Shares and Options Education

All you want to know but never asked about the stocks and options markets.

miércoles, 10 de mayo de 2017

What is the Sharpe ratio?

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The Sharpe Ratio was developed by Nobel Prize William Sharpe of Stanford University. It measure numerically the historical Profitability/Volatility (standard deviation) ratio of an Investment Fund. It is calculated by dividing the yield of a fund minus the risk-free interest rate between the volatility or standard deviation of that return over the same period.

Sharpe Ratio = Fund performance - Risk-free interest rate (3-month bills)/Standard deviation of fund performance (historical volatility)

The higher the Sharpe Ratio, the better the fund's return relative to the amount of risk that has been taken on the investment. The higher the volatility, the greater the risk, since the probability that the fund has negative returns is greater the greater the volatility of its yields. Likewise, the greater the volatility, the greater the likelihood of high positive returns. Therefore, when the volatility of the fund is large, the greater the denominator of the equation and the smaller the Sharpe Ratio.

martes, 4 de octubre de 2016

Investment Strategies: Spread Trading

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Investing in pairs or spread trading is relatively common in the world of institutional investors, but rare among minor investors, mainly because one of the two legs of the strategy involves a short position. This fact can limit access to retail investors, because they tend to have more difficulty finding a broker that allows them to open a short position on an asset.

In general terms, spread trading is to bet that an asset will perform better than another, regardless of whether the market rises or falls. That is, it is considered a market neutral strategy, because if our forecast is met, it does not matter what the market do.

martes, 21 de junio de 2016

Binary options, investment or bet?

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binary options, bet or investment

The options, in general, are financial products that are part of the group of derivatives.
Theoretical definition: An option is a contract between two parties whereby one acquires on the other the right, but not the obligation, to buy or sell a specific amount of an asset at a certain price at a future time.
Previously we saw the overall functioning of the most frequent options known as call and put options options.

viernes, 10 de junio de 2016

Investment Strategies: Permanent portfolio

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Investment Strategies - Permanent portfolio


In the last months of 2015 there has been a marked deterioration in the S&P 500, the benchmark of the US stock market, a situation that persists in the beginning of 2016. Among the reasons for this decline, as well as for the high volatility experienced from the summer of 2015, can be mentioned, among others, doubts about the Chinese economy, the drop in commodities (especially in oil), the political and economic uncertainty in many countries (including United States) and the South American stagnation.

How to make a lifestyle with intraday trading?

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First of all, start with a demo account. Trade in your demo account for 3 months. Try to negotiate five days a week. Establish a daily profit and loss goal for yourself.

Discipline

Check the big news every morning before the market opening. Trade with capital you can afford to lose. Do not put all your buying power in one trade (money management). Stick to your trading plan at all times. Work with a small list of 3-5 stocks that you dominate. And do not overtrade.

viernes, 3 de junio de 2016

Sprint looking to buy T-Mobile USA

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Sprint, which previously played a merger between AT&T and T-Mobile  is now interested in buying T-Mobile USA based in Seattle for $40 per share. Earlier this year, Sprint was acquired by the  largest mobile communications company in Japan, Softbank. Softbank executives have more than 85% of the shares of Sprint and want to expand their investments to keep up with the competition and become one of the three largest companies in the sector of mobile comunications.

lunes, 2 de mayo de 2016

Make Money with Insider Information

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The use of privileged information only appears in the news when someone ends up in jail. Thus, it may seem strange to suggest the possibility to try to make money through insider trading.

However, here it is a shocking truth - the insider is not illegal. It is perfectly fine for a key executive to make trades based on what he knows about what is happening in their company - whether good or bad. What is illegal is not reporting the trade made - the Securities and Exchange Commission (SEC) requires that privileged traders with non-public information report any transaction in shares of the company within a period of two days after the trade.