Conservative Margin Lending - A tool to use, and a reason to invest outside of Super
Hi AusFinance, i thought i would write on a topic i'm rather passionate about, and hopefully offer some 'food for thought' and an alternative to the standard answers of 'Super is the best environment for your money'. Disclaimers:
this is not financial advice, i am merely trying to offer some food for thought
these examples are greatly simplified, they do not take into account interest rate risk, legislation risk (both on super, on changes to tax, etc..).
The case study below does not take into account the ability to margin lend inside super. the ability is there, such as Bell Potter's Equity Lever platform, but this is not available to your average retail/industry super, hence it is excluded.
Margin lending for the uninitiated: For those of you unaware, margin loans are borrowing to invest. Your shares/fund units act as security that let you borrow money to buy more shares/fund units. These are given different levels of "Loan to Value Ratio" aka LVR. a 75% LVR means you can make up a total investment with a minimum of 25% your money, and a maximum of 75% borrowed money. So with $2,500 you'd be able to borrow up to $7,500 (Making up a total portfolio of $10,000). Why borrow to invest? Simply put, Margin lending amplifies your gains and your losses. I have included a table below to demonstrate what a margin loan will do to a $25,000 investment at an 8% p.a. return at different LVRs. I am using Leveraged Equities variable 4.24% interest rate on their direct investment loan as the interest cost - the product offers access to the vast majority of funds and shares that an investor needs, it's just lacking advanced features like options trading (who cares!) https://preview.redd.it/42p6co191lb51.png?width=786&format=png&auto=webp&s=764b15d0695792766367cc05b5adae78f3af840a Here we can see the return improve from the standard 8% all the way to 11.8% if using 50% LVR. But in my opinion, 50% LVR is too risky for many investors appetite here, even if it is my ideal point. Instead, i would direct your attention to 35% LVR. Why 35% LVR? a 35% LVR comes with a number of benefits to an investor doing standard VAS/VGS/VDHG style etf investing.
Increased returns - as we can see it takes an 8% return and increases it to a 10.1% return
Returns slightly understated - The return is not factoring the effect that the interest will have on your tax return - it is tax deductible.
Low chance of a margin call.
Let's talk about #3. Margin calls are without a doubt the scariest part of margin lending, and i don't blame you for being afraid of them. Many people who leverage too aggressively and fly too close to the sun get hit with a nasty cycle where:
Their investment falls into margin call territory because it has dropped
They are forced to sell their assets at the worst points in the market to get out of the margin call
they miss out on the recovery because their excess cash was used covering margin calls on the way down.
But this is where a 35% LVR is so appealing. the calculation to figure out where your margin call will happen is: 1-(Loan/(Lending Value + Buffer)). So if we take a standard favourite of Ausfinance such as VAS, VDHG etc, we can see that they have a LVR of 75%. Industry standard buffer is 10%. so let's figure out a margin call on a $25,000 investment, with $14,000 borrowed funds (35% LVR): 1-($14,000/(($39,000*0.75)+($39,000*0.10))) = 58% it would take a 58% drop in the portfolio to bring it to a margin call. This is the portfolio dropping from $39,000 to $16,470. This requires a staggering drop before you experience a margin call, and if you are concerned reducing your LVR to only 25% will still improve your return and increase your chance of never being margin called. You have time to add to your holdings with equity only (buying a dip + decreasing your overall LVR). the important thing is you can manage your risk and it requires truly a cataclysmic level of decline before you experience a margin call ,and at that point that may not be your biggest concern. Why all the fuss? What's the point of risking being margin called? It's all in that % return. in the following example i will use ASIC's compound calculator, along with the following parameters: $25,000 initial deposit (your capital), $0 regular deposits, annual compounding, and a 30 year time horizon. The only assumption is that as the portfolio grows in capital value, the 35% LVR is maintained. Case 1 - 0 LVR (AKA [email protected]%) - after 30 years of compounding at 8% you end up on $251,566 Case 2 - 35% LVR (AKA compounding at 10.1%) - after 30 years of compounding at 10.1% you end up on $448,291 Verdict - Case 2 ends up being $196,725 better. a 78% superior return Every % matters so much in a long term strategy, it is truly impossible to overstate how important it is to long term outcomes. Case Study: Super Showdown As a final demonstration of the power of a low leverage strategy we will put two different cases head to head. Let us assume that a 30 year old intends to retire at age 65, and has the option of either having $50,000 in super, or invested at a 35% LVR. After retirement, they will either 1. Take the money tax free in pension phase or 2. pay capital gains tax by cashing out their own 'pension' each year, with their marginal tax rate being 30% (using the currently legislated but not implemented rates). Case 2 will overstate their tax slightly, as i will not scale it, i will just hit the whole thing at 30%. https://preview.redd.it/86c7xcrc7lb51.png?width=530&format=png&auto=webp&s=045a1774106ac8d8ac848decb04bec9a142bdc52 We can see that with the CGT discount, paying 15% tax is actually better than paying a 0% tax rate due to the higher return. It's an out-performance of $508,681 But okay, i hear you, CGT discount may be gotten rid of, let's recalculate it with no discount: https://preview.redd.it/yafmmg6p7lb51.png?width=530&format=png&auto=webp&s=d9ae4b0db5de48808ca202f7c6e40d599c34c065 Even without a CGT discount (and 30% flat is more tax than you'd pay on a CGT discounted method on the highest marginal rate currently) there has been an out-performance of $306,102 What do i hope you take away from this? Even if you decide that the risk of margin lending is too much for you, or that i'm absolutely insane to choose an outside of super strategy that relies on borrowing to invest, i hope that i have given you something to think about. the one thing i hope everyone takes away from this just as a general point is the sheer power of small changes in your long term return %. I really strongly believe in conservatively leveraging safe and boring investments to boost that all critical return over the long term to create outstanding long term results. minor edit: fixed up some grammar
Should you ever trade options if you cant use margin for credit spreads etc?
As the title says, should you ever "play" with options if you still havn't signed up for using a margin? I have had my ups and downs with only trading calls/puts.. Some big wins, some small wins, some big losses and some small losses. I would love to know what you guys trade the most and what has been most profitable for you, not asking specific stock picks but your train of thought and trial and error experience. I am more looking for small "safe" profits. I have 70-80% of my capital in stocks and would like to use the last 20-30% for option trading and develop my skills in that general area. Did you start out making money/going even or did u loose most to begin with? I am considering only trading highly liquid stocks like AMD and working with different strategies until i learn the ropes. How did you guys start out and what became your best strategy? How big do you think an account should be before trading spreads, etc. ? Thanks in advance!
PRPL earnings is tomorrow, 8/13, after hours. Any other date is wrong. Robinhood is wrong (why are you using Robinhood still!?!). I'm going to take you through my earnings projections and reasoning as well the things to look for in the earnings release and the call that could make this moon even further.
I make the assumption that Purple is still selling every mattress it can make (since that is what they said for April and May) and that this continued into June because the website was still delayed 7-14 days across all mattresses at the end of June. May Revenue and April DTC: The numbers in purple were provided by Purple here and here. April Wholesale: My estimate of $2.7M for Wholesale sales in April comes from this statement from the Q1 earnings release: " While wholesale sales were down 42.7% in April year-over-year, weekly wholesale orders have started to increase on a sequential basis. " I divided Q2 2019's wholesale sales evenly between months and then went down 42.7%. June DTC: This is my estimate based upon the fact that another Mattress Max machine went online June 1, thus increasing capacity, and the low end model was discontinued (raising revenue per unit). June Wholesale:Joe Megibow stated at Commerce Next on 7/30 that wholesale had returned to almost flat growth. I'm going to assume he meant for the quarter, so I plugged the number here to finish out the quarter at $39.0M, just under $39.3M from a year ago. Revenue Expectations from Analysts (via Yahoo) https://preview.redd.it/notxd6hhbng51.png?width=384&format=png&auto=webp&s=aa0453414f467aa6c5bf72ce8a8046c0ae6e62a5 My estimate of $244M comes in way over the high, let alone the consensus. PRPL has effectively already disclosed ~$145M for April/May, so these expectations are way off. I'm more right than they are.
I used my estimates for Q3/Q4 2019 to guide margins in April/May as there were some one time events that occurred in Q1 depressing margins. June has higher margin because of the shift away from the low end model (which is priced substantially lower than the high end model). Higher priced models were given manufacturing priority.
Marketing and Sales Joe mentioned in the Commerce Next video that they were able to scale sales at a constant CAC (Customer Acquisition Cost). There's three ways of interpreting this:
Overall customer acquisition cost was constant with previous quarters (assume $36M total, not $93.2M), which means you need to add another $57M to bottom line profit and $1.08 to EPS, or
Customer Acquisition Costs on a unit basis were constant, which means I'm still overstating total marketing expense and understating EPS massively, or
Customer Acquisition Costs on a revenue basis were constant, which is the most conservative approach and the one I took for my estimate.
I straightlined the 2.2 ratio of DTC sales to Marketing costs from Q1. I am undoubtably too high in my expense estimate here as PRPL saw marketing efficiencies and favorable revenue shifts during the quarter. So, $93.2M General and Administrative A Purple HR rep posted on LinkedIn about hiring 330 people in the quarter. I'm going to assume that was relative to the pre-COVID furloughs, so I had June at that proportional amount to previous employees and adjusted April and May for furloughs and returns from furlough. Research and Development I added just a little here and straight lined it.
Interest Expense Straightlined from previous quarters, although they may have tapped ABL lines and so forth, so this could be under. One Time and Other Unpredictable by nature. Warrant Liability Accrual I'm making some assumptions here.
We know that the secondary offering event during Q2 from the Pearce brothers triggered the clause for the loan warrants (NOT the PRPLW warrants) to lower the strike price to $0.
I can't think of a logical reason why the warrant holders wouldn't exercise at this point.
Therefore there is no longer a warrant liability where the company may need to repurchase warrants back.
The liability accrual of $7.989M needs to be reversed out for a gain.
What to Watch For During Earnings (aka Reasons Why This Moons More)
Analysts, Institutionals, and everyone else who uses math for investing is going to be listening for the following:
Warrant Liability Accrual
Capacity Expansion Rate
CACs (Customer Acquisition Costs)
New Product Categories
Cashless Exercise of PRPLW warrants
Margin Growth This factor is HUGE. If PRPL guides to higher margins due to better sales mix and continued DTC shift, then every analyst and investor is going to tweak their models up in a big way. Thus far, management has been relatively cautious about this fortuitous shift to DTC continuing. If web traffic is any indicator, it will, but we need management to tell us that. Warrant Liability Accrual I could be dead wrong on my assumptions above on this one. If it stays, there will be questions about it due to the drop in exercise price. It does impact GAAP earnings (although it shouldn't--stupid accountants). Capacity Expansion Rate This is a BIG one as well. As PRPL has been famously capacity constrained: their rate of manufacturing capacity expansion is their growth rate over the next year. PRPL discontinued expansion at the beginning of COVID and then re-accelerated it to a faster pace than pre-COVID by hurrying the machines in-process out to the floor. They also signed their manufacturing space deal which has nearly doubled manufacturing space a quarter early. The REAL question is when the machines will start rolling out. Previous guidance was end of the year at best. If we get anything sooner than that, we are going to ratchet up. CACs (Customer Acquisition Costs) Since DTC is the new game in town, we are all going to want to understand exactly where marketing expenses were this quarter and, more importantly, where management thinks they are going. The magic words to listen for are "marketing efficiencies". Those words means the stock goes up. This is the next biggest line item on the P&L besides revenue and cost of goods sold. New Product Categories We heard the VP of Brand from Purple give us some touchy-feely vision of where the company is headed and that mattresses was just the revenue generating base to empower this. I'm hoping we hear more about this. This is what differentiated Amazon from Barnes and Noble: Amazon's vision was more than just books. Purple sees itself as more than just mattresses. Hopefully we get some announced action behind that vision. This multiplies the stock. Cashless Exercise of PRPLW Warrants I doubt this will be answered, even if the question is asked. I bet they wait until the 20 out of 30 days is up and they deliver notice. We could be pleasantly surprised. If management informs us that they will opt for cashless exercise of the warrants, this is anti-dilutive to EPS. It will reduce the number of outstanding shares and automatically cause an adjustment up in the stock price (remember kids, some people use math when investing). I'm hopeful, but not expecting it. The amount of the adjustment depends on the current price of the stock. Also, I fully expect PRPL management to use their cashless exercise option at the end of the 20 out of 30 days as they are already spitting cash.
I've made some updates to the model, and produced two different models:
Warrant Liability Accrual Goes to Zero
Warrant Liability Accrual Goes to $47M
I made the following adjustments generally:
I reduced marketing expenses signifanctly based upon comments made by Joe Megibox on 6/29 in this CNBC video to 30% of sales (thanks u/deepredsky).
