1. Expiration for Index and Equity Options is the Saturday immediately following the 3rd Friday of the expiration month (except when Friday is a holiday, then the expiration date brings fwd 1 day to Thursday).
2. American Style Option (usually the case)
- can be exercised at any time prior to expiration, up to the 3rd Friday of the expiration month
3. European Style Option
- last trading day is Thursday
Note:
- Although an option can be assigned/ exercised any time, the majority of options are assigned the week of expiration
31 July 2018
Option Basics
How to Read a TRADE
XYZ AUGUST 70 CALL AT $3.10
where XYZ is the name of the stock
August is the expiration date
70 is the strike price
Call is the option type
$3.10 is the premium
Buyer - LONG - buy to open - debit
Buyer - LONG - sell to close - credit
Seller - SHORT - sell to open - credit
Seller - SHORT - buy to close - debit
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How to Read an Option Pricing Diagram
Where option expires on the 1st Friday of April 2017
10 days left
"100" represents the multiplier. i.e 1 option rep 100 underlying shares
Weekly option. If NO indication, means monthly option
* Monthly option expires on the 3rd Friday of the month
Option Pricing and the Greeks
where IV is impacted by SPOT and STRIKE price
where Time Value of Money is impacted by - Time Value of Money - further from expiration, more valuable the option
- Higher Volatility - higher option price
- Interest Rate - Not much impact for options that have > 60 days to expiration
August is the expiration date
70 is the strike price
Call is the option type
$3.10 is the premium
Buyer - LONG - buy to open - debit
Buyer - LONG - sell to close - credit
Seller - SHORT - sell to open - credit
Seller - SHORT - buy to close - debit
How to Read an Option Pricing Diagram
APR 17 (10) 100 (weekly)
Where option expires on the 1st Friday of April 2017
10 days left
"100" represents the multiplier. i.e 1 option rep 100 underlying shares
Weekly option. If NO indication, means monthly option
* Monthly option expires on the 3rd Friday of the month
Option Pricing and the Greeks
Pricing = IV + TVM
where IV is impacted by SPOT and STRIKE price
where Time Value of Money is impacted by - Time Value of Money - further from expiration, more valuable the option
- Higher Volatility - higher option price
- Interest Rate - Not much impact for options that have > 60 days to expiration
How to Decide on which REITS to invest in?
1.Highest yield - 5- 6% - to beat inflation rate
2. DPU consistency
3. NAVPS < Bid Price - to see if undervalued
4. AFFO - the 'real' Cash Flow
5. Leverage < 30%
6. D/E < 60%
7. Interest Coverage Ratio > 5%
8. Rental Occupancy
9. Rental Reversion - Positive is better
10. Undervalued P/B < 1
11. Diversification - property categories
12. Weighted Average Lease Expiry - improving market, choose shorter lease. Deteriorating market, choose longer period.
Growth or Value Investing?
| Growth | Value | |
|---|---|---|
| Ratios | ||
| Growth Rate | 5 - 10% | |
| PEG | - | < 1 |
| ROE | high | |
| P/B | low | P≈ BV |
| P/E | high | low |
| D/E | - | D≈ E |
| Dvd | high | Consistent payouts |
| Operating Performance | ||
| low R&D, depreciation and interest expense | ||
| NI/ Revenue ≈ 10 - 20% | ||
| Healthy cash level | ||
| Increasing retained earnings | ||
| Qualitative Factors | - Durable Competitive advantage. If no CA, then choose firms with govt intervention that favours incumbents- geographical diversification- easy to understand biz models | |
| E.g | IT, Technology, Mining, Industrial, Consumer Discretionary, Energy | Financials, Utilities |
| When to SELL | ||
| lost of competitive advantage | ||
| P/ EPS > 40 | ||
CANSLIM
System for Selecting Stocks
C - current Q earnings of a firm - last Q earnings have > 20% growth
C - current Q earnings of a firm - last Q earnings have > 20% growth
A - annual earnings growth - annual EPS growth of 25- 50%
N - new product, service, management or new high in price level
S - supply and demand - smaller firms with smaller # shares < 25 mil
N - new product, service, management or new high in price level
S - supply and demand - smaller firms with smaller # shares < 25 mil
- less #, more movement.
Also, look out for re- purchasing which signals mgmt confidence
L - leader or laggard - relative px strength ~ 70% - ΞP stock/ ΞIndex over the same period of time
I - institutional sponsorship - ideally between 3 and 10 sponsors - over-owned, be cautious
M - market direction - uptrend/ under pressure/ correction - invest in time of definite uptrend - see Indices
Also, look out for re- purchasing which signals mgmt confidence
L - leader or laggard - relative px strength ~ 70% - ΞP stock/ ΞIndex over the same period of time
I - institutional sponsorship - ideally between 3 and 10 sponsors - over-owned, be cautious
M - market direction - uptrend/ under pressure/ correction - invest in time of definite uptrend - see Indices
29 July 2018
Reading List
Reading List
- an open tell-all book by Sandberg. really enjoyed reading this book as i see her in her most vulnerable state. Not being a sadist here, more like the reader can click better with the writer and see that after-all, we are all humans.
