Do Superstitious Traders Lose Money?

Found an interesting paper (scribd embed below) where the authors hypothesize that superstition may be a symptom of a general cognitive disability in making financial decisions.

The authors constructed a “superstition index” and bucketed traders based on their trading activity in the Taiwan Futures Exchange. They found that the superstitious individuals (the top-quintile of the superstition index) under-perform their non-superstitious counterparts (the bottom-quintile of the superstition index) by 1.6 basis points within a trading day. The under-performance widens to 2.4 basis points for one day and 6.3 basis points for five days after the transactions.

Here’s an odd titbit: Did you know that India’s Independence Day falls a day after Pakistan’s because astrologers in India insisted that August 14, 1947, was an inauspicious day to become independent?

Options Daily 21.08.2014

Nifty OI

nifty.puts.calls.AUG.2014-08-19.2014-08-20

Bank Nifty OI

bank-nifty.puts.calls.AUG.2014-08-19.2014-08-20

Anomalous Option Trades

A sudden increase or decrease in open interest can signify informed buying/selling that you can potentially profit from. Option traders tend to ‘lead the pack’ and their actions can be used to gain insight into the consensus opinion of traders. This scan lists option trades that were one standard deviation away from the average over the last 20-days. Note that this scan maybe too noisy around expiry.

You can download the data here.

Check out our Option Strategy Studio. One more reason to open a demat account with us.

Opening Bell 21.08.2014

Your world at 9am

world equity markets 2014-08-21

Equities

Major
DAX(DEU) -0.21%
CAC(FRA) -0.32%
UKX(GBR) -0.35%
NKY(JPN) +0.79%
SPX(USA) +0.25%
MINTs
JCI(IDN) -0.17%
INMEX(MEX) +0.63%
NGSEINDX(NGA) -0.05%
XU030(TUR) -0.59%
BRICS
IBOV(BRA) +0.73%
SHCOMP(CHN) -0.57%
NIFTY(IND) -0.28%
INDEXCF(RUS) +0.53%
TOP40(ZAF) +0.25%

Commodities

Energy
Brent Crude Oil -0.22%
Ethanol +0.00%
Heating Oil -0.10%
Natural Gas +0.92%
RBOB Gasoline +0.01%
WTI Crude Oil -0.04%
Metals
Copper +0.00%
Gold 100oz -0.26%
Palladium -0.14%
Platinum -0.09%
Silver 5000oz +0.00%

Currencies

USDEUR:+0.07% USDJPY:+0.10%

MINTs
USDIDR(IDN) +0.11%
USDMXN(MEX) +0.04%
USDNGN(NGA) +0.12%
USDTRY(TUR) +0.04%
BRICS
USDBRL(BRA) +0.67%
USDCNY(CHN) +0.16%
USDINR(IND) -0.11%
USDRUB(RUS) +0.32%
USDZAR(ZAF) +0.04%
Agricultural
Cattle -0.23%
Cocoa +0.83%
Coffee (Arabica) +0.82%
Coffee (Robusta) +1.13%
Corn -0.28%
Cotton +0.67%
Feeder Cattle +0.19%
Lean Hogs -1.08%
Lumber +0.37%
Orange Juice +0.51%
Soybean Meal +1.19%
Soybeans +0.58%
Sugar #11 +1.55%
Wheat -0.23%
White Sugar +1.00%

Credit Indices

Index Change
Markit CDX EM +0.12%
Markit CDX NA HY +0.01%
Markit CDX NA IG +0.23%
Markit CDX NA IG HVOL -0.71%
Markit iTraxx Asia ex-Japan IG -1.57%
Markit iTraxx Australia -1.39%
Markit iTraxx Europe -1.01%
Markit iTraxx Europe Crossover -5.58%
Markit iTraxx Japan -1.21%
Markit iTraxx SovX Western Europe -0.34%
Markit LCDX (Loan CDS) +0.00%
Markit MCDX (Municipal CDS) +1.07%
Narrower spreads, S&P up last night and NKY up in the morning, what more can a bull ask for?

Must reads

The government expects to reduce the food subsidy burden by Rs 23,400 crore annually. And did you know that some states give a “bonus” to farmers over and above the MSP? (TOI, #economy)

Here’s some WTF facts from Ashish Chauhan, BSE CEO, at the VCFS Summit:

BSE with combined m-cap of Rs 92 lack crore is bigger than banking system with asset value of Rs 80 lack crore.
There were 2.6 crore investors in stock market in 1992. The no. remains the same in 2014.

