risk exposure by themselves and the prices are offered by a few market markers so it is comparatively fairer than warrant trading or CBBC.
There are many underlying assets for option trading in the U.S. market but in the local context, stock option and index option are the two mostly traded products. Despite the two have a common point that they are related to local stock market but indeed since their respective underlying assets are different so the trading skill sets and trading mindset differs from each other as well.
Personally I prefer index option trading because the analysis on it is a bit simpler than the counterpart as there are almost 70 stocks available for option trading but just two index option products, ie., the HSI and HSCEI only. To trade the index option, one just needs to have an view point on at what point the settlement point will be at the end of a particular month.
There are many strategies in option trading but they are just derived from the four basic orders, ie., long call, short call, long put and short put. A simplified job of an option trading player is that one must forecast the direction of the market, the volatility of the month and finally and most importantly is the settlement point at the end of the month. To me, simpler the better so I prefer just to play at the short side to receive premium and the relevant risk.
Being a short side player, what I need to do is just to place order with the strike higher/lower (for call/put) than the expected settlement point then I am safe. However it is easier said than done to decide that particular strike so I resort to statistic on estimating where the safe strike lies.
For any one who knows about statistics must have heard about the binomial distribution and the bell shape curve. All the outcomes of an event are bounded to be covered under the curve and the chance of the happening of a particular outcome is governed by its probability. A safe strike should be the one with low probability. Say by selecting a strike with 0.10 probability meaning the maximum chance I shall lose is 10% only. Of course lowest possible is best but a too OTM strike means very low premium will be rewarded so a trade off is to pick the not too OTM yet with a probability and the associated risk that one can afford.
One may wonder how to figure out the probability of a particular strike. Well, no valuable thing comes without paying effort in this world so one have to build a database to do this job. I have built my own database covering the last 18 years, ie., 216 months, for data-mining purpose. The possible ways of data-mining are only limited to one's imagination. I mainly use it to forecast the possible monthly volatility/closing point and to backtest the trading strategies though. I am going to explain a little bit how it works in my next post.
There are many underlying assets for option trading in the U.S. market but in the local context, stock option and index option are the two mostly traded products. Despite the two have a common point that they are related to local stock market but indeed since their respective underlying assets are different so the trading skill sets and trading mindset differs from each other as well.
Personally I prefer index option trading because the analysis on it is a bit simpler than the counterpart as there are almost 70 stocks available for option trading but just two index option products, ie., the HSI and HSCEI only. To trade the index option, one just needs to have an view point on at what point the settlement point will be at the end of a particular month.
There are many strategies in option trading but they are just derived from the four basic orders, ie., long call, short call, long put and short put. A simplified job of an option trading player is that one must forecast the direction of the market, the volatility of the month and finally and most importantly is the settlement point at the end of the month. To me, simpler the better so I prefer just to play at the short side to receive premium and the relevant risk.
Being a short side player, what I need to do is just to place order with the strike higher/lower (for call/put) than the expected settlement point then I am safe. However it is easier said than done to decide that particular strike so I resort to statistic on estimating where the safe strike lies.
For any one who knows about statistics must have heard about the binomial distribution and the bell shape curve. All the outcomes of an event are bounded to be covered under the curve and the chance of the happening of a particular outcome is governed by its probability. A safe strike should be the one with low probability. Say by selecting a strike with 0.10 probability meaning the maximum chance I shall lose is 10% only. Of course lowest possible is best but a too OTM strike means very low premium will be rewarded so a trade off is to pick the not too OTM yet with a probability and the associated risk that one can afford.
One may wonder how to figure out the probability of a particular strike. Well, no valuable thing comes without paying effort in this world so one have to build a database to do this job. I have built my own database covering the last 18 years, ie., 216 months, for data-mining purpose. The possible ways of data-mining are only limited to one's imagination. I mainly use it to forecast the possible monthly volatility/closing point and to backtest the trading strategies though. I am going to explain a little bit how it works in my next post.
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