Comments for Futures Options Trading http://futuresoptionstrading.org Sat, 31 Jul 2010 02:44:13 +0000 http://wordpress.org/?v=2.9.2 hourly 1 Comment on An Introduction to Derivatives, 4e by MURAT CAKIR http://futuresoptionstrading.org/an-introduction-to-derivatives-4e/comment-page-1/#comment-813 MURAT CAKIR Sat, 31 Jul 2010 02:44:13 +0000 http://futuresoptionstrading.org/an-introduction-to-derivatives-4e/#comment-813 I am a graduate who majored in finance working as a financial analyst. Well, what I should say of this book is that it tells you how the mechanism works in the whole derivatives world in terms of trading and pricing in a comprehensive manner. As a corporate finance and banking finance expert who has recently got interest in the field of derivative securities this book turns out to be a good starting point in understanding derivatives. However, if you want to know more about in this field, you should also spend time on other textbooks and read academic papers. Furthermore, one had better take some empirical exercises especially on derivative pricing by using computer programmes. (A good comprehensive and easy to follow text is Simon Benninga's Financial Modelling with Excel) Also a good statistical and econometric background would be helpful in understanding derivatives. What I find as a shortcoming in this book is that it doesn't provide answers to the end of chapter questions nor does it supply a computer aid material (a disk whatever) even though it is mentioned in the book. Rating: 4 / 5 I am a graduate who majored in finance working as a financial analyst. Well, what I should say of this book is that it tells you how the mechanism works in the whole derivatives world in terms of trading and pricing in a comprehensive manner. As a corporate finance and banking finance expert who has recently got interest in the field of derivative securities this book turns out to be a good starting point in understanding derivatives. However, if you want to know more about in this field, you should also spend time on other textbooks and read academic papers. Furthermore, one had better take some empirical exercises especially on derivative pricing by using computer programmes. (A good comprehensive and easy to follow text is Simon Benninga’s Financial Modelling with Excel) Also a good statistical and econometric background would be helpful in understanding derivatives. What I find as a shortcoming in this book is that it doesn’t provide answers to the end of chapter questions nor does it supply a computer aid material (a disk whatever) even though it is mentioned in the book.
Rating: 4 / 5

]]> Comment on Traders, Guns & Money: Knowns and unknowns in the dazzling world of derivatives by de_lege_ferenda http://futuresoptionstrading.org/traders-guns-money-knowns-and-unknowns-in-the-dazzling-world-of-derivatives/comment-page-1/#comment-810 de_lege_ferenda Fri, 30 Jul 2010 21:26:21 +0000 http://futuresoptionstrading.org/traders-guns-money-knowns-and-unknowns-in-the-dazzling-world-of-derivatives/#comment-810 Satyajit Das has performed a great service to all of us who have heard talk of derivatives and wondered what all the fuss was about. It is both an entertaining and informative read and an indictment of the investment banks that crank these financial products out. He shows first how Wall Street fools its clients by creating incomprehensible products chock full of profits to them as seller but markets them as the financial cure for cancer, without including the long and unwelcome list of potentially deadly side effects in their sales pitch. Second, he shows how Wall Street has fooled itself into believing they understand and have properly hedged their own exposure. The system will inevitably blow up, but the traders will already have moved on with their gigantic bonuses made using other people's money and someone else will be left to hold the bag and clean up the mess. Rating: 5 / 5 Satyajit Das has performed a great service to all of us who have heard talk of derivatives and wondered what all the fuss was about. It is both an entertaining and informative read and an indictment of the investment banks that crank these financial products out. He shows first how Wall Street fools its clients by creating incomprehensible products chock full of profits to them as seller but markets them as the financial cure for cancer, without including the long and unwelcome list of potentially deadly side effects in their sales pitch. Second, he shows how Wall Street has fooled itself into believing they understand and have properly hedged their own exposure. The system will inevitably blow up, but the traders will already have moved on with their gigantic bonuses made using other people’s money and someone else will be left to hold the bag and clean up the mess.
Rating: 5 / 5

