Re: Consequences of breaking RSA, AES

From: Mok-Kong Shen (mok-kong.shen_at_t-online.de)
Date: 05/09/03


Date: Fri, 09 May 2003 16:43:50 +0200


Bryan Olson wrote:
>
> Mok-Kong Shen wrote:
> >
> > Louis Scheffer wrote:
> >
> >>Mok-Kong Shen <mok-kong.shen@t-online.de> writes:
> >>>If I understand your last sentence correctly, there
> >>>is a general way of getting rich thru buying options,
> >>>for one wins thereby regardless of the direction the
> >>>stock moves. That would be marvelous. Could you please
> >>>elaborate that some more?
> >>
> >>Yes, it's possible, but the idea works only if the variations are large.
> >>If the price does not change much, you lose money.
> >>
> >>Suppose a stock is selling at $20. For a few
> >>dollars/share you can by the right (but not the obligation) to buy shares
> >>a few months from now at $20/share. For this example let's make the cost
> >>$2/share though it varies due to market conditions. (The seller is
> >>expecting that the price will not increase, and he can pocket the
> $2/share
> >>and keep his shares). Likewise you can buy the right, but not the
> obligation,
> >>to sell shares a few months from now for price of $20, from someone who
> >>thinks the price will go up. Now if the price varies a lot, one of these
> >>two will become valuable, and the other worthless.
> >>The downside is that if the price does not vary by more than $4,
> you've lost
> >>money.
> >
> >
> > One terms the one 'put' and the other 'call' option.
> > Now you as investor has to decide whether you do put
> > or call. If you speculate on the one kind of options
> > and the market goes in the other direction, you'll
> > certainly lose. Or am I missing something?
>
> You are missing a few minutes of thought. Louis Scheffer has
> given you all you need to know. Re-read his post carefully.

He (and also you) entirely missed the context.

Colin Andrew Percival wrote:

   A better idea would probably be to buy options so
   that you profit regardless of the direction the
   stocks move.

I wrote:

   If I understand your last sentence correctly, there
   is a general way of getting rich thru buying options,
   for one wins thereby regardless of the direction the
   stock moves. That would be marvelous. Could you please
   elaborate that some more?

I was questioning the possibility of (always) winning
with options 'regardless' of the direction the stock
moves. (That is clearly impossible. Do you agree?
I knew that's impossible, but for rhetoric reasons I
formulated a question.) Is that clear?

M. K. Shen