I reduced June wholesale revenue to 12.6M to be conservative based upon another possible interpretation of Joe's comments in this video here. It is a hard pill to swallow that June wholesale sales would be less than May's. The only reasoning I can think of is if May caused a large restock and then June tapered back off. The previous number of $19.0M was still a retrenchment from the 40-50% YoY growth rate. I'm going to keep the more conservative number (thanks again u/deepredsky).
I modified the number of outstanding shares used for EPS calculations from 53M (last quarters number used on the 10-Q) to almost 73M based upon the fact that all of the warrants and employee stock options are now in the money. Math below. (thanks DS_CPA1 on Stocktwits for pointing this out)
Now that we have established that coliseum still has not exercised the options as of july 7, and that purple needs to record as a liability the fair value of the options as of june 31, we now need to determine what that fair value is. You state that since you believe that there is no logical reason that coliseum won't redeem their warrants "there is no longer a warrant liability where the company may need to repurchase warrants back." While I'm not 100% certain your logic here, I can say for certain that whether or not a person will redeem their warrants does not dictate how prpl accounts for them.
The warrant liability accrual DOES NOT exist because the warrants simply exist. The accrual exists because the warrants give the warrant holder the right to force the company to buy back the warrants for cash in the event of a fundamental transaction for Black Scholes value ($18 at the end of June--June 31st that is...). And accruals are adjusted for the probability of a particular event happening, which I STILL argue is close to zero. A fundamental transaction did occur. The Pearce brothers sold more than 10M shares of stock which is why the exercise price dropped to zero. (Note for DS_CPA1 on Stocktwits: there is some conflicting filings as to what the exercise price can drop to. The originally filed warrant draft says that the warrant exercise price cannot drop to zero, but asubsequently filed S-3, the exercise price is noted as being able to go to zero. I'm going with the S-3.) Now, here is where it gets fun. We know from from the Schedule 13D filed with a July 1, 2020 event date from Coliseum that Coliseum DID NOT force the company to buy back the warrants in the fundamental transaction triggered by the Pearce Brothers (although they undoubtably accepted the $0 exercise price). THIS fundamental transaction was KNOWN to PRPL at the end Q4 and Q1 as secondary filings were made the day after earnings both times. This drastically increased the probability of an event happening. Where is the next fundamental transaction that could cause the redemption for cash? It isn't there. What does exist is a callback option if the stock trades above $24 for 20 out of 30 days, which we are already 8 out of 10 days into. Based upon the low probability of a fundamental transaction triggering a redemption, the accrual will stay very low. Even the CFO disagrees with me and we get a full-blown accrual, I expect a full reversal of the accrual next quarter if the 20 out of 30 day call back is exercised by the company. I still don't understand why Coliseum would not have exercised these. Regardless, the Warrant Liability Accrual is very fake and will go away eventually.
ONE MORE THING...
Seriously, stop PMing me with stupid, simple questions like "What are your thoughts on earnings?", "What are your thoughts on holding through earnings?", and "What are your thoughts on PRPL?". It's here. Above. Read it. I'm not typing it again in PM. I've gotten no less than 30 of these. If you're too lazy to read, I'm too lazy to respond to you individually.
$PSTG: PURE STORAGE for them, PURE TENDIES for you
This is actually my first DD I've ever posted so fuck you and forgive me if this doesn't work out for you.I've been looking at $PSTG for a while now and if my buying power didn't get so fucked from my decision to buy 8/7 UBER puts, I would have been already all over this play. What had got me looking into Pure Storage was an unusual options activity alert. I've looked into this company before but didn't entirely understand what they do. Now after looking at them again, I'm still not exactly sure wtf they do....BUT I've gotten a better clue. Basically what I got from my research is that these guys fuck with "all-FLASH data storage solutions (enabling cloud solutions and other low-latency applications where tape/disk storage does not meet the needs)."......and ultimately what this all means to me is that these are the motherfuckers making those stupid fast laser money printers with the rocket ships attached. And that's something I'm interested in. Now, here is the DailyDick you all degenerates have all been fiending for: Fundamentally: PureStorage remains one of the few hardware companies in tech that is consistently growing double motherfucking digits, yet remains constantly cucked and neglected by investors (trading at 1.9x EV/Sales). https://preview.redd.it/ek7ugjsewnf51.png?width=1118&format=png&auto=webp&s=f9c7e72c95e450a105e44223937422d896eeeb21 The 36 Months beta value for PSTG stock is at 1.62. 74% Buy Rating on RH. PSTG has a short float of 7.28% and public float of 243.36M with average trading volume of 3.16M shares. This was trading at around $18 on Wednesday 8/5 when I started writing this and as of right now, it's about $17.33 💸 The company has a market capitalization of ~$4.6 billion. In the last quarter, PSTG reported a ballin'-ass profit of $256.82 million. Pure Storage also saw revenues increase to $367.12 million. IMO, they should rename themselves PURE PROFIT. As of 04-2020, they got the cash monies flowing at $11.32 million . The company’s EBITDA came in at -$62.81 million which compares very fucking well among its dinosaur ass peers like HPE, Dell, IBM and NetApp. Pure Storage keeps taking market share from them old farts while growing the chad-like revenue #s of 33% in F2019, 21% in F2020, and 12% in F1Q21. Chart of their financial growth since IPO in 2015: https://preview.redd.it/gwlmy82v4nf51.png?width=640&format=png&auto=webp&s=b6508cd5f641da4086b70d8b8007da034e982fd7 At the end of last quarter, Pure Storage had cash, cash equivalents and marketable securities of $1.274B, compared with $1.299B as of Feb 2, 2020. The total Debt to Equity ratio for PSTG is recording at 0.64 and as of 8/6, Long term Debt to Equity ratio is at 0.64.Earning highlights from last quarter:
Revenue $367.1 million, up 12% year-over-year
Subscription Services revenue $120.2 million, up 37% year-over-year
GAAP operating loss $(84.9) million; non-GAAP operating loss $(5.4) million
Operating cash flow was $35.1 million, up $28.5 million year-over-year
Free cash flow was $11.3 million, up $29.0 million year-over-year
Total cash and investments of $1.3 billion
I bolded the Subscription Services Revenue bullet because to me that's a big deal. Pure Storage keeps them coming back with products such as Pure-as-a-service and Cloud Block Store and everybody knows that the recurring revenue model is best model. Big ass enterprises buy storage from vendors such as Pure Storage in the cloud to prevent vendor lock-in by the cloud providers. $$$ >!💰< What are Pure Storage's other revenue drivers? Well these motherfuckers also have the products to address the growth of Cloud storage as well as the products to drive the growth of on-prem storage. For on-prem data center, Pure sells Flash Array to address block storage workloads (for databases and other mission-critical workloads) and FlashBlade for unstructured or file data workloads. On-prem storage revenue is mainly driven by legacy storage array replacement cycle. https://preview.redd.it/01su6chrwnf51.png?width=1129&format=png&auto=webp&s=16e6a705f9392291bc0c3932c815802d9101365e So far, it seems like Pure Storage's obviously passionate and smart as fuck CEO has been spot on with his prediction of the flash storage sector's direction. Also seems like he's not camera shy either. Pure Storage's "Pure-as-a-Service and Cloud Block Store" unified subscription offerings is fo sho gaining momentum it. This shit is catching on with enterprises, both big and small. COVID-19 increased the acceleration of our digital transformation and the subsequent shift to the cloud. This increased demand in data-centers is going to drastically help Pure Storage's future top and bottom line. To top it off, NAND prices are recovering! (inferred from MU earnings). I expect Pure Storage to get some relief on the pricing front because of this which obviously in turn should improve revenues. PSTG's numbers look pretty good to me so far but are they a good company overall? Even when scalping and trading, I don't like to fuck with overall shitty companies so I always check for basic things like customer satisfaction, analyst ratings/targets, broad-view industry trends, and hedge fund positioning.. that sort of thing.Pure Storage stands out in all of these fields for me. https://preview.redd.it/4n0e5nve5of51.png?width=373&format=png&auto=webp&s=495416bb6f5a2dab77f3ac483ca4d9510b39037c Customers like Dominos Pizza and many others all seem to be happy AF with no issues. I can hardly even find a negative review online. Their products seems to be universally applauded. Gartner and other third party independent analysts also consider Pure Storage's product line-up some of the best in the industry. The industry average for this sector is a piss poor 65.Pure Storage has a 2020 Net Promoter Score of 86 https://preview.redd.it/3w51io8yvmf51.png?width=698&format=png&auto=webp&s=4f7d06825d0ad9d126216e5069af2f9c3636f86a Enterprises are upgrading their existing storage infrastructure with newer and more modern data arrays, based on NAND flash. They do this because they're forced to keep up with the increasing speed of business inter-connectivity. This shit is the 5g revolution sort to speak of the corporate business world. Storage demands and needs aren't changing because of the pandemic and isn't changing in the future. The newer storage arrays are smaller, consume less power, are less noisy and do not generate excess heat in the data center and hence do not need to be cooled like the fat fucks at IBM need to be. Flash storage arrays in general are cheaper to operate and are extremely fast, speeding up applications. Pure Storage by all accounts makes the best storage arrays in the industry and continues to grow faster than the old school storage vendors like bitchass NetApp, Dell, HPE and IBM. Pure Storage’s market share was 12.7% in C1Q20 and was up from 10.1% in the prior year - LIKE A PROPER HIGH GROWTH COMPANY.HPE, NetApp and IBM, like the losers they are, lost market share.According to blocksandfiles.com, AFA vendor market share sizes and shifts are paraphrased below:
“Dell EMC – 34.8% (calculated $766m) vs. 33.7% a year ago
NetApp – 19.3% at $425m vs. 26.7% a year ago
Pure Storage – 12.7% at calculated $279.7m vs. 10.1% a year ago
I beat Bloodstained recently, and because this forum seems to think Hollow Knight is the greatest game ever while Bloodstained sucks I decided to go against the grain a bit and create a different discussion. Granted, overall I think Hollow Knight is better, but that's doesn't mean it's better on every aspect. Now, I found Bloodstained and Hollow Knight essentially took opposite approaches to building large Metroidvanias (in summary, Bloodstained gets it's complexity by filling out large continuums with quantitative variations, while Hollow Knight gets it through combinatorics by giving unique behavior to simple things which then synergize), so I don't think it's necessarily fair to compare them, but I'm going to do it anyway. This post is very long as I've found a lot to talk about, so I don't recommend reading the whole thing. Each paragraph is one aspect, you should be able to get what it is just from reading the first sentence, the rest of the paragraph is just an argument as to why I found that aspect to be better if you care to read it. I'll post the list of all the aspects in the concluding paragraph. With that being said, here it goes. First, I prefer Bloodstain's save/death system over Hollow Knight's. While autosaving is convenient, I honestly prefer manual saving as I like having control over those cases where you don't want to overwrite your savefile. In Hollow Knight's case, it's clear that they implement autosaving specifically to prevent you from doing that, as otherwise their death mechanic wouldn't work, and it makes certain choices permanent. It really says something about how brutal Hollow Knight's death mechanic is that it would be preferable for the game to just end and have to be reloaded from a save point. In addition to being brutal, I find such a mechanic to be a poor fit for Metroidvania's, as forcing the player to go to the same destination to recover discourages exploration or trying different routes when a particular ones proves too hard. The logistics of the whole thing are also pretty iffy, both with the shade mechanic and with autosaving and returning to a save point on quitting, and both can be exploited in ways that feel to defy the logic of the game. The thing I like the most about Bloodstain's save system is that it has lots of slots you can branch out into, which I like using to save before boss fights in case I want to refight them. Hollow Knight's Hall of Gods is much more convenient, but it still fails to capture all such fights that a player might want to reattempt with a different strategy (the big one being the Pale Lurker), and not all the fights it does have are quite the same as the original (Uumuu in particular feels like a completely different fight), so it does not make having such a feature be obsolete. Even when bosses are available unchanged in the house of gods though, the fact that the Hall of Gods can't even be unlocked until midgame needs to be considered, while save branching can be done immediately after the boss is fought. Finally, even though Hollow Knight has autosaving, it still has save points, and Bloodstained does a much a better job at placing save point in desirable locations. In particular, Bloodstained always has a save point before a boss, while there is some frustrating exceptions in Hollow Knight. Next, I prefer Bloodstain's map system. It's simple, but effective, and in terms of functionality has most of the features of Hollow Knight's, with essential features like save points and NPCs being marked in one way or another, and personal markers are given as well. Hollow Knight's maps are certainly prettier, but that doesn't necessarily make them more useful. They have a couple advantages with the colored regions and drawn out landmarks, but are also frustrating in other ways, such as with the limited markers, and the fact you need to buy everything first. The biggest issue though is the fact that maps must be bought before they can be used. This wouldn't be a bad idea by itself, but in practice it isn't used particularly well, as the map is often either is often either hid so near the entrance that they might as well start with it, or being hidden so late that they needs to frustratingly memorize the area before getting to it. The fact they cost geo is little more than a nuisance, as they don't cost enough for the player to ever be worth passing them up for now, but it's still often enough to just waste time grinding until enough geo is gathered to buy them. The problems with the map system are exacerbated by the shade mechanic, as a map is needed to track down the shade. This further discourages exploration, as it encourages someone to either just map a beeline towards the map while ignoring everything else, or just avoid areas entirely that they don't have the map for. Fog Canyon in particular was frustrating, as the map in positioned in such a place to actively discourage exploring the region until the player gets the shade cloak, but the area was designed to be cleared with either the shade cloak or Isma's tear, and the map can actually be picked up pretty easily picked up with the latter if the player wasn't discouraged from exploring by the tease combined with frustrating game mechanics. Bloodstained did a much better job at handling money than Hollow Knight. I never found myself having to grind for money in Bloodstained, but I did in the early game for Hollow Knight. The biggest issue with currency in Hollow Knight though is in the late game, which is that geo becomes absolutely useless once everything is bought. There is one stock that never exhausts, the rancid eggs, but these become all but useless after everything else is bought out as the only use for rancid eggs is recovering the player's shade, where the primary purpose for doing such is just to recover geo. The only other reason would be to fix the soul gage, but in most cases it would probably be faster to just kill yourself than to return to Confessor Jiji in order to fetch the shade. This issue is amplified in Steel Soul mode, where geo will likely accumulate to a greater extent due to not being lost on death, rancid eggs can no longer be bought, and the end game geo sinks are useless as they only prevent an effect that occurs on death. The one other replenishable stock, fixing the fragile charms, can't be restored either as the charms only break on death. This is not an issue as Bloodstained. Not only is it much harder to pay for everything, and consumable items ensure that there will always be practical stock