Tuesday, October 22, 2013

Quarterlife crisis

The world as it looks today is not much different from what it has been for millenia.
A new world order has arisen. A new form of slavery has come into existence.
A delusion of freedom exists in most countries. In reality we are but slaves to our economic situation.
You work at a job. You earn money. You spend it to maintain the lifestyle of your peers.
Money from corporation goes to buy goods made by corporation.
The profit off the labors of the people go to the oligarchy at the top.You run the endless cycle of work-pay-buy-work.
I've joined the club. I'm an young professional. Get a better lifestyle and maintain the oligarchy.
The oligarchy changes from time to time. But the status quo remains with a new oligarchy in place.
It's 1984.
There exist but 3 classes of people--- the rich(the oligarchy), the poor and the middle class which contains the seeds of the next oligarchy.However, rich in this context implies not only monetary wealth but power to control wealth as in the case of political power.
In the midst of a quarterlife crisis I question my existence in this world order.
Is anyone truly free? The oligarchy---slaves to the system, the middle class---slaves to the oligarchy, the poor---slaves to everything and everyone.

Written - circa 2008

Options Basics

Options are a contract between 2 parties where one party has the right (but no obligation) to buy or sell an underlying asset at a fixed price at a future date.

2 types:
Call - right to buy an asset at a fixed price
Put - right to sell an asset at fixed price

There are 2 parties involved - the buyer of the contract and the seller (option writer).
The fixed price is called strike price/exercise price.

American option: Can be exercised on any date up to and including the expiration date.
European option: Can be exercised only on expiration date.

Option writer is "short" on the contract
Option buyer is "long" on the contract

Stock options:

Price of buying the option: Option Premium
By convention, all traded options expire on the Saturday following the third Friday of the month.

At-the-money: Current price of stock = exercise price of option
In-the-money: Payoff from exercising an option immediately is positive. More positive ones are called Deep-in-the-money.
Out-of-the-money: Payoff from exercising an option immediately is negative. More negative ones are called Deep-out-of-the-money.

Stock option prices are always written on 100 shares of the stock.
Option prices are however quoted on a per-share basis.
Therefore, an ask price of $3.30 implies that you would pay 3.30 x $100 = $330 for the contract.