How do you value pieces of paper? What creates currency? What makes the dollar a reserve currency?
There are several different models used to value currency, including Purchasing Power Parity and the BEER (Behavioral Equilibrium Exchange Rate) model, amongst others. There are several variables that go into those models, most notably conditional expectations, current rates, term premiums, national savings/investment, demographics, and interest rate differentials.
https://castbox.fm/vb/88765713
An analysis of how we value currency, what is going on with the lira, and how it affects all emerging market.
Enjoy!
One of the best things about trading options is the math behind it.
Place your strikes based on the deltas. Adjust for your desired probability of profit and risk/reward appetite. Trade in a 45 day cycle. Roll. Place a new trade.
Rinse and repeat.
Confession: I normally don’t do much research outside of options and long stock.
Not because the other platforms are some terrible place where people are yelling about pork bellies and soybeans, but simply because I don’t really understand it.
So to make up for admitting my weaknesses in finance on my finance blog, I decided to learn.
I recently had a conversation with a good friend of mine. Our friendship blossomed when he talked about puts one day in our Applied Investments class. My head whipped around to locate the person that was finally speaking my language, and once we did the options trader secret handshake, we became fast friends.
One of our more recent conversations surrounded the economics of options – He said that basically, if you’re on the sell side of a naked option, your margin requirement (collateral) is going to be pretty high.
But I disagree.