]]> Comment on Traders, Guns & Money: Knowns and unknowns in the dazzling world of derivatives by Hedge Fund Analyst http://futuresoptionstrading.org/traders-guns-money-knowns-and-unknowns-in-the-dazzling-world-of-derivatives/comment-page-1/#comment-809 Hedge Fund Analyst Fri, 30 Jul 2010 21:13:07 +0000 http://futuresoptionstrading.org/traders-guns-money-knowns-and-unknowns-in-the-dazzling-world-of-derivatives/#comment-809 I really enjoyed reading the book Traders, Guns, and Money: Knowns and Unknowns in the Dazzling World of Derivatives by Satyajit Das. It is an interesting book in that it is a fictionalized autobiography of Das. As the book outlines the author's professional life in finance, it describes how he got involved in financial derivatives. The primary purpose of the book is to give a primer on derivatives, how they were created, how they are used, their benefits, and their dangers. The author's use of humor along with the hilarious vignettes of his finance associates (Nero, Clem/Crem, Adewiko, Budi, etc.) and funny anecdotes from his career made the book fun to read. <br />The book really helped explain what exactly derivatives are (giving me a good review of some of what I was taught in college) and how they are used today. I also appreciated the in-depth analysis of several well-known instances where derivatives were used by investors and companies which really helped to demonstrate their application in the real world as well as the oftentimes hidden dangers of using these financial tools. I found his discussion of the currency swap done by the Walt Disney Company in the 1980's to be of particular interest to me. Despite the fact that I previously read the HBS case study during a Derivatives and Risk Management course which I took as a student at Harvard, Das's explanation of the incident really gave me an even better understanding of how exactly the transaction was structured and how it eventually went wrong. His explanation of why Disney's financial advisors made the deal so complex was also amusing. (You will have to read the book to find out.) <br />Moreover, Satyajit Das really underscored the complex nature of derivatives and their use in either speculative bets or in hedges. Previously, I had considered these financial tools as an efficient and safe way to hedge. However, the author points out that there are significant risks even when they are only utilized as a hedge. <br />Hence, I really enjoyed this entertaining and informative book. The author explains complex concepts in a clear, readily understandable, and comical way. I would recommend this book to anyone who wishes to learn more about financial derivatives or the world of finance in general and who does not mind being entertained at the same time. <br />Thank you for your time. <br /> Rating: 5 / 5 I really enjoyed reading the book Traders, Guns, and Money: Knowns and Unknowns in the Dazzling World of Derivatives by Satyajit Das. It is an interesting book in that it is a fictionalized autobiography of Das. As the book outlines the author’s professional life in finance, it describes how he got involved in financial derivatives. The primary purpose of the book is to give a primer on derivatives, how they were created, how they are used, their benefits, and their dangers. The author’s use of humor along with the hilarious vignettes of his finance associates (Nero, Clem/Crem, Adewiko, Budi, etc.) and funny anecdotes from his career made the book fun to read.

The book really helped explain what exactly derivatives are (giving me a good review of some of what I was taught in college) and how they are used today. I also appreciated the in-depth analysis of several well-known instances where derivatives were used by investors and companies which really helped to demonstrate their application in the real world as well as the oftentimes hidden dangers of using these financial tools. I found his discussion of the currency swap done by the Walt Disney Company in the 1980’s to be of particular interest to me. Despite the fact that I previously read the HBS case study during a Derivatives and Risk Management course which I took as a student at Harvard, Das’s explanation of the incident really gave me an even better understanding of how exactly the transaction was structured and how it eventually went wrong. His explanation of why Disney’s financial advisors made the deal so complex was also amusing. (You will have to read the book to find out.)

Moreover, Satyajit Das really underscored the complex nature of derivatives and their use in either speculative bets or in hedges. Previously, I had considered these financial tools as an efficient and safe way to hedge. However, the author points out that there are significant risks even when they are only utilized as a hedge.

Hence, I really enjoyed this entertaining and informative book. The author explains complex concepts in a clear, readily understandable, and comical way. I would recommend this book to anyone who wishes to learn more about financial derivatives or the world of finance in general and who does not mind being entertained at the same time.

