IB Products & Exchange
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The Investment Team consists of 25 ambitious students of the University of Groningen. All students have an affinity with the financial world and a profound interest in investing. Collectively we manage a diversified portfolio comprised of equities, derivatives and other financial instruments. Once a month we meet to discuss macro-economic trends, current portfolio holdings and new investment opportunities.
After each meeting we have kpn trading options beer at the bar with our fellow investors. Royal BAM At the time January 10thwe anticipated better prospects for the infrastructure and construction industry. The industry was expected to recover from the tough market conditions that it faced in the aftermath of the global financial crisis. By investing in Royal BAM we capitalized on an upward trend in the industry. Next to the positive momentum for construction companies, our team was correct about the fundamentals of Royal BAM.
As can be seen from the figure, BAM indeed appeared to be undervalued relative to its peers. For an explanation of this strategy you can refer to our previous article An option expires on the third Friday of the month and our option had a maturity of Junewhich implied that kpn trading options was near its maturity date. In our last meeting, dated at May 29 thwe closed this strategy by buying back the call and put options, as well as selling the shares.
We made profit on the shares and the value-reduced call and put options. An ETF trades like a common stock on a stock exchange. Despite the international bailout programme, challenges of securing political stability and debt sustainability remain.
Moreover, GDP contracted again in the first quarter of as growth fails to emerge despite a battery of economic reforms. Besides, the country has by far the highest unemployment rate in the Eurozone. In the beginning of the index noted an all-time low due to uncertainty about the continuation of rescue packages. However, investor confidence improved a bit since Aprilwhen Greece, the European Union and the IMF reached a political agreement on the continuation of the support programme.
In return, Greece must take additional measures in the field of pensions and kpn trading options in All in all, positive news for Greece. The objective of our investment is to take advantage of the recovery of the Greek economy. Investing in an ETF comes with the benefit of diversification. Kpn trading options buying the index, instead of an individual Greek stock, we reduce our exposure to firm kpn trading options risk also known as unsystematic risk.
In regard of our investment objective we only want to be exposed to market systematic risk. Market risk in Greece is relatively high due to its political instability and its dependency on economic conditions of the EU and the IMF.
For that reason Greece formally lost its developed market status inand is now classified as an emerging market. Nevertheless, high levels of uncertainty risk are associated with high potential returns.
Sell in May and go away, but remember to come back in September? Recently May 29 th the Investment Team had its last meeting of the academic year Since there are no meetings scheduled for the coming three months, our investment portfolio needed to be risk adjusted. This is the main task for our control group. The control group is responsible for thorough advice regarding current portfolio holdings.
In order to minimize risk exposure we considered selling equities that might fluctuate heavily in the coming months. Based on technical analysis we concluded that Royal KPN is nearing a resistance level price level where selling is thought to be strong enough to prevent prices from rising higher and could fall back to a kpn trading options lower kpn trading options level which would evaporate our return on the option strategy with Royal KPN.
This led us to buy back the options and sell the stock. Overall we did not cut down the size of our portfolio. Instead, we focused kpn trading options limiting our risk exposure, keeping constant the level of total invested capital.
To limit risk exposure in our portfolio we used the method of hedging. Instead of kpn trading options high kpn trading options stocks, portfolio risk can be reduced by making an offsetting investment. In our last meeting of the previous academic year, the majority of our members voted for a long position in the VIX index. An increase in the implied volatility of stocks adversely affect stock kpn trading options.
Hence, in theory, a downward kpn trading options on stock markets should result in a decent gain on our long position in the VIX index. In practice, however, this strategy did not payoff due to negative roll yield on our long position in the VIX index. For an elaborate explanation click here. This year, we decided to keep Kpn trading options Traders in our portfolio. Flow Traders is a market maker that delivers bid and ask prices for Exchange Traded Products ETPsa collective name for index products such as Exchange-traded securities and commodity funds.
The difference between kpn trading options and kpn trading options prices is the profit for the company. This spread is usually higher when markets kpn trading options more volatile. Recently, Flow Traders published its earnings which were lower than expected. As a result, Flow Traders was trading at kpn trading options all time low during our final meeting. This, together with the fact that Flow Traders benefits from volatile markets led us to keep Flow Traders for the summer to protect our portfolio against increasing volatility.
Catalysts for rising volatility could be the speed of interest rate hikes in the US, the upcoming election in the UK, economic policy of Donald Trump, ending of ECB acquisition program or Greece sliding back towards a new recession.
More information can be found on www. In case you are interested or have further questions, please kpn trading options us via our email: