For Sale: Call Option on my Condo

Economics, Money, options

This is the stuff I think about.  Do you own any asset at all, where the price fluctuates with a predictable volatility?  Consider the following.

I will sell, the right, but not the obligation, to buy my 568 sq foot condo, in one of the most central places in Toronto, for $275K, in 3 years from today, in exchange for $21K in cash today.  Considering futures (pre-sales for 2011) are selling for approximately $300K today, it may or may not, be a good deal.

I will also buy, the right, but not the obligation to force the sale upon somebody, for $240K, in exchange for me paying them $2K.  This may be worth it to you - is it? 

This $21K, and $2K, is derived from my intrinsic expectations for what the market could potentially do, as well as a binomial method.  In the first case, the money is worth more to me to have the cash, rather than the potential.  And in the later, the $2K worth of insurance, is worth it. 

Measuring the implied volatility, this is works out to 7.5%.  Way cheaper, than any stock which usually clips between 25% and 45%, and it’s not rare to see IV approach the double digits on say - a pharmaceutical company, where perhaps the implied volatility is in fact worth it.

Before you comment, you must understand, that this is an offer, it is the bidders responsibility to assess the value for themselves.  That is, REALIZE: the market is not guaranteed to move in ANY direction, or ANY magnitude.  If you think it is - slap yourself.

An American Hedge Fund: My Thoughts

books

Timothy Sykes wrote, An American Hedge: his story from starting to trade, the rise of his fund, and fall of hist fund. These are my thoughts. 

Thank-You Timothy Sykes. Thanks, for sharing your down-to-earth opportunistic & inspirational story as well as for giving me great insights into the mind of one trader.

In Tim’s book he reminded me, I am but one market participant, and every one of us plays by different rules. This was a great book, both for the witty written words he self published and also for what was written, between the lines. Reading Tim’s thoughts, learning from his experiences, and extrapolating/hypothesizing to what was really going on during his ups and downs yielded unexpected dividends for a young eccentric trader/investor like me.

With his book, Tim offered a fun glimpse into the mind of; a trader who has unknowingly mastered causality, and an entrepreneur who laughs in the face of the improbable.

Tim offers up his ‘tell-it-like-it-is’ and some ‘do-as-I-say-not-as-I-do’ advice, and illustrates through example why he believes discipline is the most important trait for a trader to possess. I do concur. But what I meant before, about reading between the lines, is that he illustrates (without explicitly writing about) the importance of understanding causality. It was great to read that Tim’s documented version of his thought process, more or less, show that the closer a trader adheres to the fickle whims of market causality, the closer the trader gets to unparalleled returns.

I was impressed to learn of Tim’s experiences, not only as a trader, but also as a social leverage wielding entrepreneur. He details the fun ride he had as a student who blatantly laughed in the face of the irrational games played on the capital markets, then immediately moved to exploit those same games by eventually taking on New York. He chronicles the rough, chicken and egg situation, new funds can find themselves in when raising capital. As a wannabe fund runner, I was glad to hear of all his reflections, even if our styles and viewpoint are often completely opposite, while at other times, identical.

It is with no surprise, that Tim writes a page turning story detailing his trades (both good and bad), his naivety, his cockiness, and his passionate inspiring stop-at-nothing drive towards different checkpoints. Any reader will undoubtedly also pick up a hint of heinz sight laden commentary, when it comes to his previous experience and of course lessons learned on the markets, networking, marketing, business management, and random stories. This was all, to be expected, and Tim delivered.

This wasn’t the type of book, I would typically read. But, I’m glad I did. I would recommend the book to anybody young, with at least a few years ‘on the street’ or anybody who is so obsessed with the capital markets and volatile trading stories they dream in dollar signs. The book is a must-read for anybody who may one day want to start their own fund. However, I am only speculating that his experiences will help anybody in the latter category. Any professional with more than 5 years in the business, will likely find Tim’s story, a light, amusing and even jaw-dropping read. Or, so I would guess.

Disclosure: Tim gave me a signed copy, and wanted to know what I thought. I was skeptical at first, that I would not learn anything. But, I’m glad I read it with an open mind.

Stay tuned for a review of Mohammed El-Erian’s, ‘When Markets Collide’.

If you would like your book reviewed, feel free to contact me.

There is no Spoon

Future, Ideas

Any heavy internet user, who likes thinking about humanity, will thoroughly enjoy this clip. Promise.

Of course the title of this post…is a subtle refrence to the greatest movie of all time. This TED talk, reminded me of it…just a little.

Mass Transit Growth

Uncategorized

Mass transit is up double digits YoY in every state, yet they can’t increase capacity because of fuel costs.  Rock and a hard spot.  What goes up? -> fare prices + inner city real-estate.  Like prices, lifestyles are sticky.  Yes, economically sticky.  Get long elevators, if you know how. Otis isn’t public, I checked. I’m long cranes, for the same reason.

The 19th century belonged to the horse, the 20th…to the car, the 21st…the bike…I hope the jet pack makes a recovery before we hit the 22nd

It’s Tuesday, and I haven’t made it through this week’s economist yet…I’m sad.  But, I’m getting used to wearing a cape to work, and I’m glad I’m working on Bay-street all this week…(for you Americans that’s Canada’s Wall-street).

And…I’ve got to sell some stocks I own, so that the firm I joined can maintain independence with those who we audit and/or consult.  And, I can’t tell you which ones I have to sell because, then you’ll know that they are clients of ours.  Soo…blah…this really ticks me off about working for deloitte.  Luckily the carrot they hang in front of our nose referred to as ‘

Just a little update…

Life

Started my 5th or 6th day job last monday….Working in the Technology Integration practice, in the Systems Development service line, as a Business Technology Analyst…for Deloitte.  That’s a mouthful.

I think Deloitte is breeding super heroes…I can’t put it into words, any better than that…is that obnoxious to say?  All I’m saying is that, I am super impressed with the company culture and training that’s available.

I’m not sure if I’m going to fit in here, or not…time will tell.

They sent me to Arizona for my second week…I think it’s a million and a half degrees with the A/C on. I get back next week.

Sounds like my first project, could take me to Montreal and/or Paris…but I’m not sure, at all.

Orientation and a 2 hour commute has had me tied up, and barely able to glance at Mrs. Market…after I get back from Arizona, I’m looking forward to moving downtown Toronto at the end of August…my commute will shrink from 2 hours down to 2 minutes.  So, with that time difference…I’ll be back in the online conversation and dancing with Mrs. Market again.  Looking forward to it…and getting onto my first project at Deloitte.

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