- STRONGLY RECOMMENDED
- accurately identifying our emotions as we experience them. Don't generalize.
- the reveal- all book by Bastian, a German investigative journalist who received The Panama Papers from an anonymous source. The source went on to forward extensive volume of internal documents which forms the basis of the investigations for this book. A compelling read for those who are curious how the rich get richer by evading taxes and much more. How Bastian et al research helped launched investigation by local authorities and made us aware of the legal loopholes out there.
1.Option B: facing adversity, building resilience and finding joy by
Sheryl Sandberg
- an open tell-all book by Sandberg. really enjoyed reading this book as i see her in her most vulnerable state. Not being a sadist here, more like the reader can click better with the writer and see that after-all, we are all humans.
- i never knew that we have the capacity to increase our resilience by
taking concrete steps in the face of adversity
- thru the eyes of Sandberg, she took the readers on an emotional
healing journey with her
2. Never split the difference : negotiating as if your life depended
on it by Voss Christopher
- STRONGLY RECOMMENDED
- before reading this book, I always think of negotiation as 50-50,
give and take. Only when going through this book did I realize I got the
concept wrong all these time. To truly win at negotiation, we have to make the
other party give in fully, without them thinking that we are extracting more
than we deserve.
3. Blink: the power of thinking without
thinking by Gladwell Malcolm
- I personally feel that Malcolm has a similar writing style with the Freakonomics
writer duo. Their tongue-in-cheek writing style, combined with eccentric ideas
makes this book really enjoyable to read.
- so do I see things differently now? .. applying "out of the
box"/ innovative ways of going about my daily routine tasks? I hope :)
4. Get the truth : former CIA
officers teach you how to persuade anyone to tell all by Philip Houston
5. Emotional intelligence 2.0 by
Bradberry Travis
- Understanding the 4 skills
- Self awareness
- Self management
- Social awareness
- Relationship management strategies
- accurately identifying our emotions as we experience them. Don't generalize.
- good to know. my main takeaway? be mindful of my own emotions; think
of the big picture, long term consequences, don't get carried away in the
now.
6. The Panama papers : breaking
the story of how the rich & powerful hide their money by Obermayer
Bastian
- the reveal- all book by Bastian, a German investigative journalist who received The Panama Papers from an anonymous source. The source went on to forward extensive volume of internal documents which forms the basis of the investigations for this book. A compelling read for those who are curious how the rich get richer by evading taxes and much more. How Bastian et al research helped launched investigation by local authorities and made us aware of the legal loopholes out there.
7. Super Freakonomics by Steven D.
Levitt and Stephen J. Dubner
- interesting applications of economics and everyday "common
sense" logic that most of us fails to think of, or even bother to sit back
and ponder.
8. Think like a Freak by Steven D.
Levitt and Stephen J. Dubner
- Authors challenges us to think out of the box. Many a times the solution to everyday problems is very simple and right in front of us. We don't have to think deep, just take a step back and look at the big picture.
- Authors challenges us to think out of the box. Many a times the solution to everyday problems is very simple and right in front of us. We don't have to think deep, just take a step back and look at the big picture.
Book Review - Never split the difference
Book Review
- use the late- night FM DJ voice
- start with "I'm sorry..."
- Mirror - use the last 3 words of what someone just said
- Silence for at least 4 seconds. to let the counterpart reveal their intentions when you stay silent
- Repeat
- Don't commit to assumptions. Instead, view them as hypothesis and use the negotiation to test them rigorously
- put a smile on your face
2. Don't feel the pain. Label it
"it seems like..."
"it sounds like..."
"it looks like..."
- use labels to encourage them to be responsive
- if they disagree with the label, it's OK
- step back and say, "I didn't say that was what it was. I just said it seems like that."
- they need to feel understood and appreciated
- Do an accusation audit
- list every terrible thing your counterpart could say about you
- acknowledge counterpart's situation while simultaneously shifting the onus of offering a solution to the counter party.
3. Beware "Yes". Matter "No"
- "No" starts the negotiation
- people need to feel in control
- give them permission to say "no" to your ideas
- when someone says "no" - re- think the alternative meaning
- I am not yet ready to agree
- you are making me uncomfortable
- I do not understand
- I don't think I can afford it
- I want something else
- I need more information
- I want to talk it over with someone else
Ask them, "what about this that doesn't work for you?"
