The TLFs INSIDER TRADER!

[azza33]

They just lacked a proper greek letter for V like Volatiliy.

Makes me chuckle every time someone includes vega as a greek.

You need help!!!  

These formulas work well under normal market conditions.

Like every formula you must understand the underlying assumptions that enable a partial differential system to be solved.

And it wont work at the tails of distribution as the underlying distribution model is flawed due to demand distortions.

As for the "model" - i have only every used it to put in a vega estimation to get a price to exit a position more quickly in the pain in the ass illiquid Australian ETO market.

Using it as some sort of perfect trading vehicle is a sign that you never studied fluid dynamics in applied mathematics
... sadly which i did which means i used to be able to solve PDE systems to yield equation such as the BS model.  
- Now it just hurts my head looking at them  

[PigDogg]

(PigDogg @ Sep. 29 2010,05:34) Long Term Capital Management which fell apart in 1988.  

Should be 1998, typo and too late to edit.

[azza33]

... Damn I thought it was the vodka swilling ruskies in 1997 that caused that mess  

[manarak]

to continue about the existing options pricing models, not just B&S, but also the others, like Cox Ross Rubinstein, Binomial or Monte Carlo Simulations, or even Garman Kohlhagen for FX options...
All these models have the same flaw.

The value of the option is a positive function of volatility.
The more a stock is volatile, the higher the option price.

So what? will you say.

Well, a modern method of valuation of a company's worth is:
selling value of assets + projected income

since the projected income is not known today, it is valued as on option.
then the value becomes
selling value of assets + option

to increase the value of the company, CEOs tap the assets and go into leverage, i.e. they use the assets to guarantee debt and use the debt to increase projected projected revenue and increase risk.
so the ideal value of the company becomes:

0 assets + option with huge volatility

i.e. the stock rises and the CEOs get bonuses.

In other words, the more risks are taken by CEOs, the more the company is worth on the paper.

similarly as in the option pricing models, this only works in "normal market conditions"... but when the company goes bust, the CEO gets to lead another company :-)

[azza33]

Interesting way to view it for sure!

I'm punting DCF is still the usual valuation method

[azza33]

Ninewives is on fire... RED and CCU are going rather well... my holding of them... ZERO

[azza33]

hmmm.... not such a bad return me thinks...  

[Ninewives]

(azza33 @ Oct. 11 2010,15:47) Ninewives is on fire... RED and CCU are going rather well... my holding of them... ZERO  

Still time to enter both. Red 5 will jump in April

[azza33]

Ccu has had a 150% gain since your 1st mention...not a bad tip

Every mining stock I touch turns to shit

I cant take a trick in this sideways market!!! Yet so many smallcap mining shares have done so well

[deepthroat]

I'm still VERY happy with my purchase of Apple, which I've been touting on here for a year or more. Ford is doing very well too.

Bought Apple last December at $195, closed today at $320. Up 40% in a year.

Bought Ford last March at $13.85, closed today at $16.42. Up 16% in 9 months.

[azza33]

sell your apple...unless the new ipad is amazing....they have had their day...famous last words of course

ps. I only base this on tge fact that android phones outsell apple now...and they will only get stronger...could mean nothing of course.

Pps. Anyone want to buy my iphone 3gs??

[azza33]

Btw some nice gains there

One of my better stocks was up 25% 2 days after I bought it.
Due to trading restrictions imposed by my employer I couldn't sell it

Now I'm sitting at break even

[azza33]

(Ninewives @ Dec. 15 2010,01:47)

(azza33 @ Oct. 11 2010,15:47) Ninewives is on fire... RED and CCU are going rather well... my holding of them... ZERO  

Still time to enter both. Red 5 will jump in April

Why april??

[Ninewives]

Probably should say by April the shares will jump. (IMO of course)

They will be digging ore in the January / February timeframe. Pouring gold in April, which should test the process: prove the cost of production and recovery rate from the ore. All being well €“ production in June.

Your earlier point about 1.2 billion shares is a good one but I'll stick to my 75 cent share price by Q3 Q4 next year.

Disclaimer, disclaimer, I'm not a financial advisor etc.........  

[Ninewives]

(Ninewives @ Sep. 10 2010,04:45) IMHO Red5 has a long way to go even with gold at such high levels.

It's a gold/copper explorer soon to be gold producer (should pour it's first gold in Q2 2011). Also has A$50M cash on hand and no debt. (although in process of organising a loan of a further $50M). It's cash cost is $350 per ounce against current sell price of around $1200. No gold hedge! Plus as it's mines are in the Philippines so it's costs and sales currency is in US$s -only currency exposure is translation and repatriation.

I will no doubt live to regret this but my thinking is:

RED in 12 months - 75cents

CCU 60 cents by end 2011 and over $1 by mid 2012

I still belive this.