remaining, but there is uses for money other than buying items, namely the gold bullet spell and the gold power ring. While charms can slightly modify the attack in Hollow Knight, the overall form remains the same, with the same nail attacks and the same spells. Meanwhile, by changing up weapons and spell shards, several different modes of combat are possible in Bloodstained. For example, one spell I enjoyed using in Bloodstained is Plume Parma, which launches a flying pig that bounces around the arena, and it's fun challenge to work on the geometry of arenas and boss patterns to figure out where to launch the pig so it hits the boss the maximum number of times before it pops. Hollow Knight has nothing comparable. As far as actual weapons go, boots encourage completely different fighting styles than swords or guns do. The fact there are different attack types as well also mixes stuff up in Bloodstained by more explicitly encouraging different builds. With that said, I did find Hollow Knight to have much better synergy between charms than any items in Bloodstained did, the limitation is just in modes of combat. I found the traversal items to be much more interesting in Bloodstained. Hollow Knight's are pretty generic, with the most interesting one being super-dash, which is kinda annoying. Bloodstained had three more interesting traversal abilities with reflector ray, invert, and dimension shift. I do have to say the Hollow Knight did a much better job at actually putting it's traversal abilities to use, but even then I do think Bloodstained had a much more useful invert mechanic than most games where something similar can be done. Even with some of the more generic abilities Bloodstained had more interesting traversals. The best example of this is with how they handle water, where all Hollow Knight's traversal does is make some more water swimmable on the surface, while Bloodstained has two different traversal abilities for water, each allowing different ways to explore it in 2d space. One thing that always frustrated me in Hollow Knight is how little of a difference upgrades in the game actually made. The clincher is the fact that once you get ALL mask upgrades and vessel fragments, you're still not even twice as powerful as you were at the start of the game. This difference is even more marginal when you consider how easy it is to heal and recover soul in this game, so in practice you have much more soul and life available then the meters indicate. On the other hand, if you do get pushed to the edge (which is the only point where health upgrades make a different anyway) and recover, then the effect is amplified as you could recover more than one mask after you otherwise would have died. For what they are worth, it annoys me that there are much easier method to continue pushing life past the limit, such as by farming lifeblood, making there be little incentive to actually track down any upgrades. This is one area where Hollow Knight's emphasis on the discrete works against it, as complete sets are needed before mask shards or vessel fragments, while any individual health or magic upgrade in Bloodstained makes a difference, even if it's so small that it's only situational. What really makes this bad is exactly how the upgrades are obtained. In short, I've found that for both masks shards and vessels fragments there is one that is extremely hard to get, a few that are fairly challenging, and most are a matter of going to the right place. As a result, there is little incentive to tackle the fairly challenging ones unless one is also confident that they can get the extremely challenging one as otherwise they won't amount to anything once all the easy shards and fragments are picked up, collapsing challenges with rewards of varying levels of difficulty into one. Unlike the masks, the fully upgraded nail is significantly more powerful the original nail. I don't like the way I paced the upgrades though. Each nail upgrade adds a constant amount of damage to the nail which is slightly less damage than the starting nail. This is fine, though the practical effect is somewhat sporadic due to most enemies having so few hit-points that the ratio between the previous number of hits it took to kill an enemy to the new number of hits is often quite different from the ratio between the previous amount of damage the nail did to the new amount of damage. It would be more consistent against bosses, if it wasn't for the fact that many bosses are giving more hits as the nail is upgraded so the effect is nerfed. Even worse, spells don't become more powerful, so a boss can actually become HARDER when thought with more powerful nail. While not a boss, I noticed this effect with the shade, which was quite annoying. With those aside, the issue comes from the fact the requires for upgrading the weapon are not constant, but instead increase linearly. By itself this would be reasonable as it would be expected for their be a greater requirement to get a constant improvement later on to reflect the increasing difficulty of the game, but the issue comes from the fact that the upgrade requirement is from a rare item, of which each is required to get the final upgrade. As result, the difficulty of upgrading the item increases superlinearly, not linearly. To explain why, I'll use this example of completing a set of trading cards by buying random cards. Say there are twelve possible cards that could be randomly gotten, there is six in the set you're trying to complete, and the package contains one card. With the first package, you have a 1/2 chance of getting a card in the set, and thus getting one card closer to complete set. Once you have 5/6 cards in the set though, you only have 1/12 chance of getting one card closer to completing the set as you need the specific one that you are missing, not just any card in the set. You can't apply the same calculations to Hollow Knight as obtaining the ore isn't random, it's gotten by performing certain tasks, but similar reasoning applies. The issue isn't just that it's superlinear though, but the exact values are poorly balanced. To get the first nail upgrade, you need zero pale ore, while the final upgrade needs three pale ore, which is half the total pale ore. As a result, it's strictly harder to get the final nail upgrade than to get ALL the nail upgrades before it, but the proportional effect isn't anywhere close to what you get for ANY of the upgrades before it. This lack of marginal improvement is then exacerbated by the fact that some pale ore is much easier to get than others (easiest is basically just found on the wayside on a route you have to go down anyway, hardest requires completing the second of three gauntlets), so of course the easy to find ones are all going to found before the hard ones. The reward to effort ratio is just completely out of wack for the final nail level, and I find that it just added one more nail level and four more ore it could have been much more reasonable without changing the overall system. Meanwhile, Bloodstained does damage upgrades completely differently. Frankly I don't know how Bloodstained scales damage other than it being much more complicated, but in practice I found it to be much better paced than it was in Hollow Knight. There is an issue where occasionally you randomly got a weapon that's much more powerful than the weapons you should have at that point so until you get to the next stage most weapons you pick up are useful, but overall I found it to be much better. Bloodstained has much more interesting alternative game modes than Hollow Knight does. First off, it has different difficulty settings, which Hollow Knight just lacks. If we consider Hollow Knight's alternative game modes, none of them actually add any functionality. Steel Soul mode technically adds a single new feature in the form of Steel Soul Jinn, but as all she does is convert eggs to geo, which is not particularly useful for the reasons explained in the section on money. The fact the save file deletes on death doesn't actually add functionality as a player could impose this challenge on themselves by choosing to manually delete their save file on death, all it does is automate the process. I guess you could consider the achievements associated with the mode as an added feature, but those are spoiled by the fact you can save you run by just quitting before death, meaning you can play as if you only have one less hit, and can't do any shade-jumping exploits. The other mode is Godseeker mode, which is it's answer to Boss Rush mode. It sounds like a good idea, but it's pretty terrible in practice because you can already do all of Godhome in the main game, and all Godseeker mode is just Godhome and nothing but Godhome. I see two potential uses for this mode, the first is that in Godseeker mode you're fulling upgraded so it can be done to get around having to get all the upgrades yourself, and the second is that Godhome is a pain to get to to and get out of, so just opening a second save file can be done instead for convenience sake. The problem is, it's so hard to unlock Godseeker mode that by the point you've gotten there you've probably already done every else, so you don't need to unlock any upgrades, and you can just set around in Godhome while you try to clear it in the main game as you don't actually need to leave. As it is I still haven't cleared the third pantheon, but the only upgrade I'm missing is the fourth level Grimm charm, which I frankly don't find to be worth beating either Nightmare Grimm or the third Pantheon for. The fact the Hall of Gods is almost filled in Godseeker mode means it could be used to fight the handful of bosses (Pure Vessel, Winged Nosk, and the Sisters of Battle) that still need to be unlocked in Godhome if you're unable to clear the fourth Pantheon, and it can be used to fight Grey Prince Zote if you let the real one die, but that's not much. Bloodstained also has a Boss Rush Mode, but it's much more reasonable to unlock, just requiring the bosses to be rather than tracking down some obscure location and complete the challenges there, and it doesn't waste an entire safe file. It also actually emphasizes the rush part, with a timer for high scores, and performance rewards that can actually be used in the main game instead of just being some weird isolated challenge for getting an alternative ending. With boss revenge mode it has another fun challenge mode that's unlike anything in the game, but it also has a couple full length modes that act like full games. Right now they have Zangetsu mode and randomizer mode, both of which are substantially different from the main game. Bloodstained is still being updated to add new game modes, while Hollow Knight is now capped at it's definitive version. Finally, I found Bloodstained to be much more reasonable with how it distributed its alternative endings. Hollow Knight has five endings, but two of them are just variations, so I'll only consider three of them. Bloodstained also has three endings, so we can compare them. As far as it can be measured, I feel these endings are roughly distributed in the same way: the first ending is a bit over half-way through the game, and final ending requires doing a bit more than the second one. The main difference I feel in between how this three endings are distributed between the games is that in Bloodstained, the first two endings are the result of aborting the main path through the game early. Meanwhile, you get the first ending in Hollow Knight if you go and do exactly what you are supposed to do, and the other two endings are for doing extra. There is one issue though: the first ending in Hollow Knight SUCKS. I swear it's one of the worst endings I've ever seen in modern commercial game, not only is the outcome unsatisfactory for our characters, but it's just short and feels like it doesn't actually resolve anything. It's the second ending that feels canonical, and that you need to actually get to for the game to feel complete. This is where the issue comes in. To get the best ending in Bloodstained, you pretty much just have to finish exploring the castle, and everything else will fall into place as long as you take advantage of what you were told along the way. That's not the case in Hollow Knight, where I feel they were trying to find an excuse to force player to hit all the important lore spots, but it never really came together in a meaningful way. Half of it is reasonable, where you need the shade cloak to explore through Queen's Garden so you can get half of the kingsoul. The Pale King's half though, is kinda ridiculous. The first issue is getting to the White Palace, which requires using an ability that isn't used anywhere else in a specific location. The bigger issue than finding the White Palace though is getting that ability. For reasons I don't understand, they decided to make it the final upgrade that you get from collecting dream essence, when I think it would make more sense to include at least one optional upgrade past it instead of just having the seer disintegrate. The larger issue though is what it takes to get that point. The game points to two sources of dream essence, warrior dreams and whispering roots, and they contain enough essence to get all the upgrades EXCEPT the awakened dream nail. For the final bit of essence, you're expected to beat one of the champions, most of which are harder than the tyrant lord so it brings into question of what's the point of even including the queens path. The Hidden Dreams updated added some somewhat more reasonable alternative champions to get this final bit of essence from, but they have the same issue of the other champions in that not only are they hard to beat, but they are also hard to find. It's not that they are actually hard to find if you know to look for them, but as far as I'm aware the game gives you know hints that these bosses even exist, and they are all located in isolated areas that you already visited and would have no reason to revisit unless you're specifically looking for the champions. The Hidden Dreams ones are even worse in this regard, as you can be locked out of one if you miss something much earlier in the game, while the other requires a trigger completely unrelated to the character to appear, and is located in a secret area which is the one region I know of that requires desolate dive to access without any sort of visual cue. The real problem though comes once you actually get to the White Palace though, which is this seemingly never ending platform section that is FAR harder than anything before it, feeling more like you're playing Super Meat Boy than Hollow Knight. It's one thing if was just an optional challenge like the Path of Pain that it also contains, but I find the fact you need to beat it to get a decent ending to unreasonable, the game doesn't even do anything to prepare you for it. The only reason I got through it was with an optional charm, Hive Blood, whose use involves a lot of just sitting around and waiting and it is so tedious. I wonder if the White Palace feels some out of place specifically because it was a stretch goal that happened to be part of the main quest instead of a side quest like the colosseum is. Maybe it would have been even harder, but I feel like the whole ordeal would have at least made more sense if the abyss was actually completed as originally planned. The final ending doesn't have the same weight the second one does, but it's even more ridiculous. For unknown reasons, they decided to make the sole reward of boss rush side quest to be getting this final ending, and then center the entire ending around this boss rush mode, and it's just weird. What makes it absurd though is what it takes to actually get the ending, which is beating the Pantheon of Hallownest. It's hard enough to unlock as it requires clearing all the other Pantheons, but the real issue with it isn't that it's hard, it's that it's LONG. To get the hard part of the Pantheon, the player needs to spend like 20 minutes fighting all of the bosses that they've already mastered on the previous pantheons, and if they die they need to restart the entire thing. Because the ending is so hard it's like 20 minutes wasted each failed attempt, and that's just not worth it for most people. The worst part is the ending ends in a bit of cliffhanger, letting people to believe it was sequel bait, in turn frustrating countless player's trying to avoid spoilers who fruitlessly beat themselves against this ridiculous challenge. Bloodstained has it's superbosses too, but those are just additional challenges, not being required to get what seems to be an important ending. To get that you just need to be beat the game. In conclusion, I preferred Bloodstain's save and map systems, found it did a better job at handling money, had more combat options and more interesting traversal items, had more useful upgrades to health, magic, and damage, has more useful alternative game modes, and has more reasonable conditions for getting the good endings. While I'm not saying these are the only things Bloodstained did better, I do think Hollow Knight is better in most other aspects, including graphics, story, bosses and enemies, and sound and level design, and these aspects are considered to be more essential. I will not argue why I think Hollow Knight does this better people seem to generally be in agreement to this, and I've already written well more than enough. I'd like to hear any differing opinions, but again, I recommend only reading the sections you're interested in discussing and not the entire essay.
