I've been asked to look at other series so here's INDUSTRY, we're starting with the analysis of a big option trade from episode 1. Hope you enjoy it. What option do you think they are talking about? I'm just trying to guess. Let me know what you think it is in the comments please.

@InvestOrama

3 жыл бұрын

And a big thank you to those who corrected the previous release of this analysis - oops!

@Maria-wc1nn

3 жыл бұрын

Scam alert 🚨

I like your content and how you respond to comments, keep up the good work!! +1 new subscriber

@InvestOrama

3 жыл бұрын

Thank you and welcome on board!

The US didn't need to go to war here, they just needed jpow to quell inflation.

@InvestOrama

Жыл бұрын

Yep - and Harper's idea just paid off now yields >4%

I love this show and I love your channel. Can you explain Harper's trading idea, something about put option (I think they're sell put options) on homebuilder index?

@InvestOrama

2 жыл бұрын

Thanks! Do you remember which episode it's in?

@oliviertam6911

2 жыл бұрын

@@InvestOrama Episode 3 around 25:25

@investorama_podcast

2 жыл бұрын

@@oliviertam6911 awesome thanks - it's time for me to move into a new series!

@InvestOrama

2 жыл бұрын

@@oliviertam6911 Awesome! got it

@oliviertam6911

2 жыл бұрын

@@InvestOrama Cool!

You should really do an episode on a show called The Devils. I think it has to be one of the most brilliant finance shows ever. You will enjoy it and its only 10 epa

@InvestOrama

3 жыл бұрын

Thanks I need to watch that

@woodwyrm

3 жыл бұрын

can't find anything on a show called the devils, not on wikipedia not on imdb edit: I found it, its just Devils; looks to be Eurojank.

@InvestOrama

3 жыл бұрын

@@woodwyrm yeah i rememer seeing something on KZread. But for this to work we need a popual series or film

@AdrianDucao

2 жыл бұрын

@@woodwyrm its about back stabbing and love triangles trading and finance part is ok but it doesnt show much

@InvestOrama

2 жыл бұрын

Sounds interesting though

Calculation is 500MM x .0005 or .0004 for those who don’t understand

@InvestOrama

Жыл бұрын

I've got a confession to make: the first time I posted the video I got it wrong and quickly deleted and reposted

@irshviralvideo

Жыл бұрын

i dont get it. can you explain what happened here in a way a non finance person can understand ?

@InvestOrama

Жыл бұрын

Maybe it deserves a new video

I'm a bit new here, but why would treasury yields rise once US goes to war in the South China Sea?

@InvestOrama

3 жыл бұрын

Yeah it's a bit silly. I guess it could be the US risk rising? If there's such war I think there will be bigger moves elsewhere (and first run for your life)

@FarEastAlpaca

3 жыл бұрын

@@InvestOrama china might be h dumping treasury, so would other major holders. Guess that's the play but I agree, I'd just run lol

@InvestOrama

3 жыл бұрын

@@FarEastAlpaca great call

@orpheusepiphanes2797

3 жыл бұрын

@@FarEastAlpaca Either that or Chump following through on his threat to default on their debt to China...that would likely reprice US debt globally wouldnt it?

@FarEastAlpaca

3 жыл бұрын

@@orpheusepiphanes2797 that would be a supporting reason why china has to dump, knowing default risk is higher, but it's a really a lose lose situation for both countries. I think a better play here is to go into Japanese Yen, or other traditional assets such as gold. It's also too difficult to price such option.

Did Rishi just mentally (or randomly) price such a complicated option? Its most likely a one-touch option. How did he come up with 4bps? Also why was he so reluctant to show Harper a price? Would such a trade be difficult to square off? I guess its hard to find someone else to take the opposite end of that trade but surely he could square off the risk using the underlying directly right? Appreciate any responses!

