25 | May | 2012 | wealthymatters

Making Sense Of Open Interest

May 25, 2012 Leave a comment

wealthymatters.com Open interest is the total number of outstanding futures and options (F&O ) contracts at any point in time. In other words, these are open or yet to be settled contracts. For instance, if trader X buys 2 futures contract from trader Y(who is the seller), then open interest rises by 2.If another trader A buys 2 futures contracts from trader B, then the open interest rises to 4. Now, if trader X unwinds his position and the counter party is either Y or B, then the open interest in the system will reduce by that quantity.But if X unwinds his position, and the counter party is a new entrant, say C, then the open interest will remain unchanged. This is because while X has squared off his position, C’s position is still open. Read more of this post

Filed under Paper Assets, Theory Tagged with bearish, bullishness, cash market, derivatives, derivatives trading, futures contracts, futures trading, going long, going short, open interest, option trading, options, postaday, put and call options, put call ratio, reversal of trend, spot market

The Athenian Taxation System

May 25, 2012 Leave a comment

If there has to be a state,there has to be a government and inevitably expenses and so taxes.It’s interesting to see how the democratic Athenian city-state (polis) dealt with the problem of raising taxes by understanding human needs well.Athens had two ways of tapping into the resources of its wealthier citizens:

First,the Athenians derived funds for the normal, everyday operations of their government from indirect taxes (mainly harbor and market dues), and a variety of fees, fines and rents. These were sufficient in times of peace, even after the loss of their empire.But war was another matter. In times of war and other emergencies, the Athenians, voting in Assembly, levied a special tax (eisphora) on the more well-to-do citizens of the polis, approximately the upper one-third. This tax was based not on income, but on total assets.After all the moneyed had more to lose materially in a war than the poor. Read more of this post

Filed under Theory Tagged with Athenian Taxation System, eisphora, expenditure, indirect taxes, liturgies, moneyed, postaday, private funding, project funding, public control, public welfare, social prestige, special tax, tax on assets, taxation, trierarchy

Bloomberg Billionaires List

May 25, 2012 1 Comment

wealthymatters The Bloomberg Billionaires List consists of a daily ranking of billionaires by net worth.You can access it here http://topics.bloomberg.com/bloomberg-billionaires-index/

What I find interesting about the list is the daily fluctuations in these net worth figures.Obviously,these figures are for staggering amounts of money simply because these people are so wealthy.But as a percentage of their net-worth it’s not all that large.This is in huge contrast to the “financial advisers” who so glibly talk about “true investors” being comfortable with upto a 50% drop in portfolio values.It’s obviously easier to play round with and/or lose someone else’s money. Read more of this post