CFA Institute Blogs
Hardest hit by the 1997–98 Asian financial crisis, Indonesia has overcome political turbulence and other problems. This issue’s cover story examines the country’s emergence as an unexpected leader in Asian economic and market performance. Read more
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Could the derivatives market finally be listening to Albert Einstein? As you may recall, Einstein famously stated, “Make everything as simple as possible, but not simpler,” and according to the Reuters article “Simple Options Thrive in Risky World,” that is exactly what is happening. Simple, plain vanilla options that hedge risk are beating out the more exotic, custom-designed option structures. Read more
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Top posts from last month included articles on the DCF model, the recent Hildebrand scandal, and an interview with Felix Zulauf. Read more
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Researchers at CERN, the European Organization for Nuclear Research, in Geneva, Switzerland, made a splash recently with the “discovery” of the Higgs boson — a subatomic particle that creates a vital link between matter and anti-matter. For researchers at CFA Institute, the Higgs boson discovery is interesting because it parallels a great challenge facing the world of finance: derivatives. You see, in finance, derivatives contracts are kind of like the Higgs boson as they contain the vital link between money and anti-money. Read more
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The world is flat, or so people thought, until enterprising Greek philosophers challenged the notion in the 6th century BC. More than 2,000 years later, Ferdinand Magellan made a practical demonstration of that fact when he circumnavigated the globe. Although stocks in 2011 sailed through periods of sunshine, wind, and rain, many equities markets ended up flat just the same. Nonetheless, some investors proved that it is possible to make money in this market — and they did so writing covered calls. Read more
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As you are aware, the derivatives markets never sleep. There is always something going on. Following a year of turmoil concerning regulation and the use/misuse of derivatives, many stories from this rapidly growing segment of the investment industry warrant your attention. Read more
Leave a CommentIn a recent interview, 3rd Annual Middle East Investment Conference speaker Marc Faber remained bearish and announced that “one day the whole derivatives market will cease to exist.” Read more
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The trading of options is quite mysterious to many investors. Some view the use of options as nothing more than gambling. One may place small bets with the potential for very large gains. Unfortunately, just like bets at a casino, the options trader who bets on a large move in the price of an asset is rarely the winner because most such bets expire worthless. As Kerry W. Given (a.k.a. Dr. Duke), founder of Parkwood Capital, points out in No-Hype Options Trading: Myths, Realities, and Strategies That Really Work, “The casino establishes a game where the casino holds a statistical edge. . . . Your model for trading options should be the casino owner, not the player at the tables.” His goal is to teach investors how to profit from the use of options while intelligently managing the risks involved. Read more
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When Warren Buffett recently disclosed a 5.4% position in International Business Machines (IBM), it took almost everyone by surprise. How did the Oracle of Omaha manage to build a $10.7 billion position in the technology bellwether over the course of … Read more
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As Albert Einstein famously said, “Insanity is doing the same thing over and over and expecting a different result.” This quote comes to mind in the wake of the drama that has unfolded at UBS, where 31-year-old trader Kweku Adoboli … Read more
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