Thank you for your time.

Rating: 5 / 5

]]> Comment on Traders, Guns & Money: Knowns and unknowns in the dazzling world of derivatives by Valeri Pushnya http://futuresoptionstrading.org/traders-guns-money-knowns-and-unknowns-in-the-dazzling-world-of-derivatives/comment-page-1/#comment-808 Valeri Pushnya Fri, 30 Jul 2010 20:39:12 +0000 http://futuresoptionstrading.org/traders-guns-money-knowns-and-unknowns-in-the-dazzling-world-of-derivatives/#comment-808 As a derivatives trader I've seen many of my colleagues who just enter the field paying hundreds of dollars for thousands of pages of Mr. Das highly unreadable and stupefying compendiums on the subject of structured products. It is impossible to imagine a more serious and devote approach to derivatives than that exuding from his technical volumes. In comparison this new book feels like a gush of fresh air and while demystifying and ridiculing what used to be his bread and butter Mr. Das may look a bit cynical it is an honest book full of interesting and plausible examples and stories. For novices it can be very educational and for experts quite entertaining. It is like a memoir of a spy who turned out to be a double agent on his lifetime in secret services. When a guy knows so much who cares what side he was serving on? Rating: 4 / 5 As a derivatives trader I’ve seen many of my colleagues who just enter the field paying hundreds of dollars for thousands of pages of Mr. Das highly unreadable and stupefying compendiums on the subject of structured products. It is impossible to imagine a more serious and devote approach to derivatives than that exuding from his technical volumes. In comparison this new book feels like a gush of fresh air and while demystifying and ridiculing what used to be his bread and butter Mr. Das may look a bit cynical it is an honest book full of interesting and plausible examples and stories. For novices it can be very educational and for experts quite entertaining. It is like a memoir of a spy who turned out to be a double agent on his lifetime in secret services. When a guy knows so much who cares what side he was serving on?
Rating: 4 / 5

]]> Comment on Traders, Guns & Money: Knowns and unknowns in the dazzling world of derivatives by Joe Kolman http://futuresoptionstrading.org/traders-guns-money-knowns-and-unknowns-in-the-dazzling-world-of-derivatives/comment-page-1/#comment-807 Joe Kolman Fri, 30 Jul 2010 17:58:57 +0000 http://futuresoptionstrading.org/traders-guns-money-knowns-and-unknowns-in-the-dazzling-world-of-derivatives/#comment-807 This is not another journalist musing on the financial world. This is not an academic explanation of how financial instruments work. It's something else entirely -- a rare inside glimpse into the world of derivatives by a literate professional who's been a handshake away (or closer) from the major events in the market. Das leavens a series of technical discussions about particular strategies with more entertaining glimpses into the culture the drives the deals. Although I have bones to pick with the book's episodic structure, I can't think of a better way to get a crash course in how the capital markets really work. Rating: 5 / 5 This is not another journalist musing on the financial world. This is not an academic explanation of how financial instruments work. It’s something else entirely — a rare inside glimpse into the world of derivatives by a literate professional who’s been a handshake away (or closer) from the major events in the market. Das leavens a series of technical discussions about particular strategies with more entertaining glimpses into the culture the drives the deals. Although I have bones to pick with the book’s episodic structure, I can’t think of a better way to get a crash course in how the capital markets really work.
Rating: 5 / 5

