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With a real currency you could buy options to buy or sell in the future...Does something like that exist for Bitcoins?

Yup.

Actually, volatilities are near historical lows, see here: http://www.cboe.com/data/HistoricalVolatility.aspx

erm, your link only gives data for 2001-2010. I think I heard somewheres that the stock market was around before 2001.

Serious real markets also trade on abstract intangible stuff. Here are some examples

Indexes
Volatility
Interest rates
Weather
Pollution
Payroll

I always thought of a market to invest in film production, where your money went to actually finance a movie and entitle you to a share in revenue (if any). However, film making is a high profit low risk business and as such is reserved to a select number of people, and I'm not sure they need the mass investors for financing, they have enough money.

However I'm not sure where this "movie stocks" and "celebrity bonds" would fit. Technically speaking they are not stocks nor bonds.

Serious real markets also trade on abstract intangible stuff. Here are some examples

Indexes
Volatility
Interest rates
Weather
Pollution
Payroll

I always thought of a market to invest in film production, where your money went to actually finance a movie and entitle you to a share in revenue (if any). However, film making is a high profit low risk business and as such is reserved to a select number of people, and I'm not sure they need the mass investors for financing, they have enough money.

However I'm not sure where this "movie stocks" and "celebrity bonds" would fit. Technically speaking they are not stocks nor bonds.

Serious real markets also trade on abstract intangible stuff. Here are some examples

Indexes
Volatility
Interest rates
Weather
Pollution
Payroll

I always thought of a market to invest in film production, where your money went to actually finance a movie and entitle you to a share in revenue (if any). However, film making is a high profit low risk business and as such is reserved to a select number of people, and I'm not sure they need the mass investors for financing, they have enough money.

However I'm not sure where this "movie stocks" and "celebrity bonds" would fit. Technically speaking they are not stocks nor bonds.

How good are you at math?

Seriously, I wouldn't let the current Bear market put you off of the idea of getting into trading. Start out as a clerk or runner for a good trading firm, learn the ropes and everything you can about the markets, balanced portfolio strategies and options trading, and ride the next Bull market to the top.

If I'd known in my twenties what I know now, I would have done that. Contrary to popular myth you don't have to know exactly when to get in and get out, you just need to know how to spot opportunities and exploit them, understanding risk and how to minimize it, so that your inevitable losses are consistently dwarfed by your equally inevitable gains.

And who knows, you may find yourself honing those programming skills getting a good model put together to increase your earnings.

Frankly, as one whose made a very good living over the years as a programmer, system administrator, and project manager in the financial world, if I had it to do over again I'd go into trading. Same amount of work, similar levels of stress, similar math skills, and far greater financial rewards, the current economic troubles notwithstanding. Why make around $100k - $200k per annum when you can quite readily earn $300k - several million, and no, I'm not exaggerating.

A good place to start, including free courses (normally $50/course): http://cboe.com/LearnCenter/default.aspx

Good luck with whatever career you choose.

Strong explanation from the parent who's obviously been through a corporate finance class.

This is exactly why the options should be expensed. The company gave away options that a normal investor would have paid $10 for today.

Some people say that the options are hard to value, and no one knows what they're worth. It is extremely easy to value things when there is a ready market for them:

Chicago Board Options Exchange quotes

If the stock price plummets, the company gets an unexpected boost, because the call options will be worthless. If the price shoots up, then the company has to take a charge when the execs cash in. Simple.

You are incorrect in saying that the value of the option at grant is zero. If I flip a coin and you get $1 if heads and 0 if tails, that is worth something to you. An option is the same: you get a payoff if the stock goes up and nothing if the stock goes down. The valuation problem for standard options (like those traded on the CBOE) is well understood. There are tricky issues in applying option pricing to employee options, but their value is emphatically not zero.

You may not have asked for the right thing.

There are no options written for SCOX, and there never have been. See here for yourself. Had there been PUT options available, you could have bought those to make money when SCO's stock price crashed. The good thing about options: if you simply buy calls and puts, your loss is limited to your original investment.

Selling short does not involve option trading. It is effectively borrowing stock from holders of SCO at your brokerage and selling it, with the hope that you will be able to buy it back at a lower price to close out the position. If the stock price skyrockets, your potential loss is limited only by how high the price rises. There's a phenomena known as a "short squeeze", where short sellers try to close out their position by buying the stock, which only pushes the price higher.

In order to sell short, you must have a margin account. Depending on the brokerage and the specific stock, margin requirements are different. At mine (Fidelity), the margin requirement for SCOX is 60%, which means you would have to put up $6,000 in cash or marginable equities to short $10,000 of SCOX stock. They also have a minimum account balance.