Occasionally people ask how these loans work. With that in mind: from the Canadian prairie on a beautiful day in July, to you: First, if you're from the U.S.: I'm doing this from a Canadian perspective which means I'm ignoring the Regulation T, special memorandum account, overnight maintenance requirement, and initial margin, because all of those are concepts that have no equivalent or application in Canada. But the basics are the same. You can ignore all of those concepts because they have no bearing on how margin actually works. Those concepts are simply restrictions in how you can use margin and as a practical matter they're not onorous restrictions. I'm also ignoring U.S. risk-based "portfolio margin" because that's a specialized, alternative margin system some brokers offer in the U.S., that we don't have in Canada. We have traditional, rules-based margin that hasn't changed in Canada in 100+ years. Note: If you are a Canadian resident buying U.S. stock in Canada you still fall under the Canadian rules for margin. Margin in Canada hasn't really changed since the 1900's, except you have to put up at least 30% nowadays instead of 10% as it was back before the crash of 1929. Basically that's the only thing that's changed. In Canada you can borrow up to 70% of a position at once for most stocks. This means that if you want to buy $10,000 worth of RBC or Apple, you only have to put up $3,000 and your broker lends you the rest. Margin was first developed in the Netherlands which basically invented the modern financial system we have today in the West, back in the 1600s. The Dutch East India corporation (ticker VOC) was at one point 20% of the world's total commerce. That would be like a company in 2020 grossing about 16 trillion US a year. By comparison Apple brings in about one half of one percent of that. The Amsterdam stock market developed just to trade VOC and other shares and related securities. Seein the success of their Continental rivals, the British copied the Dutch and for a long time, until after the Battle of Waterloo, the western world had two rival financial capitals, London, and Amsterdam. For various historical reasons, Amsterdam got pushed out of the picture and for about 100 years the City of London (which is what the financial district in London is called) was the financial capital of the west. They of course now share that crown with New York City. But it's really the Dutch who started it all, around the time of Vermeer. *** The concept is that the bank (or broker) will lend against some of your stock, but not all of it. They want a "haircut." The haircut is the amount they won't lend against. In Canada the haircut is usually 30% but can be 50% and there are some stocks the banks won't lend against at all, like most of the stuff on the TSX-V or on the U.S. pink sheets. Every bank is different, so BMO InvestorLine might want 50% on one company and Interactive Brokers Canada might want 30% or vice versa for another. But most things are 30%, some are 50% and some are 100% (meaning no loan). The maximum available leverage is 1/haircut. If the haircut is 30% as is typical in Canada, the bank will let you buy up to 1/0.3 = 3 1/3 as much as your cash, meaning, you can borrow up to 2 1/3 dollars for every dollar you put up. That's the limit. But: So say you have $3,000 and you want to buy on margin. As the bank haircut (margin rate) is 30%, you can buy $3,000/0.3 = $10,000 worth of stock. Obviously you then have a loan of $7,000. You now have $10,000 worth of stock, but remember, the bank won't let you borrow against 30%*$10,000 = $3,000. So your collateral is only $7,000. So you now have a $7,000 loan collateralized by $7,000 worth of stock. In the above example, you put up 30% margin, the same as the haircut. It's easy to see that if your total position slides so much as a dollar, you will have less collateral than $7,000 and therefore get what's called a "margin call" where they will tell you that you have to put up more money in a few hours or sell stock (which automatically pays down the loan to the extent of the sale) so that you have enough collateral to cover your loan, otherwise they will automatically sell a stock of their choosing at an amount of their choosing. They are also allowed to sell whichever stock they choose automatically without calling you first, in the event of a margin call. That is explicitly set out in your margin agreement. There have been at least two challenges to that in the Ontario courts in the last 20 years or so, where the former client argued that the bank sold their shares out without first advising them, or, in one of the court cases, after promising to hold off so that the client could put up money, and then reneging on that and selling the client's stock anyway. The court in both cases sided with the bank. The margin is for real, not negotiable, it is there to protect the bank and the other client's capital, and the words "the bank can sell at any time and without prior notice" mean what they say they mean. If you get sold out at a loss, don't expect the courts to give you redress. So obviously you need some "buffer" because of volatility, but how much do you borrow? Now you have to understand some more math. target margin = 1-(1-x)*(1-haircut) x is the price drawdown target margin is how much margin you have to put up. Say Apple is marginable at 30% (the haircut) by your bank. You decide you want to borrow on margin. But you decide, "I will allow Apple to slide 40% from what I buy it at before I get a margin call." So how much margin should you put up? target margin = 1-(1-0.4)*(1-0.3) = 1-0.6*0.7 = 1-0.42 = 0.58. So you have to put up 58% margin. That means if you have $3,000 to invest, you would buy $3,000/0.58 = $5,172 worth of Apple. If Apple is trading at $350 that means it can slide to $210 before you get a margin call. At which point you will have lost 0.4/0.58 = 68.9% of your money. (Remember, leverage is simply 1/margin.) You can convince yourself by working through it as a check. In the example, as you had $3,000 and you margined that at 58%, you bought $3,000/0.58 = $,5172 worth of stock. Obviously your equity at the time of purchase was be $3,000 because you owned $5,172 worth of stock and owed the bank $2,172. Because of the haircut, 0.3*$5,172 = $1,551 could not be used as collateral. Then the stock slid 40%, from $350 to $210, so your total stock position was then (1-0.4)*$5,172 = $3,103. Of course, you still owed the bank $2,172. But remember, not all of the $3,103 was available be used as collateral, only 70% (meaning, 1-haircut) of that. So at $210 your collateral was (1-0.3)*$3,103 = $2,172, exactly the same as the loan amount. $210 was, therefore, the lowest price at which you still have sufficient collateral. Anything less and you would have received a margin call or the bank would simply have automatically sold stock, depending on how they saw the risk. Key takeaway here is that the haircut is 30%, meaning that 30% of your stock cannot be used as collateral, which mathematically also means that your account equity/total amount of stock = (total amount of stock-loan)/(total amount of stock) has to stay at or above 30%. You're putting up 58%, meaning you're borrowing 1/0.58 - 1 = 72 cents from the bank for every dollar of your own money that you put up. The formula above is simply a rearrangement using basic algebra, of the basic margin equation which is: price at margin call = initial price of stock*(1-target margin)/(1-haircut) Whatever you do, make sure you are maxing out your TFSA or possibly RRSP or possibly both before you use margin, or only contribute a small amount of capital to a margin account and make sure your TFSA or RRSP is your main stock investment vehicle. Do not put up your TFSA as collateral on a margin account. You could end up getting a margin call, then the broker transfers the TFSA over to the margin account, but then the stock market slides again and now your TFSA is wiped out along with your margin account. Questrade offers this and I think it's an absolutely terrible idea. Frankly I think the CRA should disallow it. Notice how none of the banks offer this. Also have a plan for a margin call. You will get a margin call at some point. One good plan is simply to sell enough stock to pay off the margin loan and then re-enter margin when conditions warrant. It makes absolutely no sense to have cash lying around to meet a margin call. Why not just invest the cash and not use margin. The old adage is, "Never meet a margin call" and I think that's good advice. If the bank gives you to choice of either putting in more money in or selling, then sell. To me there are only 3 reasons you would use a margin account:
You have a large account in a diversified stock portfolio and you want to borrow against say 5% of that to go and buy a car, renovate your house, pursue an investment other than securities;
You are consistently good at beating the stock market by a significant amount, and you have maxed out or at least significantly contributed to a TFSA or RRSP or have other wealth-generating property, you have a well-thought out plan that you commit to, that governs your trading decisions, how much you will borrow, and what you will do in the event of a margin call;
You are executing certain trades that require a margin account; for example, options spreads, short selling stocks or commodity futures trades.
To me the following are bad reasons to trade on margin:
It looks like a way to make even more money in stocks, even though you don't know how to make money in stocks;
You are a diversified "Canadian Couch Potato" -style investor getting more or less average returns and you realize that you can buy stock get a 5% dividend yield and pay 4% pre-tax on margin money, so you decide to be a margined "couch potato."