]]> Comment on Traders, Guns & Money: Knowns and unknowns in the dazzling world of derivatives by Jaronimo http://futuresoptionstrading.org/traders-guns-money-knowns-and-unknowns-in-the-dazzling-world-of-derivatives/comment-page-1/#comment-806 Jaronimo Fri, 30 Jul 2010 17:41:55 +0000 http://futuresoptionstrading.org/traders-guns-money-knowns-and-unknowns-in-the-dazzling-world-of-derivatives/#comment-806 "Knowns and unknowns in the dazzling world of derivatives" great subtitle and the author really delivers. I love books on finance. Possibly stemming from being dropped on my head as a child. Some are pretty brutal to read but this one is as entertaining as it is educational. <br /> <br />I was familiar with some derivatives like futures contracts and options, before reading this book. Now derivatives like CDO (Collateralized Debt Obligations), CCO (Commodity Collateralized Obligations), currency swaps, interest rate swaps, or even inverse floaters make sense to me. Obviously I am far from being an expert on any of these, but after reading this book I can now understand why Warren Buffet called derivatives "Financial Weapons of Mass Destruction". <br /> <br />The author does a great job educating you in story-like fashion. The book told of numerous investors that ended up getting screwed by some pretty good salespeople at different dealer firms. Buyer beware comes to mind time and time again as I read these episodes. The treasurer of Orange County California got in way over his head because he was making a ton of money. Which he attributed to his financial wisdom. Then when interest rates went against him and his county lost 1.5 billion dollars he changed his tune saying he had some kind of brain defect and could not understand numbers. That would have been handy for the voters of Orange County to know BEFORE they elected him to office. <br /> <br />I guess there are many reasons to use derivatives like avoiding taxes, moving risk from highly regulated areas to less regulated areas, using loans as collateral for even bigger loans, or repackaging bad credit in a way that transfers the risk to someone else. The more I learn, the more I am amazed that supposedly very intelligent people see these as a great way to make money. It just goes to show that most people invest in things they do not understand. <br /> <br />I read an article by the author, Satyajit Das today. In the article he mentioned that "1 dollar supports 20-30 dollars worth of loans" and that the derivatives market at the moment is valued at 485 trillion dollars, or to make that a little more understandable, 8 times the global gross domestic product. 8 times the GDP of the entire planet. Wow. <br /> <br />This book is a great introduction to the world of derivatives and I highly recommend it. <br /> <br /> Rating: 5 / 5 “Knowns and unknowns in the dazzling world of derivatives” great subtitle and the author really delivers. I love books on finance. Possibly stemming from being dropped on my head as a child. Some are pretty brutal to read but this one is as entertaining as it is educational.

I was familiar with some derivatives like futures contracts and options, before reading this book. Now derivatives like CDO (Collateralized Debt Obligations), CCO (Commodity Collateralized Obligations), currency swaps, interest rate swaps, or even inverse floaters make sense to me. Obviously I am far from being an expert on any of these, but after reading this book I can now understand why Warren Buffet called derivatives “Financial Weapons of Mass Destruction”.

The author does a great job educating you in story-like fashion. The book told of numerous investors that ended up getting screwed by some pretty good salespeople at different dealer firms. Buyer beware comes to mind time and time again as I read these episodes. The treasurer of Orange County California got in way over his head because he was making a ton of money. Which he attributed to his financial wisdom. Then when interest rates went against him and his county lost 1.5 billion dollars he changed his tune saying he had some kind of brain defect and could not understand numbers. That would have been handy for the voters of Orange County to know BEFORE they elected him to office.

I guess there are many reasons to use derivatives like avoiding taxes, moving risk from highly regulated areas to less regulated areas, using loans as collateral for even bigger loans, or repackaging bad credit in a way that transfers the risk to someone else. The more I learn, the more I am amazed that supposedly very intelligent people see these as a great way to make money. It just goes to show that most people invest in things they do not understand.

I read an article by the author, Satyajit Das today. In the article he mentioned that “1 dollar supports 20-30 dollars worth of loans” and that the derivatives market at the moment is valued at 485 trillion dollars, or to make that a little more understandable, 8 times the global gross domestic product. 8 times the GDP of the entire planet. Wow.

This book is a great introduction to the world of derivatives and I highly recommend it.