@InvestOrama

Ай бұрын

All good questions. One hypothesis is that the series is not realistic, he should dive in his models before giving a price. But I prefer to think it's real and find an explanation for that, so there you go: He's reluctant because the option is so out there that the model gives it a probability close to 0, but that means it's going to be hard to hedge. The price from the models is pretty much 0, so he just adds a few bps to make one and that's why he also moves it from 5 to 4 (a 25% discount) without checking the models (I'm trying hard to make it work)

@nabilkamaludeen1804

Ай бұрын

@@InvestOrama Wow yea thats a great explanation and it really makes sense. When Rishi said 'i cant price that without losing money', my guess is that he would find it hard to be delta neutral (square off the position) as its hard to find another party to take the opposing side of such a punty trade, especially of that size (half a bil). I guess hedging that position (although it is so far out of the money, the delta is tiny) would require dabbling in the underlying, resulting in costs. Also, i doubt he has the limits to hold such a huge position in his book.

Is this a new series?

@InvestOrama

3 жыл бұрын

Yes from BBC and HBO: Industry

@RealWajahat

3 жыл бұрын

@@InvestOrama cool Is it any good?

It’s almost certainly an exotic option, it it was just a regular option on treasuries it’s a listed product and Rishi wouldn’t be concerned about taking the risk.

@InvestOrama

10 ай бұрын

What did you think about the binary option I suggested?

@pejpm

10 ай бұрын

@@InvestOrama yeah that’s what I mean, a binary is an exotic option. It’s almost certainly referring to the 10 year future and the fact she says it ‘pays out’ if they hit 4% would mean it’s a binary put on the 10 year future, as they’re quoted in price not yield.

@InvestOrama

10 ай бұрын

@@pejpm yes I think I got this way in the video. By the way good call from Harper it hit 4% in 2023

@pejpm

10 ай бұрын

@@InvestOrama ha, well digital options still have expirations. One of the major factors in options pricing is time. This was set in 2020. Nobody would write a 3 year put at that price! The only way she could have been right is if she’d put that trade on just before May 2023. This option would have undoubtedly expired worthless. That’s actually something missing from that scene, I don’t believe they mentioned the expiration. Without an expiration an option is impossible to price. Binary options tend to be pretty short term.

@InvestOrama

10 ай бұрын

@@pejpmbut what if the client asks for it? I think what happened here is Rishi doesn't "price" it with a model. He says 4 or 5 bps because the model says 0

the $50k option premium goes to who? who gets paid? and why is Rishi not okay with the offer at 4 cents initially?

@InvestOrama

10 ай бұрын

Hey good question. I've been asked about it before. The option premium in this case is paid by the buyer (the client) to Rishi's trading book. So Rishi wants to raise his offer from 4c to 5c And is the option premium 50k? I don't think that's the right number

great explanation. I don't get the "because I'm excellent" line, why is he bragging? he is clearly pricing the product lower than what he would have ideally wanted, is under pressure from Harper, and he has no way to influence the futures evolution and bet outcome, has he? so then why is he excellent, does he mean he will sell the option further or short it?

@InvestOrama

Жыл бұрын

It can be explained at different levels 1) he's bullshiting and can always say that - why not but 2) a 'better' trader may be able to price more aggressively when it's a critical deal because he has more 'skills' In both ways it looks like he pulls the price out of nowhere

@pejpm

Жыл бұрын

He means he can offset the risk

@InvestOrama

Жыл бұрын

Yes but at any price?

@pejpm

Жыл бұрын

@@InvestOrama not sure about ‘any’ price, but if he’s selling an option he can delta hedge using the underlying. I don’t know if that means he could do literally any price, but that’s not what is being suggested

@InvestOrama

Жыл бұрын

@@pejpm yes he can always hedge the risk, but can he do it profitably? I still think he looks like he pulled the price out of thin air

What is Harper's job title exactly?

@InvestOrama

3 жыл бұрын

She is in detivatives sales and her grade is 'analyst' which means entry level.