Margined investing = active investing = checking your positions at least daily and following a trading plan. Finally, the average investor working with average capital should always, always, make the TFSA their #1 priority. The TFSA is truly a gem. When I was in my 20's back in the 90's, the only tax shelters for the average Canadian were the sale of their primary residence and the RRSP, the latter which is a deferral and a deduction but not an outright break the way the TFSA is. The TFSA offers leverage effectively equal to the capital gains inclusion rate * your average taxation rate, and yet without a margin call and at zero percent and it doesn't even magnify your losses. No margin account can match that. Some investors don't believe in margin at all. Like Warren Buffett, who said in a 2018 CNBC interview, "It's crazy to borrow against securities." (Note he said borrowing against stocks, not borrowing to buy stocks.) But he is right in saying that the bad thing about margin is that it gives you limited additional potential upside but at the cost of great potential downside. Understand the risks. Read your margin agreement. Consider even meeting with a securities lawyer who can explain the agreement to you. Consider this statement from an article posted on a popular stock investing website (Fair dealing exception), posted March 15th, 2020: " https://www.fool.com/investing/2020/03/15/5-ugly-lessons-from-a-nasty-margin-call.aspx From its close on Feb. 19 to its close on March 12, theS&P 500fell more than 26%, a huge decline in less than a month. Like many investors who had been using options in a margin account, I faced a margin call during that precipitous decline and was forced to liquidate positions to satisfy that call. Note that despite facing that margin call, I never actually borrowed money from my broker. I just had margin available and usable from a purchasing power perspective in the event some of my options got exercised against me. It didn't matter to my broker, though, who only saw the margin math, rather than the cash and investment-grade bonds that were also in that account and hadn't seen their values evaporate. Unfortunately, my experience during that margin call revealed some very ugly realities about how Wall Street really works, particularly when it comes to retail investors. " He goes on set out "lessons learned." None of those lessons learned is "read your margin agreement before you trade." So he didn't really learn his lesson. Anyway, it's up to each person to do what is right for them, bearing in mind the risks. But know the risks. Trading with margin doesn't mean you'll be wiped out, but if you trade anything you need to know what you're doing and that is even more important if you've agreed to borrow money. The post here was to explain how to do the calculations for this popular and important financial tool as there is a lot of misinformation out there on the subject, make some suggestions on how you can use it as a part of your overall portfolio, and give my opinions on how one might do that. Whichever road or roads you take, good investing. For more details on the TFSA and its contribution rules, see https://www.reddit.com/CanadianInvestocomments/hcy9r9/how_the_tfsa_works/
I strongly recommend that you not cuck yourself by betting against Zillow $Z $ZG
OK you autistic fucks, let's gather around and hash this Zillow bullshit out once and for all. I have been employed as a data scientist at Zillow in Seattle for several years (and still am currently)...using an old throwaway here for obvious reasons. We're gonna start with why Zillow got into iBuying, bounce off why neither iBuying nor Corona is not even going to come CLOSE to killing us, and finish with why you should probably buy some fucking LEAPs. (This post is in response to some recent grade-A retard bullshit going around this sub about Zillow, namely: https://old.reddit.com/wallstreetbets/comments/gdbzyn/home_sales_to_fall_up_to_60/ and https://old.reddit.com/wallstreetbets/comments/gdkvqf/dd_from_5254_zillow_next_leg_down_oil_reminde) WHY ZILLOW OFFERS Everybody wants to be so quick to act as smart as fucking Jim Cramer and bash us for getting into iBuying a few years ago. "Oh you are a media company, why are you trying to fuck with physical assets." Anyone who said this is a moron who was not capable at seeing the writing on the wall regarding our "media" business. In short, it was plateauing, and we knew it. There is a hard ceiling for what agents are willing to pay for a lead, and when you multiply how many "online" agents there are by how many transactions they do per year, a fucking 6 year old could calculate what our topline revenue was going to cap out at. We did that calculation about 4 fucking years ago, and we were like "hey maybe we should do something else before our growth fucking goes to zero and everyone gives up on us as a tech company". In this scenario, iBuying is a natural evolutionary step for us to open up revenue growth. Importantly, it gives us access to a revenue stream up the experience and competency curve for home buyers. The vast majority of our ad revenue comes from connecting first-time home buyers to the first agent they have ever worked with. Once they develop that relationship, they are highly likely to use that agent again without us being able to trim another slice of revenue off. So we needed to get access to repeat buyers, and through the selling process is the best way. I will come back to how this is important later, but having something on your website to engage with repeat buyers is the key here to unlocking Zillow 2.0. WHY THE CORONA SHUTDOWN AND FALLING HOME VALUES OF ZO-OWNED HOMES IS NOT GOING TO KILL US ZO is financially engineered to be impossible to kill our parent company (Zillow Group). I know amped242424, Matth3wlim, and expander2 think they are the HOT SHIT for having the 3rd-grade-level ability to read the "Total Liabilities" line on a balance sheet, but they obviously know nothing about real financing for a competent company. If you are having trouble wrapping your brain about how this works, why don't you fucking start by googling "nonrecourse debt" and come back to the table when you understand. Basically, the loans that we took out for these properties are contained inside special-purpose financing vehicles that are tied ONLY to the underlying homes. If we wake up tomorrow and decided that holding all these properties was going to fuck us, we could walk away from every single home we own and tell our creditors to shove those houses up their collective assholes. These facilities were designed this way ON FUCKING PURPOSE FOR EXACTLY THIS KIND OF FUCKING DOOMSDAY SCENARIO because we have a wicked smaht group of finance people and executives. We also have a gigantic pile of cash that we are sitting on, mostly from a set of financing that our previous CEO (rockstar Spencer "S-Money" Rascoff) got nailed down right before we put ZO into hyperdrive. This cash came from a combination of selling new stock and new convertible bonds. Most of you fucking autists are only capable of comprehending dumbassery like you see over at $TSLA, so you see convertible bond and you think "well if the stock isn't >420.69 the bond holders will just demand the money back instead" but you would be so so so fucking wrong. Unlike every other death-cult-tech-company bond out there, this conversion is at OUR option, not the note holders. So if we blow all our cash on hookers before the note comes due, we just run the Xerox machine for a couple hours and hand out some newly minted common shares. Again, all this information is available to you if you fucking read our SEC filings and investor reports instead of just skimming the Company Statistics page on Yahoo Finance. So we had to pause buying ZO houses for the 'Rona...who gives a fuck? Unlike oPenDoOr and oFFerPad, we have a cash-flow-positive media business that is continuing to hum along quite nicely in the background. We aren't slaves to the VC cycle where if you haven't shown 100% revenue growth in 18 months, you can't raise your next round, and are fucked because you aren't cash flow positive. (And lets be absolutely crystal clear...nobody gives a FUCK if you are profitable or not...CASH IS KING and if you are cash flow positive as a tech company then you never have to raise another round of financing ever again..........OD and OP are not cash flow postive: get shrecked assholes, and your investors with you. Especially Keith Rabois. Fuck that guy.) WHY ZO IS GOING TO TAKE Z/ZG FROM ~40/share TO THE FUCKING MOON I told you I would come back to why ZO is important: for its ability to engage repeat buyers. So lets fucking go. For a home owner who wants to buy another house, selling a home FUCKING SUCKS ASS, and experienced sellers know this. ESPECIALLY when you have to sell your starter home to a first time buyer; I cannot stress enough how much of a PAIN IN THE FUCKING ASS it is to sell a house to a fucking first time home buyer. They are LITERALLY THE FUCKING WORST PEOPLE IN THE UNIVERSE, wanting everything in the world on this starter house to be spic and span. Like, fucking learn to repaint a room, you fucking children. Let me summarize a typical ZO customer: "This house is worth 100k more than I paid for it...I think I would give up 20k of that to not have to deal with the WHINY ASS CHILDREN [and their shitty agents...who are always 55+ Karens with fucking Comic Sans in their email signature and who STILL haven't figured out how to use e-signature software yet, it's fucking 2020 bitch, get with it] who want to buy it." So we have someone who has significant motivation to sell asking us what the zero-hassle selling price is for their house. I am sure that even among the special group of retards we have assembled here, it will not surprise you to learn than >90% of people who initially press the sell to Zillow button on our site see our renovation-adjusted lowball offer and tell us to fuck off. HOWEVER, we have now had an opportunity (which is a parallel part of the ZO evaluation process) to have a conventional real estate agent present a comparative market analysis to this highly motivated seller, and this agent has already agreed to pay us a significant referral fee if the seller ends up listing and selling in the open market instead. If you are not educated on the real estate industry (LOL of course you aren't you fucking retard, you are 5 paragraphs deep in some rando's post on WSB) then you don't know how much that lead is worth...so I'll tell you. On a 200k house, an industry standard value for a consummated seller lead is ~$2k. (We do not charge even CLOSE to this yet, b/c ZO is still under construction.) Keep in mind that we have had to do almost NO WORK to get this lead into our funnel. Unlike Opendoor or Offerpad or PimpMyHouseUP or whatever flashy VC-funded iBuyer is in vogue this week--who has to spend GOBS AND GOBS of money on broad spectrum media to get sellers on their site and into their funnel--Zillow has FUCKING TENS OF MILLIONS OF HOME-OWNING VISITORS A MONTH on our site already, because we have already built a monster consumer media machine. So eventually we can pass off that seller lead WHICH WE PAID NOTHING FOR to an agent for several thousand dollars in pure ">90% gross margin like only a Software Company can do" fashion. But wait, what if Susan (the seller) really wants out now, and is willing to pay a fee (usually the difference nets out to 300 basis points of her home value, $400k house this is ~$12k) for a service (not having to deal with any listing shenanigans, she picks a closing date and we show up with cash) so that she move on with her life and into her new house? Remember, these are REPEAT home BUYERS...they have to go somewhere after they sell. Then ZO is there, with certainty and cash. And (and this is the BIG and, the ABSOLUTE biggest of ands, the FUCKING AND YOU HAVE BEEN WAITING FOR) we are right there with ASSOCIATED HOME AND MOVING RELATED SERVICES LIKE A MORTGAGE. DID YOU FORGET THAT ZILLOW BOUGHT A MORTGAGE COMPANY? Of course, you fucking never knew in the first place, because you never actually read any of our SEC filings, we established that earlier. It has definitely taken longer than we anticipated to modernize, but eventually we will be offering best-in-class incentives to use our mortgages and associated services, which will allow us to capture HUNDREDS OF ADDITIONAL BASIS POINTS per loan from sellers who want us to streamline the whole transaction for them. "Oh if I sell to ZO and use a Zillow Mortgage to buy my next house, they will give me $4k in credits to closing costs? And I never have to deal with a buyer ever? DONE." And we get to do all of the above without building out any significant new ad spend or marketing funnels, just by ADDING A BUTTON TO OUR WEBSITE. I mean, the button has to WORK, for like a couple thousand people a month, but that's just an implementation detail. ZO is going to unlock growth that is orders of magnitude larger than our current "media business" and allow us to get our fingers into all kinds of valuable parts of the transaction that we didn't have access to before. So, TL:DR: Zillow's core ad business was almost at its wits end. Getting into iBuying was inevitable. ZO debt is non-recourse and even crashing home prices due to the 'Rona cannot kill us. If we don't die, we win, because we now will engulf seller leads and moving-related services in the parts of the industry that we did not have access to before. As a Zillow Group employee, I am prohibited from trading options, or transacting our stock outside of quarterly vesting windows. However, I do have the opportunity every year of receiving my incentive grant of Zillow shares in options instead of RSUs. And as of this year, I am now the proud holder of what are essentially Z $48c jan'2030 options, at 3x my normal allotment of shares. So make your own decisions, but I would not recommend betting against us.
What is yield farming? Most broadly, it means getting some benefit for providing capital, usually in the form of tokens. Currently, there are three major different schemes:
Staked funds aren't utilized in any way and tokens are distributed proportionally to what's staked (may be dai, weth, ycrv, or other tokens). Token price risk: zero. Token accrues, but even if it falls to zero you lose nothing. Smart contract/protocol risk: depends on the staking contract, usually low to zero. Contracts are usually simple modification of the first contract used by yearn (taken from synthetix), making analysis easy by only looking for differences. APR: may start high, but usually collapses fast to relatively low values as funds pour in.
Providing liquidity in trading pools. Tokens are gained in return for providing liquidity for requested tokens on uniswap, balancer, curve, mooniswap. Token price risk: medium to high, depends on pool weights. See these two articles for details on how liquidity providing works: Uniswap - pool weight is always 50%/50% Balancer - arbitrary pool weights, down to 2% for one token. Can be multitoken, not just two. Smart contract security risk: medium to high. In addition to checking the (usually simple) staking contract, requires security analysis of the token contract. If it's possible to mint a very large amount of token, or someone has a hidden enormous stash, the attacker could clean the pool by dumping them at once. I'm aware of one scam called "YYFI" that did this - you can see the attacker successively getting DAI from the balancer pool. Fortunately for the victims, he wasn't very competent and did everything manually, giving time for people to withdraw. A more competent attacker would automate the pool cleaning process in a smart contract. APR: usually very high - upper three digits or four. It's rarely realized APR because it's calculated assuming that token price stays constant. If you think the token being distributed is undervalued definitely the best option to farm.
Depositing and borrowing funds for defi. Currently utilized by compound and cream (a compound clone). Users get rewarded with tokens for lending and borrowing tokens. Token price risk: zero. Security risk: the most complex to analyze option of all, although Compound itself is definitely the safest defi dapp on ethereum.
Warning: gas fees are high. $10k is probably the minimum amount that makes sense for active manual farming, which still only makes sense for a more long-term farms like COMP or CRV, at the cost of not maximizing APR. I have spent over $3k in gas during the last two months by farming very actively. Below $100k, or if you don't want to spend a lot of time on this, it's probably best to deposit your funds into one of yearn vaults that yield farms for users. https://yearn.finance/vaults A partial list of current yield farms (feel free to comment with more farms! I can edit and add them to this list):
COMP farming, the oldest one (I think?). Relatively low returns (58% on DAI), safe, no price risk. Efficient way to farm is to supply and borrow the same asset (can be done via instadapp) up to maximum leverage possible (with some margin for interest payments).
YFV finance, one of the many clones of YFI. The seed pool is safe IF you withdraw before the staking period ends (see the security part). Current APR on stablecoins: 121%
CRV farming, providing liquidity to curve pools. Mostly safe - curve smart contracts tself are safe, but keep in mind if one of tokens in the pool collapses (renBTC is probably the riskiest) other tokens are going to get drained. You can see the current APR on https://dao.curve.fi/mintegauges. As of now, the highest APR is for compound pool - 105.27%. It's varying and there's complicated game with CRV voting that impacts it.
Zombie, meme token. Current APR is abysmal (33.5%) but token may unexpectedly pump, increasing it. There's a smart contract bug that, as long as rewardDistribution and owner aren't set to zero, potentially allows rewardDistribution to lock all staked funds (not steal). Makes zero sense as of today.
Analyzing security. Yield farms come and go. The key to earning high returns is to be agile and to jump fast into new farms, which requires manual analysis of security. Of course it's possible to yolo in without any analysis, but I don't recommend it. I'm going to show an example on two recent farming contracts (of the first type - funds just sit in contracts). Original yearn staking contract. GRAP staking contract. Let's load two codes into a text diff tool, like this site. What interests us on the code level are changes relating to the withdrawal capability, which in the original code are limited to the withdraw() function. We can see that the only substantial change is the addition of the checkStart modifier which prevents both deposits and withdrawals if it's too early. As startime is set directly in source code and can't be modified anywhere, that change is safe - if it doesn't throw on deposit it's not going to throw on withdraw. The next step is switch to the 'read contract' tab on etherscan and look at two variables: owner and rewardDistribution. In Grap's case, they lead to a timelock contract that requires all changes to wait for at least 24.5 hours - which makes any fund lockup extremely unlikely. At worst, we only have to look at the rewardDistribution contract once a day to see if there's any pending change. GRAP farming is now finished with no security incidents. Second example: YFV. This one is still active. Contract link. After comparing them we can see that changes are much more extensive. The withdrawal function also has the checkStart modifier, but that part is fine (ctrl-f to check if starttime can be modified somewhere else - it can't). What's the problem is the checkNextEpoch modifier. There's a lot of things there and three external contract calls (mint calls). If anything in there throws, withdrawal would become impossible. Dangerous. However, that only happens after the staking period ends, so withdrawing before block.timestamp >= periodFinish is relatively safe. Another check is to look at the owner and rewardDistribution variables. Owner is set to zero, but where's rewardDistribution? Unfortunately, contrary to GRAP, it's private. It's possible to read it with the getStorageAt web3 api (although finding the index is more work - it's 3). However, the team has provided a link to the transaction in which they set rewardDistribution to 0 so it's fine. In conclusion, as long as you don't hold the funds after the locking period ended there's no security risk here. The current period ends on Tue Sep 1 14:02:29 2020, UTC.