Darwinism in action:

  • 429 of the original Fortune 500 companies [1955] are no longer in business today.
  • Half a century ago, life expectancy of a firm in the Fortune 500 was around 75 years. Now it’s less than 15 years and declining even further.

Good luck!

Opening Bell 20.08.2014

Your world at 9am

world equity markets 2014-08-20

Equities

Major
DAX(DEU) +0.96%
CAC(FRA) +0.56%
UKX(GBR) +0.56%
NKY(JPN) -0.05%
SPX(USA) +0.50%
MINTs
JCI(IDN) +0.40%
INMEX(MEX) +0.31%
NGSEINDX(NGA) +1.07%
XU030(TUR) +2.73%
BRICS
IBOV(BRA) +1.54%
SHCOMP(CHN) -0.16%
NIFTY(IND) +0.30%
INDEXCF(RUS) +0.81%
TOP40(ZAF) -0.49%

Commodities

Energy
Brent Crude Oil -0.05%
Ethanol +0.00%
Heating Oil -0.05%
Natural Gas -0.49%
RBOB Gasoline +0.58%
WTI Crude Oil +0.52%
Metals
Copper +0.00%
Gold 100oz +0.02%
Palladium +0.24%
Platinum +0.13%
Silver 5000oz +0.00%

Currencies

USDEUR:+0.11% USDJPY:+0.11%

MINTs
USDIDR(IDN) +0.21%
USDMXN(MEX) +0.02%
USDNGN(NGA) -0.03%
USDTRY(TUR) +0.16%
BRICS
USDBRL(BRA) -0.47%
USDCNY(CHN) +0.07%
USDINR(IND) -0.14%
USDRUB(RUS) +0.33%
USDZAR(ZAF) +0.05%
Agricultural
Cattle -0.43%
Cocoa -1.20%
Coffee (Arabica) -3.20%
Coffee (Robusta) -0.36%
Corn -0.69%
Cotton +0.19%
Feeder Cattle -0.53%
Lean Hogs -0.32%
Lumber +0.54%
Orange Juice -1.09%
Soybean Meal +0.35%
Soybeans +0.11%
Sugar #11 -1.40%
Wheat -0.14%
White Sugar -1.25%

Credit Indices

Index Change
Markit CDX EM +0.20%
Markit CDX NA HY +0.34%
Markit CDX NA IG -2.58%
Markit CDX NA IG HVOL -3.55%
Markit iTraxx Asia ex-Japan IG -0.61%
Markit iTraxx Australia -0.23%
Markit iTraxx Europe -4.47%
Markit iTraxx Europe Crossover -18.59%
Markit iTraxx Japan -0.02%
Markit iTraxx SovX Western Europe +0.09%
Markit LCDX (Loan CDS) +0.00%
Markit MCDX (Municipal CDS) -0.40%
Credit markets continue to signal “risk on.” Although western markets ended in the green, NKY seems to have opened in negative territory this morning. Will the NIFTY rally continue today? How many successive +1% days can we sustain? Stay tuned!

Must reads

Sebi has proposed that all listed companies should intimate within 15 minutes of closure of the board meetings about decisions on dividends, bonus, fund raising and buyback, among others. (ET)

The key to active reading is finding the basis for any factual assertion to determine if it is logically valid or not. Data provides a start for understanding market events. But without context, we lose meaning. Lacking that, the alternative is often assumptions, myths and bias. (BV, #behavioral-finance)

“Governments need to reform their labour markets, reduce taxes that weigh on business, free companies from red tape and continue to repair their public finances. Merely talking about such reforms is not enough…” Is he talking about India? Think again! (FT)

Good luck!

Options Daily 20.08.2014

Nifty OI

nifty.puts.calls.AUG.2014-08-18.2014-08-19

Bank Nifty OI

bank-nifty.puts.calls.AUG.2014-08-18.2014-08-19

Anomalous Option Trades

A sudden increase or decrease in open interest can signify informed buying/selling that you can potentially profit from. Option traders tend to ‘lead the pack’ and their actions can be used to gain insight into the consensus opinion of traders. This scan lists option trades that were one standard deviation away from the average over the last 20-days. Note that this scan maybe too noisy around expiry.

You can download the data here.

Check out our Option Strategy Studio. One more reason to open a demat account with us.