Possible error. When you buy the contract delivering the apples on 10/20, doesn't the broker demand the full $200 immediately or margin at minimum? That would result in a lower net profit or loss. Are you waiting for 10/20 to approach, which takes on the risk of an increase in the price of apples?
Otherwise, are you now buying call options on futures contracts, which still charge a premium to the buyer?
@siggyboss Yes, if we are dealing with futures contract, the exchange would have required an extra 10% in the margin account. Borrowing this money at, say, 10% would lower the profit somewhat (by maybe $2) but it will still be there.
@Manodragon A financial network has expressed interest in showing these videos on their website (and possibly their TV channel). They need to be under 4 minutes though. I am still getting used to not having as much time as I'd like :)
@khanacademy aha. I see. :) btw, thanks for magnetism and derrivating functions. those vids really helped me. I look forward to learn a lot more. and Im spreading the word here in eastern europe. everyone Ive recommended khanacademy replied with very positive feedback
the 5% is a risk free interest rate, at a insured bank account or federal bond
3waybar 3 months ago
What I don't get is - where would he be earning that 5% interest from?
Thanks
imbagogo 11 months ago
Maybe I missed it, but where did the 5% come from?
vway2 11 months ago
@vway2 Just made it up.
khanacademy 11 months ago
Possible error. When you buy the contract delivering the apples on 10/20, doesn't the broker demand the full $200 immediately or margin at minimum? That would result in a lower net profit or loss. Are you waiting for 10/20 to approach, which takes on the risk of an increase in the price of apples?
Otherwise, are you now buying call options on futures contracts, which still charge a premium to the buyer?
Thanks.
siggyboss 11 months ago
@siggyboss Yes, if we are dealing with futures contract, the exchange would have required an extra 10% in the margin account. Borrowing this money at, say, 10% would lower the profit somewhat (by maybe $2) but it will still be there.
khanacademy 11 months ago
@khanacademy Thanks for the explanation.
Are you going to discuss any other financial subjects? You seem to have addressed everything under the sun.
siggyboss 11 months ago
something of topic...why are you keeping this short? Ive seen you history vids with 17 minutes. . .
Manodragon 11 months ago
@Manodragon A financial network has expressed interest in showing these videos on their website (and possibly their TV channel). They need to be under 4 minutes though. I am still getting used to not having as much time as I'd like :)
khanacademy 11 months ago 2
@khanacademy aha. I see. :) btw, thanks for magnetism and derrivating functions. those vids really helped me. I look forward to learn a lot more. and Im spreading the word here in eastern europe. everyone Ive recommended khanacademy replied with very positive feedback
Manodragon 11 months ago
@khanacademy Does that mean non-financial topics aren't going to be purposely short?
siggyboss 11 months ago
@khanacademy
What I don't get is - where would he be earning that 5% interest from?
Thanks
imbagogo 11 months ago
@imbagogo Maybe from a bond, or bank deposite.
dalcde 11 months ago