Options Trading – Advantages and Disadvantages

What is Options Trading?

An option is simply granting someone the right to buy or sell something in the future. In the case of Dow index futures options, when someone buys a Dow call option they are buying the right to purchase that underlying Dow future at a specific price, known as the “strike price,” at a future point in time, known as the “expiration date.” When an investor buys a put, they are essentially selling the market; a call essentially buys the market. Likewise, selling a put essentially buys the market; selling a call essentially sells the market.

In order to receive the opportunity to buy an option on this future, investors pay a “premium.” If the market does not reach the strike price of the option, then that option will expire worthless on the expiration date. If the market does reach the strike price of the option on the expiration date, then the investor will be assigned the underlying future at that strike price.

Advantages of Options Trading

Flexibility. Options can be used in a wide variety of strategies, from conservative to high-risk, and can be tailored to more expectations than simply “the stock will go up” or “the stock will go down.”

Leverage. An investor can gain leverage in a stock without committing to a trade.

Limited Risk. Risk is limited to the option premium (except when writing options for a security that is not already owned).

Hedging. Options allow investors to protect their positions against price fluctuations when it is not desirable to alter the underlying positon.

Disadvantages of Options Trading

Costs. The costs of trading options (including both commissions and the bid/ask spread) is significantly higher on a percentage basis than trading the underlying stock, and these costs can drastically eat into any profits.

Liquidity. With the vast array of different strike prices available, some will suffer from very low liquidity making trading difficult.

Complexity. Options are very complex and require a great deal of observation and maintenance.

Time decay. The time-sensitive nature of options leads to the result that most options expire worthless. This only applies to those traders that purchase options – those selling collect the premium but with:

Unlimited Risk. Some option positions, such as writing uncovered options, are accompanied by unlimited risk.

Overall Options present a good opportunity to formulate plans which can take advantage of volatility in underlying markets as well as price direction. However for most traders the disadvantages are significant and online futures trading is usually a better option.

The Future of Blockchain Technology

What is Blockchain?

The term blockchain has been used in numerous social and corporate conversations in recent years and everyone seems to have heard about blockchain technology, but a majority of the population actually has no idea what it actually means.

In order for us to clearly explain what blockchain technology actually means allow us to give you a brief breakdown about the history of how the transaction of money has evolved. Historically whenever people used to exchange valuable items there were middle men whose sole purpose was to record the authenticity of both parties and build trust between them. Currently these middle men are known as banks. The use of banks and brokers has continued over time and with the emergence of digital assets like stock, electronic money, and intellectual property the need for a more secure method has emerged. This is because digital assets are usually files within a computer that are therefore vulnerable to manipulation and theft. Thus the use of the blockchain technology enables parties to transact openly and transparently ensuring that the exchange is secure and efficient.

The Future of Bitcoin

Blockchain has the ability of completely disrupting the financial industry the same was social media disrupted mainstream media or the same way Betflix destroyed Blockbuster films. Blockchain technology has the potential of being used as a platform that provides financial services to everyone on the part of the world, this includes people in developing countries who may not have the access to traditional banking services and cannot afford the rates required to make large transactions. This technology has the potential of making major breakthroughs in nearly all major industries that are usually manipulated by big corporations.

The use of Blockchain technology in Education

Blockchain technology in education can be used to figure out the students that actually need the scholarships and those who can afford it. This is because a few students have been bypassing the system and getting financing. This would actually end up being detrimental to the needy students who end up dropping out or accruing a lot of debt that causes them to work for nearly.

Lastly, a huge number of the population may currently be hiding their heads in the sand as they wish blockchain to go away but this piece of technology is definitely going nowhere. In the near future we will all be trading using blockchain as part of our daily activities our great grandchildren will read about money and ATM machines just as how we read about barter trade and gold. It is therefore imperative that we jump on the bandwagon as soon as possible and get adjusted before we are forced to adjust.

Pros and Cons of an Electronic Payment System

During this highly technological age, cash is trying hard to compete with electronic money, since nowadays a lot of people choose to use their virtual wallets. Here, you will read about the pros and cons of using an electronic payment system.

It is plain to see that electronic payment systems have more advantages than traditional banking services. Let’s see:

  • Saves on time

Money transfer from one virtual account to another may only take a few minutes, whereas a wire or postal transfer may take a number of days. Besides, you have to spend some time to go to the bank or post office and wait in line.

  • Controls expenses

Even if a person is willing to control his disbursements, it can take a lot of patience to jot down all the expenses, and this takes up a huge part of the total amount. On the other hand, the virtual account comprises the history of all the transactions, including the store name and amount spent. Best of all, you can check it whenever and wherever you like. In this case, an electronic payment system works to your advantage.

  • Reduced loss and theft risks

You will not make the mistake of losing or leaving your virtual wallet behind, and it can never be taken by robbers.

  • User- friendly

All services aim to reach out to a greater number of audiences and so, their interface should be easy for users to understand. Moreover, users can always ask help from the support team since they work 24/7. You can receive an answer by means of the forums as well.

  • Convenient to use

As long as you have access to the Internet, you can carry out transfers anytime, anywhere.

After discussing the advantages that come with using an electronic payment system, it is essential to talk about its disadvantages as well:

  • Restrictions

In every payment system, there is a limit with regard to the number of transactions you can do per day and the maximum amount you can withdraw.

  • Risk of Getting Hacked

Risks can be reduced when you follow the security regulations. This is comparable to the risk of being robbed. The situation can get worse when the processing company’s system breaks down, since this may lead to the leaking of confidential information on the online cards, as well as its owners. Though some electronic payment systems do not launch plastic cards, they can however be involved in Identity theft scandals.