Rating: 5 / 5

]]> Comment on Intermarket Analysis: Profiting from Global Market Relationships by Anonymous http://futuresoptionstrading.org/intermarket-analysis-profiting-from-global-market-relationships/comment-page-1/#comment-805 Anonymous Fri, 30 Jul 2010 13:06:06 +0000 http://futuresoptionstrading.org/intermarket-analysis-profiting-from-global-market-relationships/#comment-805 This book will be helpful to those seeking an introduction to the interrelatedness of the currency, commodity, equity and fixed income markets. The book was well written and easy to read. However, I would not suggest the book to a person with no technical, economic or financial background.<p>Although I respect Mr. Murphy's work, he, like most technical analysts, can tell you with 100% accuracy exactly what happened.........yesterday. He really did do a good job on a very difficult topic, but the historical analogies referenced imply that the interrelatedness is rudimentary and predictable. <br>After a very detailed history of the four major market relationships, Murphy finally concludes that some of the historical tendencies are currently being challenged and that only time will tell if a new relationship has emerged or if history will again be proven right. Rating: 4 / 5 This book will be helpful to those seeking an introduction to the interrelatedness of the currency, commodity, equity and fixed income markets. The book was well written and easy to read. However, I would not suggest the book to a person with no technical, economic or financial background.

Although I respect Mr. Murphy’s work, he, like most technical analysts, can tell you with 100% accuracy exactly what happened………yesterday. He really did do a good job on a very difficult topic, but the historical analogies referenced imply that the interrelatedness is rudimentary and predictable.
After a very detailed history of the four major market relationships, Murphy finally concludes that some of the historical tendencies are currently being challenged and that only time will tell if a new relationship has emerged or if history will again be proven right.
Rating: 4 / 5

]]> Comment on Intermarket Analysis: Profiting from Global Market Relationships by ServantofGod http://futuresoptionstrading.org/intermarket-analysis-profiting-from-global-market-relationships/comment-page-1/#comment-804 ServantofGod Fri, 30 Jul 2010 12:14:15 +0000 http://futuresoptionstrading.org/intermarket-analysis-profiting-from-global-market-relationships/#comment-804 The author is definitely an avante garde in the field of intermarket analysis, considering the first version of this book was published in 1991. However, with the advance in IT, the sophistication of today's market, and that traders can easily "cross" and "correlate" whatever they want on a "trade station" PC platform, the material provided in this second version becomes much less helpful than what it's predecessor then offered to its readers over a decade ago. Though much had been updated, I am afraid it still can't satisfy the savvy investors/traders of the day. As a pragmatic reader/trader, I must complain that the author had told little about the skills/techniques for identification of inflationary/deflationary cycles and the respective opportunities in sector rotation, thus asset allocation and trading/investment strategies. However, the author did show that history apparently didnt repeat itself in the relationships between bonds, commodities, stock, and currencies. You will simply go bankrupt if you bet on a strategy that worked perfectly in the past. <br /> <br />In case you are still not aware of the significance of the correlations of different classes of investment vehicles, this book can be quite a good start for you. If you are a veteran, please give this a pass. <br /> <br />p.s. Below please find some stuff that I think may be helpful (with a relatively high chance of recurrence) for your future investment/trading decision. <br /> <br />In the past, inverted yield curves have usually marked the end of economic expansions and the end of bull markets in stocks. pg 99 <br /> <br />During a business cycle from early expansion to late contraction, various sectors thrive in the following order:- Transportation, technology, services, capital goods, basic materials, energy, consumer staples, utilities, financials, consumer cyclicals. pg 110 <br /> <br />Martin Pring divides the business cycle into six stages:- Bonds up, stocks up, commodities up, bonds down, stocks down, commodities down. pg 183 <br /> <br /> <br /> <br /> <br /> Rating: 3 / 5 The author is definitely an avante garde in the field of intermarket analysis, considering the first version of this book was published in 1991. However, with the advance in IT, the sophistication of today’s market, and that traders can easily “cross” and “correlate” whatever they want on a “trade station” PC platform, the material provided in this second version becomes much less helpful than what it’s predecessor then offered to its readers over a decade ago. Though much had been updated, I am afraid it still can’t satisfy the savvy investors/traders of the day. As a pragmatic reader/trader, I must complain that the author had told little about the skills/techniques for identification of inflationary/deflationary cycles and the respective opportunities in sector rotation, thus asset allocation and trading/investment strategies. However, the author did show that history apparently didnt repeat itself in the relationships between bonds, commodities, stock, and currencies. You will simply go bankrupt if you bet on a strategy that worked perfectly in the past.

