| 5 |  | To guard against foreign financial invasion it is necessary to know the following.
Chinese professor explaining core reason of global chaos.
https://www.youtube.com/watch?v=qGBETupGB-E&t=1116s
A derivative is just a desire, a promise or deception. It is like promising the moon in proposing to a girl.
Derivatives are financial contracts whose value is derived from an underlying asset, like a stock, bond, or commodity. They are used for purposes such as hedging risk or speculating on price movements. Options are a common type of derivative.
Call options
A call option grants the buyer the right, but not the obligation, to purchase an underlying asset at a predetermined "strike price" by a set expiration date.
• For the buyer: Call options are purchased with the expectation that the asset's price will rise, allowing the buyer to acquire it at the lower strike price. The buyer's risk is limited to the premium paid.
For the seller: Sellers of call options anticipate the asset's price will not significantly increase, aiming to profit from the premium received. The seller is obligated to sell the asset at the strike price if the option is exercised.
Put options
A put option gives the buyer the right, but not the obligation, to sell an underlying asset at a specific strike price on or before its expiration date.
• For the buyer: Put options are bought when the buyer expects the asset's price to fall, allowing them to sell at the higher strike price. They can also be used as a hedge against potential losses in an owned stock.
• For the seller: Sellers of put options expect the asset's price to rise or remain stable. They earn the premium from the buyer and hope the option is not exercised, which would obligate them to buy the asset at the strike price.
This gives denizens of the stock market an advantage if there is a cooperative bank. The most dangerous are heavily leverage derivatives. The persons making the derivate call has privileges like no down payment, no interest as they might be bank employees or mambers of hedge funds. On top of that it is not their money at risk but the depositors cash. Insured to $250,000. When a few billions are involvedmaybe a few hundred depositors money may be involved could be covered by the insurance. The rapid calls and put options (cancel orders) make the stock market volatile and when foreign nations economies are involved it is devastating to smaller economies. These are virtual stocks options and should be controlled.
China should make it illegal for derivatives with very high leverage and must give a an advance warning before making a call option or a put option so Chinese companies can adjust. The higher the amount the longer the time of advance warning. More than one $US biillion dollar a month’s notice. | 2025-11-10 02:47:03 |
