“Costs of trading derivatives are low relative to the costs of trading the underlying assets. As a result of low trading costs and high liquidity, derivatives markets are considered to be efficient.” 1. Try buying options and see if commissions are lower than buying stocks, or if the spread is in your favor. 2. Try to get rid of a position you have and see if liquidity is better than that of the underlying. 3. Options market is more efficient than stock? Where are they going with this?
They’re not talking about exchange traded puts/calls, they’re talking about futures.
No they are not. They are making a general statement about derivatives, appeared in more than one place.
Ok, then they must be including the total cost of trading… market impact, opportunity, timing, etc.? Find the LOS that it corresponds to and then look it up in the actual req’d reading!
Retail equity options are a very tiny piece of the derivatives universe.
> Retail equity options are a very tiny piece of the derivatives universe. Number of participants is much larger…who cares if a bunch of banks run swap agreements back and forth, when hundred of thousands of various options participants exist. This is similiar to the hype over the Forex market…the size of the Forex market is blah blah times the stock market daily volume. Nonsense.
the key to passing is not acting like you are better than CFAI (or Stalla) … instead just take it all in. The forex market probably is more liquid just because there aren’t that many currencies (i.e. “issues” or names, compared to stocks) and they all have to be traded daily to facilitate world trade.
Thanks virgin. The key to passing is asking the right questions.
I took the level 1 Stalla class in New York with Peter Olinto. He wouldn’t let people ask questions during class. I’m guessing it’s because often the students didn’t know enough to ask questions or their questions were a distraction.
Dreary Wrote: ------------------------------------------------------- > > Retail equity options are a very tiny piece of > the derivatives universe. > > Number of participants is much larger…who cares > if a bunch of banks run swap agreements back and > forth, when hundred of thousands of various > options participants exist. This is similiar to > the hype over the Forex market…the size of the > Forex market is blah blah times the stock market > daily volume. Nonsense. LOL.
virgin, in a previous post I paid lots of compliments to Stalla for excellent notes, but I thought the statement they made here was mostly wrong. http://www.analystforum.com/phorums/read.php?1,708674,708712#msg-708712
I passed all 3 levels using stalla but I used to bitch endlessly about BOB STALLA… the worst teacher on the planet.
Who wrote the notes, Peter Olinto.or Bob stalla?
they have a staff of people writing I believe… however, i heard that bob stalla’s brother was in charge. I’m really not sure though. Ask your tutor if you’re in the program (i’m out).
virginCFAhooker Wrote: ------------------------------------------------------- > I passed all 3 levels using stalla but I used to > bitch endlessly about BOB STALLA… the worst > teacher on the planet. amen to that. i was so choked last year when i got my stalla cds and found out bob was doing 40% of the lectures. david herrington was ok, but good lord, bob made me want to bang my head against my desk. and dreary, just ignore this statement, stalla’s derivatives material was ace. i got above 70% in derivatvies every level cause of their notes.
Yeah, Hetherington taught derivatives and he was good!
Poor Bob Stalla. He means well, and by and large started up a good company/service. But the guy sounds like novocaine feels.
Dreary Wrote: ------------------------------------------------------- > > Retail equity options are a very tiny piece of > the derivatives universe. > > Number of participants is much larger…who cares > if a bunch of banks run swap agreements back and > forth, when hundred of thousands of various > options participants exist. This is similiar to > the hype over the Forex market…the size of the > Forex market is blah blah times the stock market > daily volume. Nonsense. Who cares if there are 20,000 people trading 5 AAPL calls at a time. I’m more interested in the 100 players trading hundreds of billions of notional eurodollars.
…it depends on what interests you! Ask someone what’s the largest company in the U.S. and enjoy the answers you get.
Asking people a silly and vague question doesn’t make your original point any less asinine.