@Fallenscion

3 жыл бұрын

@@InvestOrama it's so frustrating how this can vary firm-to-firm. I'm an analyst in a consultancy, which is a mid-level position - associates are entry level here. Meanwhile that's flipped in other firms. Makes job hunting occasionally irritating.

@pingu_land

3 жыл бұрын

@@Fallenscion Woah that flip is pretty frustrating tbh

@woodwyrm

3 жыл бұрын

@@Fallenscion perhaps people applying for jobs in finance should write out what kind of position they're applying for? entry-level, mid-level etc

@orpheusepiphanes2797

3 жыл бұрын

@@woodwyrm I think that would flag you as a noob

What is going on here? If usa goes to war stocks fall? bond yield falls?

@InvestOrama

Жыл бұрын

Yes I know... Now the yields have reached 4% without a war with China. What would happen to yields if there was a war? Any idea?

What happens once the option is getting executed? I.e. what would the value of that contract be if TBills hit 4%?

@InvestOrama

Жыл бұрын

I don't think we know the exact amount. But if it's a binary option it would pay a fixed amount agree at the start if it closes above 4%

This would be hell of a trade if done in 2021 with a maturity date of 2023

@InvestOrama

10 ай бұрын

Yep well spotted. It reached 4% like Harper said. Better listen to what she predicts next

@harlyslamm2888

10 ай бұрын

@@InvestOrama except her thesis was all wrong. The reason for 4% today was the unexpected and surprise rise of inflation which caused the people who were tracking inflation by surprise! I think 7% inflation was a dead give away but most said this wasn't the right inflation

@InvestOrama

10 ай бұрын

Yeah I'm glad there's no conflict between the us and China. The thing with Harper is she says massive BS but really believes it

@SOLOcan

8 ай бұрын

@@harlyslamm2888 She's incorrect about her analysis but she's correct in the sense that her job is essentially the same as a used car salesman. They don't know if the car will work, they just sell it.

@harlyslamm2888

8 ай бұрын

@@SOLOcan that's what makes a market

what is bps

@InvestOrama

3 жыл бұрын

Welcome back Brasso 1bp = 0.01%

@kingfgc

3 жыл бұрын

A basis point which is 1% of 1%.

@enocksematimba9794

3 жыл бұрын

Wasap bro? You trade ?

Looking back now, Nicole might've hit the jackpot

@InvestOrama

Жыл бұрын

Which one is Nicole again?

@bruhBruh-iz6xw

Жыл бұрын

The client. The one talking to Harper on the phone

@InvestOrama

Жыл бұрын

@@bruhBruh-iz6xw oh yessssss - silly me

@InvestOrama

Жыл бұрын

you inspired my new short kzread.infoHBUkUqcKi3Y?feature=share thank you

@bruhBruh-iz6xw

Жыл бұрын

@@InvestOrama haha nice video and your welcome lol

Us 10 year 4.25%

@InvestOrama

Жыл бұрын

She got it right ! kzread.infoHBUkUqcKi3Y?feature=share

I have no idea what's going on

@InvestOrama

3 жыл бұрын

Just a $500000000000 exotic trade

@showdown2006

2 жыл бұрын

@@InvestOrama still don’t know what’s going on could you elaborate please?

i kept staring at her old phone headset

@InvestOrama

Жыл бұрын

haha yes feels old school with the on off switch that you could easily forget to press

She just predicted WW3. The CIA could use her

@InvestOrama

Жыл бұрын

She got the Treasury rates right! kzread.infoHBUkUqcKi3Y?feature=share

This whole industry seems incredibly boring. Money money money money money.

@InvestOrama

3 жыл бұрын

it depends if the money is billions

@orpheusepiphanes2797

3 жыл бұрын

As opposed to the industries where people work for free?

Why that annoying background music

@georgealiferis7345

5 ай бұрын

Because I messed it up? When I edit it doesn't sound so loud, sorry

@InvestOrama

5 ай бұрын

🎺