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Plex loans (options)
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Arthur Edwards
Doomheim
#1 - 2013-12-29 21:24:46 UTC
It's been about a decade since I've looked at anything as complicated as options. Also this might be my first post on this character (woot), before this I was Arpad Elo, Puremurder, and most recently Soft Step.

Anyways, I was curious if there would be any value to hedging against plex price increase via a collateralized loan at something like 1-2% per month using a plex as the collateral. So you've committed to buying say 2 plex per month, and you buy them, take a loan on them and buy them again and use them, then next month you decide between purchasing new plex or

I could see it as a way of fixing costs of operating characters. You'd definitely have to pay something for the loan though and I could see this being a way better thing to do during the summer than during the winter.

Anyways, anyone with any better further thoughts on that, please feel free to post them here. :)

Likewise, actually anyone with a good idea as to what I should read in order to learn to math this out on my own (looking at you, V.V.), please share that info with me also! :)
Vaerah Vahrokha
Vahrokh Consulting
#2 - 2013-12-30 08:10:16 UTC
You don't hedge against a globally trending market.

You hedge against a ranging market.

Who goes the first way, risks what Keynes said: "Markets can remain irrational longer than you can remain solvent".

In order to hedge you must at least find a monthly chart that formed two tops across the years. PLEX are not it.

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Cavalira
Habemus
#3 - 2013-12-30 10:38:36 UTC
Vaerah Vahrokha wrote:
You don't hedge against a globally trending market.

You hedge against a ranging market.

Who goes the first way, risks what Keynes said: "Markets can remain irrational longer than you can remain solvent".

In order to hedge you must at least find a monthly chart that formed two tops across the years. PLEX are not it.


Molto bene
Arthur Edwards
Doomheim
#4 - 2013-12-30 15:58:43 UTC
lol thanks man, and good quote too :)
Chris Carlyle
Doomheim
#5 - 2013-12-31 19:16:03 UTC
Arthur Edwards wrote:
Anyways, I was curious if there would be any value to hedging against plex price increase via a collateralized loan at something like 1-2% per month using a plex as the collateral. So you've committed to buying say 2 plex per month, and you buy them, take a loan on them and buy them again and use them, then next month you decide between purchasing new plex or

I could see it as a way of fixing costs of operating characters. You'd definitely have to pay something for the loan though and I could see this being a way better thing to do during the summer than during the winter.

I used to buy 'physical' PLEXes to hedge against inflation. The idea of borrowing ISK to buy PLEXes (expecting them to go up) might work, but I'm not sure if there is demand for options. Both loans and PLEXes are already available and any (newly introduced) financial product would require a certain amount of trust.

Vaerah Vahrokha wrote:

You don't hedge against a globally trending market.
You hedge against a ranging market.
Who goes the first way, risks what Keynes said: "Markets can remain irrational longer than you can remain solvent".
In order to hedge you must at least find a monthly chart that formed two tops across the years. PLEX are not it.

We thought the real estate prices would always go up, right? PLEX might be a bubble. Don't bet all your ISK on it.