50% is the initial Federal requirement (at the time of the short sell). Fidelity normally allows the margin requirement to drop to 35% (after the initial short) before issuing a margin call -- which requires you to deposit more cash or close out the position. The 60% margin requirement for SCOX indicates a significantly higher risks.

Part of your problem may have been your lack of knowledge about the terminology and being able to accurately articulate what you wanted to do. The SEC requires brokerages to assess whether clients understand the risks of option trading. I don't know if they are required to do the same for margin trading.

There appears to have been a lot of manipulation of the stock price by insiders: a big drop in price during the day is followed by incremental increases in the price just before close, so that the closing price doesn't look so bad. This is likely cooperative parties trading stock among themselves, with any losses being compensated under the table.

That's why I don't think it wll say below the threshold for the requisite number of days: insiders will prop up the price. The average daily volume is so low that manipulation of the price is relatively easy.

It appears that options on SCO are something like 75 times more popular than options on Ford or MSFT.

No one has written any options on SCO. Try to find it in the following file:

http://www.cboe.com/mktdata/CBOESymbolDir.csv

However, the short interest is very high, meaning that investors have shorted the stock (i.e. sold borrowed stock at a high price, betting that they will be able to close their position at a lower purchas price). The last time I saw data for SCOX, the number of shares shorted was almost 3 times the average daily volume:

http://www.viwes.com/invest/shorts/query.cgi?q=sco x

Unless they are hedging their put options. (does sco have options?)

No, unfortunately -- I wanted to buy some puts as well, since that would be cheaper and less risky than going short (and I've wanted to go short since $9, good thing I don't have any play money!).

See CBOE for the lack of options for this stock.

And, agreed -- there is no point in both going long and short on the same stock with the same number of shares -- they'd just be wasting their transaction costs with no net change regardless of where the stock goes. If this was the strategy then perhaps they just wanted to park the money for a while, and look like they were benefiting SCO? That seems unwise, though, so I'm thinking that the initial guess as to their strategy may be off.

Also, it is probably easier to get approval from a broker to trade puts. Shorting stock basically means him lending you stock. Buying puts avoids that aspect of it.

Actually, anyone with a margin account can short stock (if the broker can find it to loan to you). Being approved to trade options is a more difficult proposition.

Usually options approval is split into different levels:

1. Selling covered calls.
2. Buying puts and calls.
3. Selling naked puts and calls.
4. Spreads, straddles, and other more complex strategies.

Characteristics and Risks of Standardized Options

As far as I've been able to research (see CBOE) [cboe.com] there are no options of any type for SCO.

This is too bad, because although puts have a time limit, they're much more profitable than selling short (max gain is 200%, if you use all of your margin ability which is of course very dangerous). With the right puts (I'd buy one year out), you could easily make 500%.

So shorting SCO cannot be made less risky, as there are no options available. I wish there were... (If you can find them, please respond!)

And if you buy the correct series of put options on SCO, you can be 500% better off when the judge tells SCO to go fuck itself sideways with a wire brush.

As far as I've been able to research (see CBOE) there are no options of any type for SCO.

This is too bad, because although puts have a time limit, they're much more profitable than selling short (max gain is 200%, if you use all of your margin ability which is of course very dangerous). With the right puts (I'd buy one year out), you could easily make 500%.

Why? Well, going long (buying) stock is good when it's going up. Going short (selling before buying, by borrowing the stock from your broker -- you need a margin account for it) makes money when the stock goes down.

Options make money within a certain timeframe on stock moves. Back when I did have money, late 1998 I believe, I thought Dell would move but wasn't sure which direction, so I bought both puts and calls, in equal dollar amounts. The stock moved up, and I made money on the calls and lost 100% on the puts. However, the amount I made was something like 700% (God I miss the 90s!), so the bet paid off bigtime.

Right now, either SCO has something up their sleeve (which the evidence, such as there is, doesn't seem to support) or they're a fuckedcompany and will be sleeping with the fishes before long. One year is plenty of time for this to pan out (if I was more of a gambler, I'd say 3 months).

Dammit, I said all that and turns out there are no options for SCOX stock. Oh well. Here's the current options for DELL in case you want to learn more (the CBOE has more info in their links -- see the Learning Center at the top right).

I used to work for the CBOE as a Systems Support Analyst. In this job I was supposed to do hands-on troubleshooting of the options quote distribution system that populates the arrays of screens with stock tickers and options prices.