In Final Fantasy XIV, the ability to obtain the highest level sellable body piece, the Ornate Neo-Ishgardian Gear, is directly tied to the ability to complete Wondrous Tails, a weekly log where players attempt to complete nine out of a set of twelve challenges. Each challenge results in a "stamp" being placed on a 4x4 grid, with increased rewards being offered for each time the player creates a complete horizontal, vertical, or diagional line with four stamps. Ornate Neo-Ishgardian Gear is offered as an option when players connect three lines, the maximum line total resulting from nine stamps on the grid. There have been many writings discussing Wondrous Tails probabilities. This writing advanced upon those before it by revisiting the probability of obtaining three lines simultaneously but then follows by looking into the opportunity costs of doing so, the price of the resulting Ornate Neo-Ishgardian Gear, and the benefits offered by its sale and consumption.
Table of Contents
Probability of Success
Probability of Success
Defining the liklihood of lining up three rows in Wondrous Tails is multi-step process. There are nine "stamps" which are awarded and subsequently placed on a 4x4 grid. The liklihood of putting a stamp in the correct place requires an examination into the total number of obtainable combinations as well as the total number of winning combinations. It is easier to explain the process by highlighting what Wondrous Tails is not. We will contrast Wondrous Tails with another Final Fantasy XIV staple, the Jumbo Cactpot. The cactpot requires the player to select four numbers, each one being 0-9, as part of a lottery announced every Saturday. Because there are ten possible numbers for each selection, and four numbers to choose, the chance of winning the cacpot can be expressed as: 1 / n^k or 1 / 10^4 = .0001 Given that you are allowed to purchase three cactpot tickets per week, your odds are actually: 3 / 10000 or .0003 In the case of the cactpot, the values are independent; they can repeat. If you choose a nine as your first number, you are not prohibited from choosing nine as your second number (as opposed to many real-life lotteries that only allow a number to be chosen once). Likewise, if the winning numbers of this week’s cactpot are “4321”, there is nothing prohibiting next week’s numbers from being “4321” as well, though the chances of the winning numbers being the same two weeks in a row are diminutively small. 1 / 10000^2 or 1/ 100000000 All of this is to say that the variables are able to repeat. In the case of Wondrous Tails, they cannot. The variables in Wondrous Tails (or WT) are dependent. On a 4x4 grid, if one space is occupied by a token, then another space cannot simultaneously be occupied by another token. Using 1 / n^k is no longer applicable. Using diminishing numbers such as (1 / n^k) * (1 / (n-1)^k) * (1 / (n-2)^k) … to model a space removed after each stamp would also be incomplete because it fails to account for the fact that there are twelve spaces on the board but only nine stamps. The solution is found in combinatorics, specifically the solution is found as a k-combination which, itself, is equal to the binomial coefficient. The formula for a k-combination is:
C(n,k) = n! / k!(n-k)
where there are k distinct objects and n samples. Plugging the numbers for WT in, we are given:
There are 11,440 total stamp arrangements in WT. As with the cactpot, there are multiple opportunities for success with WT. Though you only receive one grid per week, the only requirement is that three rows are made; their orientation, position, or shape is irrelevant. A winning shape on a 4x4 grid can be rotated 90, 180, and 270 degrees as well as mirrored to produce multiple placements of the same shape.. If we examine all of the ways to create three 4-point lines with nine points on a 4x4 grid, we are left with 24 solutions. 3 line wins in Wondrous Tails source Because we have 24 chances for success, our odds are then: 24 / 11440 ≈ 0.21% The pressing question now is, "is it even worth it?"
The first value to consider in this question is the time needed to complete a series of WT. Individual times will differ, but I will use my own for purposes of demonstration. I look for one box that I can unsync repeatedly with second chances (if you run your dailies and/or have newer people in your FC that you help, you should have a problem with too many second chance points in any given week). On any given book, the top row is reserved for Main Scenario dungeons of various levels. This leaves 4x3 slots for various trails, raids, Deep Dungeons, etc. to populate. I will not go into calculating averages for this population, but I can usually guarantee an ARR extreme dungeon that I can unsync quickly. Going for Garuda, King Moggle Mog, or Ramuh are in the 1:30 range for me (and you could surely optimize that number down more). On the worst end, there may be no trials and I end up running Sastasha at 4:45 (this is rare though). I’ll stick with my 90-second number for now. We now have the assumption that I will run WT nine times at 90 seconds per run. Not counting acquisition, turn in, and duty selection, I spend 810 seconds running WT content (or 13.5 minutes). Given that I have a 0.21% chance of achieving three rows on any given week, I will, on average, take 100 / .21 ≈ 476.19 weeks to reach my goal and I will spend 13.5 * 479.19 = 6,428.57 minutes doing so.
These numbers are nice to have, but they still don’t answer the question “is it even worth it?” Provided you’re on FFXIV, and you have 13.5 minutes each week, what’s to say you shouldn’t? In order to find that number, the opportunity cost of pursing WT must be determined. The opportunity cost of any activity is the sum of what other activities are forgone by making that choice. If a person has a dollar to spend on a candy bar or soda, if they choose the soda then the candy bar is their opportunity cost (if they're required to spend that dollar). For the purposes of this evaluation, we’ll ignore estimating intagibles, sunk costs, etc. To determine one’s own opportunity cost, evaluate how much gil could be made on other activities in the same time. For analysis purposes, I will once again use my own results; If I am concentrating on money-making, I can earn around 300,000 on average in an hour. This breaks down into about:
10 minutes of finding a sample of items on the marketboard,
25 minutes of gathering,
15 minutes of crafting,
5 minutes of listing, and
5 minutes of managing the listing against the mouth-breathing asshats that undersell me by a single gil (you know who you are).
Given that 13.5 minutes is 22.5% of an hour, we’ll reduce my earnings per 13.5 minutes to 300000 * .225 = 67,500. It’s not a perfect conversion, but I’ve never approximated my money-making capabilities per 13.5-minute period. Foregoing the 67,500 gil that I could make each week with the 479.19 weeks that I would need to obtain three rows, I find that my opportunity cost is 67500 * 479.19 = 32,345,325. A single piece of Ornate Neo-Ishgardian gear should be a little over 32 million gil. So, we now have an approximation of the item's value; the final question is, “how much can I actually get for it?”
How Much is the Item Worth?
An Ornate Neo-Ishgardian Gear piece allows five materia slots to be melded to it by default. Without the ornate piece, five slots can still be melded, but the success rate becomes lower for each piece beyond the allowable slots. Further, as the standard Neo-Ishgardian Gear has only two slots, any slot beyond the third must be of a material quality one less than the preceding slots. On an ornate piece, all five slots can be socketed with the highest materia available for that item level. This leaves us with two variables to examine: the average cost of creating a non-ornate piece with max melds and the stat difference between an ornate piece with max melds and a non-ornate piece with max melds. The average price for an Ornate Neo-Ishgardian Gear piece is 6,464,286 on Malboro as of the time of this writing (August 8, 2020). This is far below the 32,345,325 that we value the item at when contrasted against its cost to produce; this also includes zero markup, or profit, for our time. This low-pricing phenomenon might stem from lack of information regarding the item’s estimated value (unlikely in an entire population) or from the notion that sellers adjust their prices until they find the prevailing rate at which buyers will purchase their goods (that's economics, baby). In this case, it would be a closed-book matter to say that acquiring an item at 6,464,286 / 32,345,325 = 20% of its real value is a steal as a buyer (and ruin as a seller)… but, of course, this assertion also must be challenged. Specifically, the question becomes, “how much benefit will I get from consuming this item?”
The average price for a standard Neo-Ishgardian Gear piece is 73,036 on Malboro at the time of this writing (August 8, 2020). The average price for the “big three” materias (Savage Aim, Savage Might, Heaven’s Eye VIII) is 14,442. The average price for the comparable Materia VII counterparts is 1,980. Melding a Neo-Ishgardian piece with 3x VIII materia and 2x VII materia will product the following success rates:
Successful Meld Chance
Taking averages for each success, here is the estimated gil cost to overmeld the gear to five slots:
Successful Meld Chance
Avg. No. of Attempts
Total Cost for Slot
The performance differences must be taken into consideration as well. Each of the big three provide +60 of their respective stat at the 8th level, and +20 of their stat at the 7th level so the difference is +300 vs + 220 respectively. The costs of purchase and meld each piece is as follows:
The stat bonus of the standard gear is 1,823 for tanks and non-magical DPS and 1,767 for magical DPS and healers. We’ll average it to 1801. The total difference of power between these gears is as follows:
Compared with Price
% Price Increase
% Performance Increase
For a 2,745.6% increase in price, you can take home a 4.95% gain in performance for this item. So, what can be said to the question of “how much benefit will I get from this item?” Only that “it depends”... Most players will not realize a benefit from the increased gear. I would model that increase as the time saved by increased damaged output as a function of gil-making potential, i.e. “How much time will I save by doing extra damage, getting dungeon drops, and selling them for additional gil?” If that amount is greater than 6,536,496-238,072 = 6,298,424, then you should, of course, make the purchase.
Given the probability of obtaining three rows in WT versus the opportunity cost of doing so, it is not worth the pursuit strictly as a method of obtaining Ornate Neo-Ishgardian Gear to sell. Secondary rewards and benefits may outrank that decision for you. Given the percentage state increase versus the percentage price increase, there are very few players that would recuperate their investment in Ornate Neo-Ishgardian Gear versus overmelded HQ Neo-Ishgardian Gear.
If you've made it this far, you've probably had a few instances where you've thought, "but what about ..." and you're probably onto something. In any case, there are a lot of assumptions and magic numbers at play. Namely, this estimate is predicated upon my own performance and deals only with gil-making. For this reason, I have detailed my calculations so that, if you were so inclined, you could channel your inner healer and adjust. As I was writing this section, I realized that I could just quickly make a calculator inside of the notebook link here, so I have, in fact, adjusted for you. (did I mention that I main WHM?) I've taken the time to list out a few more assumptions, limitations, and thoughts that I didn't have time to work out; feel free to create your own weights and formulas! :D
Statistical outliers: provided you can get three rows ahead of the likelihood of 0.21%, how much time is worth it? At which attempt does profit move to breakeven? A good question, but this document is already too long.
Only Malboro was sampled: I'm lazy. Well, that's not true; I don't like mindless tedium. I don't have the patience to log every transaction on every world over days. If mining MB data wasn't against ToS, I would've aggregated data over worlds and times.
Intangible benefits: What if having the extra 80 points from the ornate meld is what helps you get a first world clear or join a static where you derive a lot of enjoyment? What if you care about prestige? There are only a handful of these things floating around; it certainly sends a wealth statement! In that case, assign values to those intangibles if you want to attempt a comparison. Make sure to factor in your opportunity costs foregone by spending that gil.
I undercut by one gil but I'm not an asshat: you can lie to yourself but not me.
I'm filthy rich and spending millions of gil is no problem, no matter the reason: your fuction of gil and time are probably much higher than mine and would increase the value of the item considerably from a seller standpoint; there are probably few situations where pursuing WT for money would be worth your while. If your were a buyer, then you might arrive at a point where your opportunity costs of purchasing are so low that you derive value from consumption. Most importantly, if you are that rich, are you hiring? I can do lots of things.
Spending the time making gil rather than completing WT would likely not be a one-for-one tradeoff, money-wise. Every item has an aggregate demand curve and, if you spent 6,428 minutes flooding the market with a good (or an array of goods), you will affect supply. Provided supply exceeds demand at a given price point, the price will fall until equilbrium is reached (and marginal revenue equals zero and long-term economic profit equals zero and all those other perfectly-competitive assumptions because people are hard). Pursuing WT is a chance to diversify and sell something very much in demand: Sure, no question about that. If you're hitting the market so hard that a 0.21% success chance represents a worthwhile venture for you, then we are in different places in our game experience.
I enjoy WT and that's got to count for something, right? Me too and that's why I do them. I play a video game to have fun and that's enough of a reason to fill in your stickers if that's what you want to do. This writing deals with efficiencies and probabilities, not life advice (except for the one-gil thing... going on the record pretty strongly about that one).