In case you are still not aware of the significance of the correlations of different classes of investment vehicles, this book can be quite a good start for you. If you are a veteran, please give this a pass.

p.s. Below please find some stuff that I think may be helpful (with a relatively high chance of recurrence) for your future investment/trading decision.

In the past, inverted yield curves have usually marked the end of economic expansions and the end of bull markets in stocks. pg 99

During a business cycle from early expansion to late contraction, various sectors thrive in the following order:- Transportation, technology, services, capital goods, basic materials, energy, consumer staples, utilities, financials, consumer cyclicals. pg 110

Martin Pring divides the business cycle into six stages:- Bonds up, stocks up, commodities up, bonds down, stocks down, commodities down. pg 183

Rating: 3 / 5

]]> Comment on Intermarket Analysis: Profiting from Global Market Relationships by brazen999 http://futuresoptionstrading.org/intermarket-analysis-profiting-from-global-market-relationships/comment-page-1/#comment-803 brazen999 Fri, 30 Jul 2010 09:32:12 +0000 http://futuresoptionstrading.org/intermarket-analysis-profiting-from-global-market-relationships/#comment-803 I find myself always picking up this book for questions involving intermarket relationships. Stocks, bonds, commodities. There are even historical reviews of intermarket relationships in the book as well. Don't be fooled by the title, the author does discuss US markets very well. It is an easy read without technical jargon. Sure, the Phd of economics would probably be quite bored with the material but for the layman and BA student....this is a terrific reference with all meat and no fat! Rating: 5 / 5 I find myself always picking up this book for questions involving intermarket relationships. Stocks, bonds, commodities. There are even historical reviews of intermarket relationships in the book as well. Don’t be fooled by the title, the author does discuss US markets very well. It is an easy read without technical jargon. Sure, the Phd of economics would probably be quite bored with the material but for the layman and BA student….this is a terrific reference with all meat and no fat!
Rating: 5 / 5

]]> Comment on Intermarket Analysis: Profiting from Global Market Relationships by Brian E. Mitchell http://futuresoptionstrading.org/intermarket-analysis-profiting-from-global-market-relationships/comment-page-1/#comment-802 Brian E. Mitchell Fri, 30 Jul 2010 08:39:51 +0000 http://futuresoptionstrading.org/intermarket-analysis-profiting-from-global-market-relationships/#comment-802 The original book Intermarket Technical Analysis was great for its time, however some of the relationships it described change in a deflationary environment which the author suggests we are in. However, the best reason for the rewrite was the writing in the earlier book was terrible in my opinion. It was a terribly boring book -- even if you are interested in the topic.<p>This book is different, and is a much better book. It also seems to me that the sector analysis coverage is a little more thorough (although I have not opened them up side by side to tell).<p>The only downside of this book is I don't think it gives you as many practical tools for tracking the business cycle and sector rotation as Pring's book, how to select stocks using technical analysis. It will give you the basics though, relying heavily on comparative relative strength.<p>If you want to see the big picture and understand how the markets are tied together, I can without hesitation recommend this book. There are several other books that complement this one as well. Rating: 4 / 5 The original book Intermarket Technical Analysis was great for its time, however some of the relationships it described change in a deflationary environment which the author suggests we are in. However, the best reason for the rewrite was the writing in the earlier book was terrible in my opinion. It was a terribly boring book — even if you are interested in the topic.

This book is different, and is a much better book. It also seems to me that the sector analysis coverage is a little more thorough (although I have not opened them up side by side to tell).

The only downside of this book is I don’t think it gives you as many practical tools for tracking the business cycle and sector rotation as Pring’s book, how to select stocks using technical analysis. It will give you the basics though, relying heavily on comparative relative strength.

If you want to see the big picture and understand how the markets are tied together, I can without hesitation recommend this book. There are several other books that complement this one as well.
Rating: 4 / 5

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