  • The problem of money transfer from one payment system to another

Most of the time, electronic payment systems do not cooperate with one another. If that is the case, you can use e-currency exchange services. However, it can consume a lot of time when you do not have a service you can trust for this purpose.

  • Lack of Anonymity

Since the database of the payment system stores all your transactions – like the name of recipient, amount and time – the intelligence agency can access all your information. Decide on whether that is good or bad.

  • The Need for Internet Access

When you have no Internet connection, you cannot transact on your online account.

How Blockchain Is Changing Corporate Giving

The blockchain refers to a public ledger technology in which each cryptocurrency transaction is digitally signed to confirm its originality and ensure that the information therein is not tampered with. As such, the operations recorded on the blockchain and the ledger itself are considered to be of the highest level of integrity.

In the early days of cryptocurrency, people thought that blockchain was all about bitcoin. Today, it is fast becoming evident that the technology is about more than just bitcoin, or digital currencies for that matter. But while blockchain has the potential to revolutionize nearly every industry, nowhere will its impact be more pronounced than in charitable giving.

For charity organizations, blockchain presents a rare window for transparency and honesty, which could help make them more trustworthy in the eyes of backers. Some of the problems that nonprofits grapple with involve lack of accountability for how money is spent and transparency. Donors are sometimes reluctant to give because they cannot be sure where their funds are going to or who they are helping with their donation. Over time, such concerns can cause them to become disenchanted.

This makes it hard for charity organizations to attract sponsors or retain them. However, blockchain is fast raising trust in the system by showing philanthropists where their money is going. The technology achieves this by making the system wholly transparent and information, easily accessible. Here’s how blockchain enhances transparency and trust in charities:

  • Funds go directly to the cause donors are contributing towards. Thanks to blockchain technology, donations need not pass through intermediaries any more. Instead, they go straight to the recipients and the companies that are in a position to assist them. This help ensures that there’s less room for fraud or financial leakage in the system and that monies aren’t going into the wrong pockets. The result is that donors feel more encouraged to give.
  • All transactions are traceable. Distributed ledgers can be used to track transactions. Such improved traceability makes it easier to monitor how funds are being spent. As a result, donors can see even from a distance, how their funds ended up helping the people that charity foundations claim to assist.
  • Blockchain makes it easier to tell well-intentioned organizations apart from fraudulent ones. Since donations made using cryptocurrencies can be traced, it becomes easier for donors to identify the organizations that are furthering their cause from those that only seek to enrich a few individuals. This way, they get to know the right charities to work with.

Overall, blockchain and cryptocurrency will help ensure efficiency and give backers confidence that their donation is being put toward the cause that they support.

Well-intentioned organizations need to embrace the technology if they plan to improve transparency as well as track and transfer funds quickly. It is for all these reasons that platforms such as Sponsy seek to help Businesses to deliver greater transparency and trust through the blockchain technology.

The Long Tail: Big Hits and Big Misses

The ” Long Tail” is a colloquial name given to various statistical distributions characterized by a small group of events of high amplitude and a very large group of events with low amplitude. Coined by Wired Magazine writer Chris Anderson in 2004, the Web’s Long Tail has since gone on to perplex academics and challenge online marketers.The concept is straightforward. Think Hollywood movies: there are big hits that really hit big, and thousands of films that no one ever hears about. In economics, it’s the Pareto principle: 20% of anything products 80% of the effects. It’s these non-hit misses that make up the Long Tail. Anderson claims to have discovered a new 98% rule no matter how much content you put online, someone, somewhere will show up to buy it. eBay would seem to be a perfect example. The online tag sale contains millions of items drawn from every Aunt Tilly’s closet in the world and still seems to find a buyer somewhere for just about anything.

On the Internet, where storage and distribution costs are near zero, Amazon is able to offer 3 million books for sale compared to a typical large bookstore with 40,000-100,000 titles. The same is true of CDs, DVDs, digital cameras, and portable MP3 players. Wherever you look on the Web, you find huge inventories, and a great many items that few people are interested in buying. But someone is almost always searching for something. With a billion people online, even a one-in-a-million product will find 1,000 buyers. According to Anderson, online music sites sell access to 98% of their titles once a quarter. According to Netflix, 60% of its 85,000 titles are rented at least once a day by someone. Unlike physical stores such as Wal-Mart and Sears, online merchants have much lower overhead costs because they do not have physical stores and have lower labour costs. Therefore that can load up on inventory including items that rarely sell.

There are several implications of the Long Tail phenomenon for web marketing. Some writers like Anderson claim that the Internet revolutionizes digital content by making even niche products highly profitable, and that the revenues produced by small niche products will ultimately outweigh the revenues of hit movies, songs, and books. For Hollywood, and all content procedures, this means less focus on the blockbusters that bust the budget, and more emphasis on the steady base hit titles that have smaller audiences but make up for it in numbers of titles. The Long Tail is a democratizing phenomenon: even less well-known movies, songs, and books can now find a market on the Web. There’s hope for your blog and garage band! For economist, the Long Tail represents a net gain for social welfare because now customers can find exactly the niche content they really want rather than accept the “big hits” on the shelf. The Web’s Long Tail makes more customers happy, and the possibility of making money on niche products should encourage more production of “Indy” music and film.

The problem with all these misses in the long Tail is that few people can find them because they are- by definition- largely unknown. Hence, in their native state, the revenue value of low-demand products is locked up in collective ignorance. Here’s where recommender systems come into play: they can guide consumers to obscure but wonderful works based on the recommendations of others.

In many cases, recommendations are made based on past purchasing behaviour of the user, which may or may not reflect the needs or preferences of the user today. The ability to narrow down the list of potential options, however, makes the information gathering process more efficient and for many users very helpful.