If I'm already doing these runs as part of my dailies, helping FC members, etc., then doesn't that affect the outcome: yeah, definitely. Your opportunity cost is much lower because you're not trading off time that you would otherwise use to optimize making money.
Using shuffle increases probability and reduces opportunity costs. By how much is a function of how easy it is to obtain second chances for you and how many repeats you use to complete your journal.
What's the opposite of a shitpost? I'm asking for a friend
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Arbitrage opportunities in options - how options are priced, explained in layman's terms - without resorting to the BS pricing model
Alright retards, I've been laid off at work due to beervirus and I've been eyeing and toying with the idea to get back into options trading. I'm writing this post to raise the bar for discussion on this sub, I'm tired of seeing just memes. We'll never match WSB unless there is a healthy mix of dankass memes and geniass discussions. Now, when it comes to options, I am completely self-taught (completely from first principles, back in 2008, before you autists came up with the idea of watching videos on youtube). Since I am completely self-taught, my perspective will be different from the people who learnt this stuff while studying MBA/finance courses/NSE accredited investing courses. So if what I'm saying is different from what you've heard from the dude who swindled you of 20K for two days of options education or your gay BF's live-in partner, remember when it comes to maths, there are many ways of approaching a problem, ultimately, all are the same - profit means account balance goes up, loss means a loss post on ISB goes up. Now, I'm assuming that you understand how options work. If not, I suggest heading to Zerodha's Varsity to read up on options. If you're too lazy for this, get your micro-dick outta options, this is a man's game, surprise butt-sex awaits amateurs. I'm also assuming that you've come to realise that the sustainable way to make money in options is to write options. Unless you've got Trump or Ambani on speed dial to get access to news before it becomes news, YOLOing whatever rent money you have on buying options will blow up your account, eventually. Writing options also means the possibility of account balance going tits up is a real possibility. You gotta, gotta, gotta measure and manage your risk. You can do this only when you understand options as well as your dick. Towards this, I intend to put up a bunch of posts (depending on many of you shit heads are still reading at this point) that comment about little things that are more of 'wisdom' than 'education'. The example below talks about currency derivatives. Why currency? Read below:
Lower margin needed. I can short a CE/PE contract with only Rs.2000, unlike the >Rs. 70,000 for index contracts. You get to learn, play and wisen up with an order of magnitude less money than with Nifty or Banknifty contracts.
More stable underlying. When you're shorting contracts, the last thing you want is the underlying asset going crazy like a broncho during rodeo.
Sooner or later, you end up acquiring a more balanced education on economics as a whole, rather than the shit fest that goes on in the local circles.
The more contracts you can short, the more strategies you can pursue
Decent hedging is possible without throwing away all of your potential profits
Lesser stress (anybody else going through premature hairloss or is it just me?) because of points outlined above.
Alright, today, I'm going point how the put-call parity works and by extension, show proof for 'efficient markets' by pointing out how opportunities for arbitrage is pretty much non existent, so you guys can cool it with the whole 'market manipulators' knee jerk reaction. Alright, to start off, here's the current spot rate of the USD-INR pair: https://preview.redd.it/qup28ay567j51.jpg?width=452&format=pjpg&auto=webp&s=b79ef1a3480e5cbafa42547143c651397ec57f13 Here's today's USD-INR futures closing rate for Sep expiry: https://preview.redd.it/krghirc677j51.jpg?width=511&format=pjpg&auto=webp&s=60d52b785baa8a1cd240d0df7949a48c8391ba2d The difference between spot and futures rates is due to differences in what is construed as 'risk-free' interest rates in the US and in India. Check out this video if you want to understand why the Sep futures is trading at a premium of 27 paisa to the spot rate. Alright, so the deal is, if you buy 1 futures contract @ 74.49, unless the USDINR exchange rate rises by 27 paisa at the end of Sep (i.e. a spot rate of 74.49) you won't make a profit (ignoring brokerage and stuff). If the exchange rate were to remain the same without any change, you stand to lose (0.27 * 1000, currency derivatives have a lot size of 1000) Rs. 270 per lot. Even worse if the rupee were to appreciate (i.e. exchange spot rate goes down). Now bear with me if the next few paras are exceedingly boorish, I need to spoon feed people who aren't used to currency derivatives. My strategies are mostly aimed at playing a more risk balanced play, something that yields consistent returns which can be compounded. 10% profit compounded monthly gives 314% growth per year, 3.5% profit compounded weekly gives ~600% growth per year. Given how the USDINR rate is crashing, one way to profit would be to short a futures contract (duh!). The orange line indicates the current USDINR exchange rate As indicated above, if the exchange rate does nothing and remains as is till end of Sep, each lot of USDINR futures shorted yields about Rs. 250 in profit (for something that takes up Rs.3000 in margin, that's a >8% profit in return). Things look even better if the exchange rate were to fall further. The problem is that things heat up quickly if the exchange rate were to go up. Ideally we would want to hedge against it (which also reduces the margin needed drastically). One way to hedge it would be to buy a at-the-money call (74.25CE @ rate of Rs. 0.555 -> Rs. 555 per lot (i.e 0.555*1000)). https://preview.redd.it/ze16kyphv7j51.jpg?width=588&format=pjpg&auto=webp&s=a3c2bba9fb314beff309671f03a013e69e08f4e0 Having purchased a call option, the P/L curve now looks like: The max loss is now limited to Rs. 315 The keen-eyed among you will recognise the above P/L curve as one that matches that of a put option. By shorting a futures contract and buying a call option (both with same expiry), we have created a synthetic put option that would have costed us Rs. 315 (0.315*1000) for one lot. Now, why go through all of this hassle if we can get the same returns by just buying a put option? Makes sense, as long as we can purchase the 74.25 strike put option at a price lesser than Rs. 0.315 (see above). Let's see what the put options are going for: Well, how about that... The market price of 74.25 puts are exactly the same price as our synthetic put. While the synthetic put came in at Rs. 0.315, the put costs another 0.005 extra to avoid the trouble of shorting a futures contract and buying a call at the same time. This is not by chance, big trading desks have algos (trading bots for the virgins here) that keep an eye out for price disparities. In this case, if someone were to be willing to pay more, the algos would compete amongst themselves to sell the puts at any price above 0.32. And if someone were to be willing to sell a put for less than 0.315, the algos would immediately buy. The price of the puts move in sync with the prices of the futures and call contracts. Conversely, we can create a synthetic call, and you will notice that the price of the synthetic call works out to be the same as the market price for the 74.25 strike call. We can also create a synthetic futures contract the same way. The prices of derivatives aren't decided willy-nilly. They are precisely calculated at all times, which forms the basis for the best bid/ask prices. There is no room left for someone to come in and make free money via arbitraging using synthetic contracts. If you found this insightful, and would like more of this sort of posts, let me know. Options when used properly, can be used to generate risk adjusted returns that are commensurate with the amount of risk you are taking. If you are YOLO-ing, sure, you can double or triple your money, because you can also lose 100% of your margin. Conversely, you can aim for small, steady returns and compound the crap out of them. Play the long game, don't be penny wise and pound foolish.
Good morning from the UK. It’s Wednesday 15th April. The fire that severely damaged Notre-Dame Cathedral in Paris caught fire 1 year ago today on April 15 2019, Holy Monday and by the time it was finally put out it had destroyed the building’s spire and most of the roof. The stone vaults survived mostly intact, as did most of the cathedral’s artwork and relics. Covid-19 has delayed reconstruction efforts at Notre-Dame de Paris because removal of the melted scaffolding on the cathedral’s roof (scheduled to begin March 23) cannot take place whilst the country remains under coronavirus measures. On Good Friday Archbishop Michel Aupetit of Paris venerated Notre Dame Cathedral’s relic of Christ’s crown of thorns from inside the badly damaged cathedral. The archbishop prayed: “Lord Jesus, a year ago, this cathedral in which we are, was burning, causing astonishment and a worldwide impetus for it to be rebuilt, restored. Today we are in this half-collapsed cathedral to say that life is still there. The whole world is struck down by a pandemic that spreads death and paralyzes us. This crown of thorns was saved on the evening of the fire by the firefighters. It is the sign of what you suffered from the derision of men. But it is also the magnificent sign that tells us that you are joining us at the height of our suffering, that we are not alone and that you are with us always,” Aupetit said. Tonight though the Cathedral’s 339 year old 13 tonne bourdon bell (which is called Emmanuel and tuned to F#) will ring out to applaud the hard work of France’s medical workers engaged in the fight against Covid-19 (Source Liberation, in French and the Catholic News Agency). How much our lives can change in just one year.
Virus news in depth
Trump suspends funding of the world health organisation - the biggest Covid-19 story this morning is the decision by US President Donald Trump to suspend funding of the World Health Organisation pending a review. "Had the WHO done its job to get medical experts into China to objectively assess the situation on the ground and to call out China's lack of transparency, the outbreak could have been contained at its source with very little death," Trump said. US Secretary of State Mike Pompeo stated that the WHO "declined to call this a pandemic for an awfully long time because frankly the Chinese Communist Party didn't want that to happen." CNN reports that the US funds $400 million to $500 million to the WHO each year, Trump said, noting that China "contributes roughly $40 million." Another article from CNN points out that the UK announced an additional £65 million contribution to the WHO only a few days ago. Reaction to Trump's decision has been swift. Al Jazeera quotes Chinese Foreign Ministry spokesman Zhao Lijian during a daily briefing on the situation with the pandemic saying that the pandemic was at a critical stage and that the US' decision would affect all countries of the world. The news agency also quotes Dr Patrice Harris, president of the American Medical Association, who called it "a dangerous step in the wrong direction that will not make defeating COVID-19 easier". Bill Gates has tweeted “Halting funding for the World Health Organization during a world health crisis is as dangerous as it sounds. Their work is slowing the spread of COVID-19 and if that work is stopped no other organization can replace them. The world needs u/WHO now more than ever”. The Irish foreign minister Simon Coveney tweeted “This is indefensible decision, in midst of global pandemic. So many vulnerable populations rely on @WHO - deliberately undermining funding & trust now is shocking. Now is a time for global leadership & unity to save lives, not division and blame!” whilst Richard Horton, the editor-in-chief of the influential Lancet medical journal, wrote that Trump’s decision was “a crime against humanity … Every scientist, every health worker, every citizen must resist and rebel against this appalling betrayal of global solidarity”. Chile counts those who died of coronavirus as recovered because they're 'no longer contagious,' health minister says - News Week reports that cases of the novel coronavirus in Chile have climbed past 7,500, including 82 deaths, while over 2,300 have recovered from infection as of Tuesday, according to data from Johns Hopkins University but coronavirus patients in Chile who have died are being counted among the country's recovered population because they are "no longer contagious," Chile's Health Minister Jaime Mañalich said this week. "We have 898 patients who are no longer contagious, who are not a source of contagion for others and we include them as recovered. These are the people who have completed 14 days of diagnosis or who unfortunately have passed away," Mañalich announced at a press conference. It is unknown when Chile began including the dead among the number of people who have recovered. But the calculation has reportedly been adopted following validation by international health experts, the government claims. (Personal note: I just checked, as of 9am UK time Johns Hopkins has Chile down as 7912 cases with 92 deaths. Hat tip tochomponthebitfor this rather odd story).
Australia has jailed its first person for breaching isolation laws. The 35-year-old man will spend one month in jail after he repeatedly snuck out of a quarantine hotel to visit his girlfriend.
Japan also has PPE shortage problems; the Japanese city of Osaka has issued an urgent plea for citizens to donate plastic raincoats to hospitals running short of protective gear for staff treating coronavirus patients, with some doctors already having to resort to wearing garbage bags. Japanese medical workers have been warning for weeks that the medical system could soon be pushed to the brink, with nurses telling Reuters they were unsure whether their hospitals had enough advanced PPE such as N95 masks and plastic gowns. Some in Tokyo said they had been told to reuse masks.
Kandahar province has gone into full lockdown on Wednesday morning as Afghanistan reported its second biggest daily rise of new coronavirus cases in a week, triggered by a surge of infections in Kabul. The total number of identified infections is nearing 800.
India will allow industries located in the countryside to reopen next week, as well as resuming farm activities, to reduce the pain for millions of people hit by a lengthy shutdown in its coronavirus battle, the government said on Wednesday. Millions of people have been thrown out of work across south Asia since the lockdowns began last month, and growing anger in some areas was reflected in the commercial capital of Mumbai on Tuesday, when hundreds mobbed a train station demanding transport home.
Crowds and long lines have formed in the Moscow metro today as the city’s new electronic permission system may have backfired by trapping thousands of people at bottlenecks on public transport. Here’s a picture of the situation this morning.
In a first step towards easing coronavirus-related restrictions, Finland will lift roadblocks in the region around Helsinki on Wednesday, the prime minister, Sanna Marin, said. Travel restrictions to and from Uusimaa, the capital region, to the rest of the country began on 28 March, to prevent people from spreading the virus to other parts of the country. Marin said the government no longer had legal grounds to continue the lockdown, considering it an extreme measure to restrict people’s freedom of movement so strictly.
