Tech Stocks 2018

When I invested 50% of my net worth in stocks in December 2017, I had no idea what to expect. This was the seed I planted that's grown to this blog. A year later and I've invested much more.  all in hopes of learning the technology and financial markets.  It's important to have dreams, and my dream is coming true.

Has the bubble begun to burst? Nasdaq dropped 15 points in the past 2 weeks. Why? Because that's what the stock market does, fluctuates. This is the first principle to understand investing.

the market is similar to the army -- Have faith, virtue, due diligence, brotherly love, do some research, use your common sense and you'll be okay.

Like a drill sergeant the market goes -- up, down, down, up! and in the end, you're either stronger or broke.

September 26th, 2018

Options, Options, Options,

Today I browsed the career fair at Duke University and chatted with a gentleman from Akuna Capital. By the end of the conversation, I had learned something new about investing. Greek letters. Below if from Investopedia.com I highly suggest browsing them for everything finance.

Delta

Delta represents the rate of change between the option's price and a $1 change in the underlying asset's price. In other words, the price sensitivity of the option relative to the underlying. Delta of a call option has a range between zero and one, while the delta of a put option has a range between zero and negative one. For example, assume an investor is long a call option with a delta of 0.50. Therefore, if the underlying stock increases by $1, the option's price would theoretically increase by 50 cents.

Theta

Theta represents the rate of change between the option price and time, or time sensitivity. Theta indicates the amount an option's price would decrease as the time to expiration decreases. For example, assume an investor is long an option with a theta of -0.50. The option's price would decrease by 50 cents every day that passes, all else being equal. If three trading days pass, the option's value would theoretically decrease by $1.50.

Gamma

Gamma represents the rate of change between an option's delta and the underlying asset's price. This is called second-order price sensitivity. Gamma indicates the amount the delta would change given a $1 move in the underlying security. For example, assume an investor is long one call option on hypothetical stock XYZ. The call option has a delta of 0.50 and a gamma of 0.10. Therefore, if stock XYZ increases or decreases by $1, the call option's delta would increase or decrease by 0.10.

Vega

Vega represents the rate of change between an option's value and the underlying asset's implied volatility. This is the option's sensitivity to volatility. Vega indicates the amount an option's price changes given a 1% change in implied volatility. For example, an option with a Vega of 0.10 indicates the option's value is expected to change by 10 cents if the implied volatility changes by 1%.

Rho

Rho represents the rate of change between an option's value and a 1% change in the interest rate. This measures sensitivity to the interest rate. For example, assume a call option has a rho of 0.05 and a price of $1.25. If interest rates rise by 1%, the value of the call option would increase to $1.30, all else being equal. The opposite is true for put options.

Other Greeks

Some other Greeks, with aren't discussed as often, are lambda, epsilon, vomma, vera, speed, zomma, color, ultima.