"what would you need to make it work?"
"it seems like there's something here that bothers you."
Persuade them from their perspective to say "yes", not ours.
Everyone you meet is driven by 2 primal urges - the need to feel safe and secure; the need to feel in control.
"Is now a bad time to talk?"
How never to be ignored - Provoke "no" with - "have you given up on this project?"
4. Trigger the 2 words that immediately transform any negotiation
"that's right" --> trigger the CP to say these 2 words with a summary
- Effective pauses - use for emphasis
- Minimal encouragers - yes, ok, uh- huh, i see
- Mirroring - listen and repeat back what CP has said
- Labelling - label his feelings, identify with how he feels.
e.g "it all seems so unfair. I can see why you're so angry"
- Paraphrase what CP said
- Summarise
If CP says "you're right" --> means the CP is not convinced.
5. Bend their Reality
- Don't compromise. No deal is better than a bad deal.
- The "fair" word - when to use and how to use
"we just want what's fair"
IF - "we have give you a fair offer"
"fair?"
"it seems like you are ready to provide the evidence to support that"
- anchor their emotions
- accusation audit by acknowledging all their fears
- by anchoring their emotions in preparation for a loss, you inflame their loss aversion so they will jump at the chance to avoid it
- let the CP go first... most of the time
- establish a range.
- the actual amount you want is the lower range.
- pivot to non- monetary terms
- anything cheap to them but is valuable to me
- when you talk numbers, use odd ones
e.g. $37,643 sounds more thoughtful than a rounded figure
6. Create the illusion of control
- Summarise the situation followed by "How am I supposed to do that?"
- Asking calibrated questions.
- "how can I help to make this better for us?"
- "how would you like me to proceed?"
- "how can we solve this problem?"
- "how am I supposed to do that?"
- How to quickly establish rapport
- use the late- night FM DJ voice
- start with "I'm sorry..."
- Mirror - use the last 3 words of what someone just said
- Silence for at least 4 seconds. to let the counterpart reveal their intentions when you stay silent
- Repeat
- Don't commit to assumptions. Instead, view them as hypothesis and use the negotiation to test them rigorously
- put a smile on your face
2. Don't feel the pain. Label it
"it seems like..."
"it sounds like..."
"it looks like..."
- use labels to encourage them to be responsive
- if they disagree with the label, it's OK
- step back and say, "I didn't say that was what it was. I just said it seems like that."
- they need to feel understood and appreciated
- Do an accusation audit
- list every terrible thing your counterpart could say about you
- acknowledge counterpart's situation while simultaneously shifting the onus of offering a solution to the counter party.
3. Beware "Yes". Matter "No"
- "No" starts the negotiation
- people need to feel in control
- give them permission to say "no" to your ideas
- when someone says "no" - re- think the alternative meaning
- I am not yet ready to agree
- you are making me uncomfortable
- I do not understand
- I don't think I can afford it
- I want something else
- I need more information
- I want to talk it over with someone else
Ask them, "what about this that doesn't work for you?"
"what would you need to make it work?"
"it seems like there's something here that bothers you."
Persuade them from their perspective to say "yes", not ours.
Everyone you meet is driven by 2 primal urges - the need to feel safe and secure; the need to feel in control.
"Is now a bad time to talk?"
How never to be ignored - Provoke "no" with - "have you given up on this project?"
4. Trigger the 2 words that immediately transform any negotiation
"that's right" --> trigger the CP to say these 2 words with a summary
- Effective pauses - use for emphasis
- Minimal encouragers - yes, ok, uh- huh, i see
- Mirroring - listen and repeat back what CP has said
- Labelling - label his feelings, identify with how he feels.
e.g "it all seems so unfair. I can see why you're so angry"
- Paraphrase what CP said
- Summarise
If CP says "you're right" --> means the CP is not convinced.
5. Bend their Reality
- Don't compromise. No deal is better than a bad deal.
- The "fair" word - when to use and how to use
"we just want what's fair"
IF - "we have give you a fair offer"
"fair?"
"it seems like you are ready to provide the evidence to support that"
- anchor their emotions
- accusation audit by acknowledging all their fears
- by anchoring their emotions in preparation for a loss, you inflame their loss aversion so they will jump at the chance to avoid it
- let the CP go first... most of the time
- establish a range.
- the actual amount you want is the lower range.
- pivot to non- monetary terms
- anything cheap to them but is valuable to me
- when you talk numbers, use odd ones
e.g. $37,643 sounds more thoughtful than a rounded figure
6. Create the illusion of control
- Summarise the situation followed by "How am I supposed to do that?"
- Asking calibrated questions.
- "how can I help to make this better for us?"
- "how would you like me to proceed?"
- "how can we solve this problem?"
- "how am I supposed to do that?"
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