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I bloggen min skriver jeg om det som faller meg inn der og da. Derfor har den ingen rød tråd eller samlende tema, med den konsekvens at kategorien Diverse ganske stor. Bloggen min inneholder meninger, anekdoter fra dagliglivet, konspirasjoner, anvendt finans, filosofering, dikt jeg har skrevet og mye mer. Den dagen det bare er tørt […]

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Finance applied to dating (2) – Options

A friend of mine, who is online, got a proposition from a man, who said he thought she was pretty (entirely true), but who then said she could not offer him what he needed. That proved to be totally true as well. She discovered this when checking what chatgroups he was in:

BDSM, Dominance/submission, Bondage, Breath Control, TIED UP, Tied up outdoors, Dicipline – spanking – doghouse, Doms and subs who seek, figgin (ginger – an exotic spice), Old fashioned discipline, tickled while tied up, Women who want dominant Men, Long term bondage, Mummificationbondage, TRAINING IN BDSM, outdoor spanking, Playrape, Soft bondage, The whip, We who like experimental sex.

Since both my friend and I are simple country girls, what some of these things are we don’t even want to think about. The fact that dogging is not on the list, must be an oversight by this man. Surely he would enjoy that.

Again the excellent concepts of Corporate Finance are useful. This time I will apply options theory which will prove very useful when moving in the jungle of sexual preferences.

An options is a hedging instrument used to hedge a risk exposed asset or liability. However, it must be mentioned that options can be used to take on risk as well – but if this was to be included, this lesson will undoubtedly become too long.

Let us define our sexual needs as the exposure.

There are two main groups of options:

Plain Vanilla options (puts and calls, in- and out-of-the-money, some times is cylinder combinations)

Exotic options (knock-ins, knock-outs, average rate, digital, binary etc. – an seemingly infinite number of variations and new ones are added every week)

Exotic options are often very complex structures, designed to hedge complex underlying exposures. They prove useful only in special cases and need to be tailor-made to fit the exposure. The man with the membership in the chatgroups mentioned above obviously belongs to those who have such a complex exposure that he indeed needs a very exotic option. At least a knock-out, by the looks of it, but I assume he is well over into the world of binary options, perhaps. He might even be in need of options I can’t even imagine exists. But some banker is probably calculating the price of such an option as we speak.

Since exotic options are complex and often hard to grasp, hence difficult to price properly, there are lots of possibilities for a clever banker to sell them to customers who do not really need them. Namely customers who have a plain and simple exposure, best hedged by plain vanilla options. And some customers are bound to fall for the enthusiastic sales pitches of such «clever» bankers. Usually it will turn out ok, but some times it will go straight to hell. And customers suffer great losses. Losses which could have been avoided if a more appropriate hedging instrument had been used.

Without question it is some times a combination of plain vanilla options and a bit of exotic options which will prove the most suited to hedge the exposure perfectly. I believe that if you feel that a plain vanilla options not quite hedges your exposure properly, a dose of exotics may indeed prove to be an advantage. However, it is recommended to start with the more simple and transparent kinds of exotic. And you should be pretty sure that you have both understood the exposure itself and the hedging instrument you plan to use.

Anyone who has an exposure (and we all do) needs to know his or her exposure very well before entering into the jungle of hedging instruments and greedy bankers. So that we don’t choose an instrument which increases the risk rather than limit it. And so that we get what we thought we were getting, and not something totally different. And last, but not least, so that we know that the option is priced right. And that a massive amount of $$$ aren’t ending up in the pockets of some sleazy banker.

A remark to something I read in an open chatgroup about BDSM: A man was talking about finding a partner. He stated that he thought people with a preference for BDSM should not search within that group. But find someone they liked, without thinking about preferences. Because, in his words: «At least 50% go along with it anyways.» So, he would not mention until a relationship was established that BDSM was a must for him in a relationship, i.e. it was no alternative for him to be in a relationship with someone not wanting to engage in BDSM. But that was not necessary to tell his counterpart at an early stage. Since most people go along with it, anyways.

In my opinion, he is not an example of a smart banker, but of a sleazy banker. He wants to do a deal, without the counterparty having insight into what it is she is buying. He just expects her to understand that it is exotic options she needs, really. Clearly, he feels that he knows her exposure better than she does herself. Such a banker would be getting a kick in the a$$ from me. I have met the likes of this man in (completely!) different situations in my professional life. And bankers who think they know my exposure better than I do myself, have misunderstood a few things who really should not be misunderstood.

Isk

with exposure best hedged relatively plain vanilla

To sum this lesson up – something all women know:

ALWAYS check the chatgroups, list of friends and the guestbook of the people you talk to. Tons of interesting and essential stuff can be found there.

Originally written in Norwegian.

Iskwew ©

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