Finance & Consulting - Sixth Form FAQ:

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    (Original post by Trapz99)
    Lol I swear you study this stuff at university. You're an expert on this lol. Enjoy your internship
    ahh i was just curious if someone can explain to me why someone would want to buy an option that's all.
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    (Original post by Trapz99)
    Lol I swear you study this stuff at university. You're an expert on this lol. Enjoy your internship
    You could have quickly searched and said 'it's for insurance'

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    (Original post by gr8wizard10)
    ahh i was just curious if someone can explain to me why someone would want to buy an option that's all.
    You can use it to speculate and to hedge.


    (Original post by Princepieman)
    You could have quickly searched and said 'it's for insurance'

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    Yeah but I don't want to cheat on gr8wizard's tests lol
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    (Original post by Trapz99)
    You can use it to speculate and to hedge.
    what's an example where i can use an option to speculate? this is all interesting stuff
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    (Original post by gr8wizard10)
    but why would anyone want to buy these things? why can't i just buy the security at the specific time without paying for this option, what's the difference?

    so i'm buying a piece of paper (contract)? i'm rather confused
    There's lots of reasons mofo

    The most important one IMO is that you think the stock is going to go a certain away and you can profit from the difference. They're also used to hedge against changes in prices and markets you are not speculating in but might affect your returns if you don't hedge
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    i bet you don't know how to properly construct a convertible bond arbitrage
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    (Original post by MnWhCntBMvd)
    There's lots of reasons mofo

    The most important one IMO is that you think the stock is going to go a certain away and you can profit from the difference. They're also used to hedge against changes in prices and markets you are not speculating in but might affect your returns if you don't hedge
    what does a 'certain away' mean?
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    (Original post by gr8wizard10)
    what's an example where i can use an option to speculate? this is all interesting stuff
    You could buy a call option which gives you the right to buy a share of Microsoft for £25 in Janaury 1st 2017. The price of a share of Microsoft then rises to £35 on January 1st 2017. So you use that call option to buy that share of Microsoft, sell it and make £10 of profit.
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    (Original post by Trapz99)
    You could buy a call option which gives you the right to buy a share of Microsoft for £25 in Janaury 1st 2017. The price of a share of Microsoft then rises to £35 on January 1st 2017. So you use that call option to buy that share of Microsoft, sell it and make £10 of profit.
    Forgot the cost of the option bro

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    (Original post by Princepieman)
    Forgot the cost of the option bro

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    I don't know, £5? So £5 profit.
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    (Original post by Trapz99)
    You could buy a call option which gives you the right to buy a share of Microsoft for £25 in Janaury 1st 2017. The price of a share of Microsoft then rises to £35 on January 1st 2017. So you use that call option to buy that share of Microsoft, sell it and make £10 of profit.
    This doesn't really get to the heart of why you would want to use an option. Why not just go long or short on MFST?

    It's all about leverage while minimising downside
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    (Original post by MnWhCntBMvd)
    This doesn't really get to the heart of why you would want to use an option. Why not just go long or short on MFST?

    It's all about leverage while minimising downside
    Bruh why are you bothering... this has little to do with the thread
    Do you evenwork in finance/ study it?
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    (Original post by MnWhCntBMvd)
    i bet you don't know how to properly construct a convertible bond arbitrage
    I bet you don't even know how to price Bermudan Swaptions
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    (Original post by Trapz99)
    I bet you don't even know how to price Bermudan Swaptions
    Who cares lol

    You only need to be good at pricing one type of asset. If you can be really good at that and identify small mispricings in the market, you can use leverage to become phenomenonally wealthy.
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    (Original post by Princepieman)
    Rounded up data for spring weeks, summers and grad from the past 5 ish years (recent 2-3 years from friends and some scraped data from prior summer/SW threads on here). Also reflects the linkedin list that I don't think is published anymore.

    What do you disagree on and why?

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    Ok fair enough, would be interested to see the raw data if you have that? My perception is just based of my personal experience and anecdotes from friends/other attendees so your methdology is likely to be more accurate. But from what I've encountered:

    Tier 1: Cambridge, LSE, Oxford
    Tier 2: Warwick and UCL
    Tier 3: Imperial, Durham, St Andrews + (Bristol and Bath at some events)
    Tier 4: Edinburgh, KCL + (Exeter and Leeds sometimes)
    Tier 5: The rest I don't see frequently appearing

    I realise people will disagree with me as well, but this is just what I've encountered so please don't take offense if I've omitted your uni or placed your uni in a tier you disagree with
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    (Original post by KingBach12)
    Ok fair enough, would be interested to see the raw data if you have that? My perception is just based of my personal experience and anecdotes from friends/other attendees so your methdology is likely to be more accurate. But from what I've encountered:

    Tier 1: Cambridge, LSE, Oxford
    Tier 2: Warwick and UCL
    Tier 3: Imperial, Durham, St Andrews + (Bristol and Bath at some events)
    Tier 4: Edinburgh, KCL + (Exeter and Leeds sometimes)
    Tier 5: The rest I don't see frequently appearing
    The only reason Imperial might have fewer people in finance is because they tend to be less interested in that career on average compared to somewhere like LSE
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    (Original post by KingBach12)
    Ok fair enough, would be interested to see the raw data if you have that? My perception is just based of my personal experience and anecdotes from friends/other attendees so your methdology is likely to be more accurate. But from what I've encountered:

    Tier 1: Cambridge, LSE, Oxford
    Tier 2: Warwick and UCL
    Tier 3: Imperial, Durham, St Andrews + (Bristol and Bath at some events)
    Tier 4: Edinburgh, KCL + (Exeter and Leeds sometimes)
    Tier 5: The rest I don't see frequently appearing
    Eh, wouldn't put them into tiers this way tbh - all of the top 6 have higher placement numbers overall than the others. But as you can see, the same names show up - albeit you're missing Notts which shows up a crapload.

    It's a lot of data man, you can get a glimpse at snippets of it if you look for the spring week 2016 stats thread and look in the high finance thread. In total it's probably 1-2k datapoints.



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    (Original post by Trapz99)
    The only reason Imperial might have fewer people in finance is because they tend to be less interested in that career on average compared to somewhere like LSE
    I don't doubt that, my 'tiering' is just based off what I saw.

    (Original post by Princepieman)
    Eh, wouldn't put them into tiers this way tbh - all of the top 6 have higher placement numbers overall than the others. But as you can see, the same names show up - albeit you're missing Notts which shows up a crapload.

    It's a lot of data man, you can get a glimpse at snippets of it if you look for the spring week 2016 stats thread and look in the high finance thread. In total it's probably 1-2k datapoints.

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    I put it in tiers because those in higher tiers were more frequently represented, that is the only reason. I didn't see as many Imperial students as I did LSE students hence why they are not in the same tier even though Imperial is a 'target school'.
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    (Original post by Trapz99)
    You could buy a call option which gives you the right to buy a share of Microsoft for £25 in Janaury 1st 2017. The price of a share of Microsoft then rises to £35 on January 1st 2017. So you use that call option to buy that share of Microsoft, sell it and make £10 of profit.
    nice! Mn is right too in the sense that entering into an option is generally cheap exposure to the underlying so you're utilising this notion of leverage, and these derivative gives more leeway into creative though process.

    nice to see junior students taking an early interest in finance, although i hope you don't want to enter into trading.
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    Why the flip are people arguing about options here ahahaha
 
 
 
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