Germany’s government will extend restrictions on movement introduced last month to slow the spread of the coronavirus until at least 3 May, Handelsblatt business daily reported on Wednesday, citing the dpa news agency.
A German zoo has said it may have to feed some of its animals to others as it runs low on funds amid the coronavirus lockdown. Neumünster Zoo’s Verena Kaspari told Die Welt: If it comes to it, I’ll have to euthanise animals, rather than let them starve. At the worst, we would have to feed some of the animals to others. Kaspari said it would be an “unpleasant” last resort, but the zoo is not covered by the state emergency fund for small businesses and the zoo’s loss of income this spring is estimated at about €175,000 (£152,400).
Police in Berlin broke up a large birthday gathering in the early hours of Monday that violated Germany's social distancing restrictions. A 16-year-old girl was celebrating with 31 other people at an apartment in the German capital's central Mitte neighborhood. The girl's mother had apparently rented the property especially for the occasion. (Deutsche World link)
Denmark began reopening schools on Wednesday after a month-long closure over the coronavirus, becoming the first country in Europe to do so. Nurseries, kindergartens and primary schools are reopening in about half of the municipalities and about 35% of Copenhagen’s schools. Some parents have opposed the reopening of schools, citing health concerns. A petition titled “My child is not a guinea pig” has garnered some 18,000 signatures.
The world will need more than one Covid-19 vaccine so drug companies must partner in the race to develop the weapons to fight the coronavirus, the GlaxoSmithKline chief executive officer, Emma Walmsley, said on Wednesday. GlaxoSmithKline Plc and Sanofi SA said on Tuesday they would develop a vaccine to fight the fast-spreading coronavirus. The drugmakers said they expect to start clinical trials for the vaccine in the second half of this year. If successful, the vaccine would be available in the second half of 2021.
Supply chain news in depth
Heathrow cargo flights rise 500% as airport restyles itself as ‘vital airbridge’ - The Guardian says that the number of cargo-only flights at Heathrow has surged to five times normal levels, with the airport now saying it is prioritising medical supplies as passenger travel grinds to a halt. Britain’s biggest airport expects passenger traffic expected to plunge by 90% in April, with remaining flights mainly limited to repatriating citizens stranded abroad during the coronavirus outbreak. Instead, the hub airport is restyling itself as a “vital airbridge” for supplies and medical essentials during the coronavirus crisis. The number of cargo-only flights has jumped significantly; Heathrow’s busiest day for cargo so far was on 31 March, when it handled 38 cargo flights in only one day (the airport usually deals with 47 cargo flights per week). In a related article, the Independent reports that whilst the UK’s East Midlands airport has experienced “only” a 54% drop in total air movements, it’s nevertheless experienced a 7.4% rise in cargo flights with the result that it’s now the tenth busiest airport in Europe putting it ahead of major hubs such as Rome, Munich and Madrid. (Personal note: I live close to East Midlands airport and have definitely noticed there’s still a fair bit of traffic coming and going; it helps that DHL Express have a decent presence there too). Global Airline Traffic Will Nearly Halve in 2020 - The Wall Street Journal reports that global airline traffic is expected to almost halve this year because of travel restrictions, with no recovery expected until the third quarter, according to an industry trade group. The International Air Transport Association forecast airlines would lose $314 billion in revenue this year, 25% more than its previous estimate as it incorporated more pessimistic assumptions about the hit to the global economy and the relaxation of travel restrictions. (Personal note: for contrast the drop in revenue for the global aviation industry after the 9/11 attacks was about $23bn according to anarticlein the Guardian; disruption in the industry from that event caused the bankruptcy of Swissair, Belgium's Sabena and Australia's Ansett whilst he American airlines United, US Airways, Northwest and Delta all filed for Chapter 11 bankruptcy protection from creditors). Amazon faces having its operations reduced to a bare minimum in France - a court has ruled the e-commerce giant can deliver only essential goods while the company evaluates its workers’ risk of coronavirus exposure says today’s Guardian live blog (link above). The court in Nanterre, outside Paris, said Amazon France had “failed to recognise its obligations regarding the security and health of its workers,” according to a ruling seen by AFP. While carrying out the health evaluation, Amazon can prepare and deliver only “food, hygiene and medical products,” the court said. The injunction must be carried out within 24 hours, or Amazon France could face fines of €1m (£873,500) per day. Amazon has one month to carry out the evaluation. Concern has grown over the safety precautions taken by the company; dozens of workers protested in the United States last month. Pandemic breaks Vietnam supply chains; loss of exports may be permanent - The Loadstar reports that Freight forwarders in Vietnam have seen cargo volumes down by up to 70% on pre-coronavirus levels, as their key markets remain under lockdown. According to Ho Chi Minh City-based supply chain consultant CEL, the world has entered a consumer demand crisis which could permanently alter its supply chains. “As we speak, the American consumer is currently already reducing expenditure on shoes, phones, appliances, clothes, cars and tools, for example,” said CEL managing partner Julien Brun. “Most of which are made in Asia, and a large portion in Vietnam.” When the coronavirus pandemic started in Wuhan in January, the crisis was seen as a China-specific problem from a supply chain perspective, and prompted a frantic search for alternative production and transport capacity in Vietnam, Mr Brun explained. Vietnam’s own reliance on China for raw materials and components quickly materialised, however, resulting in the start of delays and production challenges. “In a survey conducted by CEL at the end of March, 83% of companies in the physical value chain in Vietnam, including retailers, transporters, traders and manufacturers, had suffered supply issues over the past two months,” he said. “And 47% of them had issues specifically with Chinese suppliers, a large majority of which was over missing raw materials.” Mr Brun said manufacturers and retailers’ current sales volumes were too low to absorb fixed costs, leaving thousands of businesses with negative margins and thinning cash reserves.
Supply chain news in brief
The US Treasury has ordered Donald Trump’s name be printed on cheques to be sent to tens of millions of Americans affected by the coronavirus outbreak, a decision that will slow their delivery by several days, according to the Washington Post (link, not behind a paywall). Citing unnamed senior officials at the Internal Revenue Service (IRS), the Post reported the $1,200 cheques – being sent by the as part of a $2.3tn package enacted last month to cushion the economic blow from the pandemic – will “bear Trump’s name in the memo line, below a line that reads, ‘Economic Impact Payment’.” The Post said the “unprecedented decision” to include Trump’s name was announced to the IRS information technology team on Tuesday.
Share trading of Virgin Australia has been suspended at the airline’s request whilst it reviews financial restructuring options in a bid to avoid collapse. The halt comes after a previous halt last week where the airline announced it had requested a $1.4 billion loan from the Australian government. The airline also announced it was cutting all flights except for a single SYD-MEL (Sydney to Melbourne) return flight 6 days a week. Options that may be considered include existing creditors swapping debt for equity (i.e. creditors write off debt and are given shares instead), priority debt to new creditors (to encourage badly needed additional funds to come in from investors), restructuring or entering voluntary administration. (Source: Airlive.net)
Air Cargo News reports that Spice Jet (my favourite airline name of them all) is ramping up its cargo operation following the virus outbreak. On April 7, India-based SpiceJet operated the country’s first cargo-only passenger aircraft flight carrying vital medical supplies in the cabin. Since then, the airline has regularly used its Boeing 737 aircraft for cargo-only flights. SpiceJet has also recently operated special cargo flights to Abu Dhabi, Kuwait and other countries, to export local fresh fruits and vegetables and maintain supply chains. On April 9, SpiceXpress — SpiceJet’s dedicated cargo arm — operated a freighter flight on the Chennai-Singapore-Chennai route carrying critical medical equipment and other Covid-19 related medical supplies.
The LoadStar has reported that Air Canada has removed the seats on 3 of its 777’s to make more room for cargo. The aircraft are being converted by aircraft maintenance and cabin integration specialist Avianor, which will remove 422 passenger seats and designate cargo loading zones for lightweight boxes containing medical equipment, restrained with cargo nets.
U.S. carriers are asking the FAA to allow shipments in passenger cabins says Freightwaves. With a global shortage of air cargo space and extraordinary demand to move emergency medical supplies, some overseas passenger airlines are taking out the seats on aircraft to make more room for freight and U.S. airlines are asking the Federal Aviation Administration (FAA) for permission to fly cargo in the main deck where passengers normally sit, including the option of removing seats, an industry source familiar with the regulatory situation said. A decision on basic main-deck loading is expected very soon. FAA sign-off for more complex modifications could take a couple weeks longer, the person said, adding “the exact framework for seat loading under U.S. regulations is not yet fully elaborated.” Almost every domestic airline is interested in using the cabin for cargo in some form, according to the source.
Prologis Inc (which is one of the world’s largest logistics real estate investment trusts and has a lot of warehouses) has said 24% of its customers have inquired about rent releases and deferring payments in response to the COVID-19 pandemic, which has stunted demand for goods in many industries. On a business update call with analysts and investors earlier this week, the company said the release requests total 69 days of rent relief on 16.6% of the company’s portfolio. Prologis expects to grant deferrals in the form of a repayable loan to roughly one quarter of those that have sought relief. Management estimates the deferral loan amounts will equal 1% of the company’s gross annual rent. Of note, management said some of the inquiries have come from large, “financially sound” clients that are looking to take advantage of the current market in which some landlords are offering accommodative rent payment solutions. Freightwaves has more.
Amazon is going to start accepting all non-essential products to its warehouses again this week, a month after pausing those shipments says Business Insider. Amazon's spokesperson confirmed in an email to Business Insider that third-party sellers who use Amazon's warehouses to store their products will be able to resume sending in all non-essential items later this week. There will be limits to how many products per item the sellers can ship in, but the idea is to lift the restrictions imposed last month, the spokesperson said. "Later this week, we will allow more products into our fulfillment centers," Amazon's spokesperson said. "Products will be limited by quantity to enable us to continue prioritizing products and protecting employees, while also ensuring most selling partners can ship goods into our facilities." The change signals easing pressure on Amazon's supply chain that were caused by surging demand for essential products, like face masks and toilet paper, amid the coronavirus pandemic.
Good news section
99 year old world war 2 veteran Capt. Tom Moore has so far managed to raise £5m ($6.25m USD, €5.72m EUR) in donations to the NHS - the BBC says that Capt. Tom Moore is currently in the middle of completing 100 laps of his garden (25 metres in length) before his 100th birthday at the end of April. Mr Moore was born in Keighley, West Yorkshire and trained as a civil engineer before enlisting in the army for World War Two, rising to captain and serving in India and Burma. NHS Charities Together, which will benefit from the funds, said it was "truly inspired and humbled". Nearly 170,000 people from around the world have donated money to his fundraising page since it was set up last week. Mr Moore began raising funds to thank the "magnificent" NHS staff who helped him with treatment for cancer and a broken hip. If you’re interested in supporting him his fundraising page is here.
Calculate the rate of return in your cash or margin buy write positions. This calculator will automatically calculate the date of expiration, assuming the expiration date is on the third Friday of the month. Get covered writing trading recommendations by subscribing to The Option Strategist Newsletter. Inputs. Enter the following values: Understanding Margin - Buying Stock vs. Selling Options. Margin can be used in a couple of very different ways. First, you can buy stock on margin, or purchase more shares than you literally have the cash for. This is basically a loan from your broker (which your broker will charge you interest for).. You can't, however, purchase options on margin - call or puts - as options are non-marginable ... Some option strategies, such as covered calls and covered puts, have no margin requirement since the underlying stock is used as collateral. Traders must request options trading authorization when ... In this case, the maximum risk would be $400 per contract ([5-1] x 100). As a result, the trader would need to keep at least $400 in his margin account to cover the credit spread. Should both options finish out of the money, the return on margin would be 25% ($100 premium collected/$400 margin requirement). All figures are before commissions. Free margin = Equity – Margin. If you don’t open any position in the trading market, then your equity and margin amount will be the same. It will be helpful for you to understand precisely if I give you an example. Suppose, you have $600 in your margin account and your opened position amount is $300. So, the rest of $300 is your Free Margin.
How To Check MARGINS for Options Exposure, Span, Premium P R Sundar
www.wyattresearch.com. Bill Poulos Presents: Call Options & Put Options Explained In 8 Minutes (Options For Beginners) - Duration: 7:56. Profits Run 2,043,490 views Margin requirements in Options Trading - Let's talk about options by THE OPTION SCHOOL There have been instances when traders are charged different margins i... How To Check MARGINS for Options in Zerodha Margin Calculator Exposure Margin, Span Margin, Premium Receivable, Margin Benefit - explained by P R Sundar OPTIONS TRADING WORKSHOP: https ... An explanation of how margin works with stock options and how much margin would be required to place a trade. ... Basics Of Trading Options With Margin [Episode 97] - Duration: 6:16. The easiest way to calculate option margin requirements is using the Chicago Board of Options Exchange (CBOE) Margin Calculator that provides exact margin requirements for specific trades ...