At the core was a huge tablespace (database) of product:Bid:Offer:Last:Timestamp. That was an Amdahl mainframe running TPF (like the Sabre system backend for Travelocity). From there, the prices went through a ring-buffer where they were synchronously distributed (by another corporate entity: OPRA) back to all the derivatives exchanges including the CBOE. This happened over a T-1 in my time. Some Stratus Continuum (Wicked expensive redundant out the wazoo HPPA boxes running VOS) modules massaged the data out to and back in from OPRA. No traders on the CBOE floor have yet seen the effects of their bid/ask changes or last-sales on the overhead ticker displays.

The Stratus modules maintained a first-tier subscription list for 10 georaphic "cells" (really called "posts" at CBOE), and streamed the appropriate updates to a "Post Display Server" (PDS). Each PDS server maintained a second-tier subscription list for 4 (possibly more) "Remote Control Node" (RCN servers) which fed a third-tier of subscriptions to the RCN displays, the end-client, a Tektronix X terminal running proprietary quote-screen software locally.

We could never get clocks on all the servers to synchronise completely, but I estimate it took less than 500ms for a price change to make it to the screens, and peak trading times would see delays of 2-3 seconds.

The multiple tier distribution system is designed to limit the impact of demand/performance spikes to the fewest number of clients possible. For example: your MMPOLG might have a server for each "city" in your game. I've always thought this might be a good application for a Beowulf cluster because of all the paralellism in dealing with all the clients simultaneous actions. Basically, you're a database of game state, and you have to sort and forward events to the fewest clients possible in order to keep things from getting overloaded. Clients recieve state, and they feed input to a state-engine, which generates events, which get sent back to the clients. The server sends the client a pond, the client throws a stone in it, and the server sends ripples back to all the clients at the pond. Your job is to keep that process as lightweight and distributed as possible.

Good luck.

At one point my former company was supposed to develope a FLEX Options trading system for the CBOE. They were going to use Solaris not NT. However, since there has been no news on this front, who knows what they're using. Here's the article anyway. Trading Edge Announces Strategic Partnership With The Chicago Board Options Exchange

Example:

January 2000 puts on Microsoft (MSQMJ) are currently priced at $3/4. You buy a package of 100 contract (which you pay $75). Suppose Microsoft gets slammed by the Supreme's (and that they are quick enough to be done until the third Friday in January...), and crash to $40. Your strike price will be $10 lower than the market price, so you pocket the difference: $1000. You just made $925 (the $1000 you made minus the $75 you paid for the options).

If on the other hand it doesn't work out, and they'll hover around $55, it is not interesting to exercise (you'd lose $500 doing so). So you let your option simply expires worthlessly, and you just lost $75 rather than $575.

N.B. In reality, options are actually rarely exercised. What really happens is that as soon as the market price falls below the strike price (for puts), they appreciate tremendously: in our example of Microsoft tanking to $40, the MSQMJ options would be worth $10/option, at which time you'd simply sell them.

The big advantage of put options over short sells is that you can get no margin calls: i.e. you don't get into trouble if Microsoft climbs to $95 before crashing back to $40. Their disadvantage however, is that they do expire: so if for instance the court is slower than you expected, you lose.

Now, correct me if I'm wrong, but isn't a dime only a few cents? So this isn't like the doubling in price which happened last September.

Yep, next weeks price increse is only ten cents a 1.6% price hike.

The article seems to think the demand will continue (or rise), and that Micron has additonal idle production capacity, but pretty much nobody else does (they could switch back to DRAM from FLASH, if DRAM becomes more profitable then FLASH again, incresing hte price of FLASH of corse).

If it is right then we are in for more price hikes. How many or how much is, of corse, pretyt much unknown. If anyone could tell for sure they could make a huge amount of money from buying and selling futures on RAM. Hmmm, I can't find DRAM futures at CBOE (which has other futures and options), anyone know where they might be?

In other words this is the begining. Possably the begining of nothing. Possably the begining of a huge increse. Probbably merely something in between.

I strongly advise anyone even considering getting even remotely involved with options, to visit the Chicago Board Options Exchange's basic education page. The Philadelphia Stock Exchange also has the Characteristics and Risks of Standardized Options available on its site. Most people simply don't understand what they are getting into with options. Although options on equity securities can potentially lead to tremendous payouts, particularly at the height of the largest bull market in history, they can much more easily turn out to be completely worthless. If you don't take the time to understand the inherent risks of options trading, you deserve to get burned at some point in the future.