Online shopping boom in Asia

Online shopping boom in Asia

Thu, Dec 13, 2012

The Straits Times

 

Online shopping boom in Asia

by Lee Seok Hwai

 

TAIPEI - One consumer ordered a year's supply of sanitary napkins. Another, who was not happy with a newly purchased notebook computer, returned it after more than a week.

And if that mail-order dress does not fit, the courier who delivered it will take it back to the store, free of charge.

This is the world of online shopping for millions of increasingly wired but also increasingly time-starved consumers in Asia's biggest and most developed economies. It is instant gratification at the click of a button, with after-sales service as a bonus.

Last year, online merchants rang up sales totalling $344.6 billion in China, Japan, South Korea, Taiwan and Hong Kong. All five economies saw significant growth compared to the year before, ranging from 8 per cent in the relatively mature market of Japan, to 67.8 per cent in China, which has the lowest Internet penetration rate of just 40 per cent.

In Singapore, consumers spent $1.4 billion, or 33 per cent more than in 2010, according to online payment firm PayPal and research company Nielsen.

A case in point: China's largest online shopping portal Taobao reported record one-day sales of 19 billion yuan (S$3.7 billion) on Nov11, when the country marked "Singles' Day".

Bank executive Guan Xin was one of the more than 200 million Chinese - attached or otherwise - who marked that day with some virtual retail therapy. She spent about 3,000 yuan in total on a pair of running shoes, an MP4 player, a mobile phone charger, and even a mop and pail, whose prices were heavily marked down.

"It's faster to buy online. I already knew what I wanted," said Ms Guan, 27.

So did one of her friends, who bought a year's supply of sanitary napkins.

Ms Guan is archetypal of the region's online shopper, according to analysts: Aged between late teens and 30s, willing and able to spend, as well as tech-savvy enough to search for the best bargains with just a few clicks.

And the types of products they buy are expanding beyond long-time favourites clothes and accessories, electronic gadgets and air tickets, to daily necessities and food.

The Japanese now make 20 per cent of their daily purchases at online stores, according to a recent survey by Nikkei business daily.

In Taiwan, top online retailer PChome sold a million packs of toilet paper rolls last year.
The item was ranked the second most popular - after consumer electronics - among NT$12.3 billion (S$516 million) worth of goods the company sold.

The trend presumably owes itself to good service.

Free delivery, sometimes with no minimum spending required, has become de rigueur and is a big plus for grocery purchases.

Many retailers also offer free returns and refunds - no questions asked - for faulty items or goods still in saleable condition.

Web services engineer Lee Yi-chiun, 37, once returned a notebook computer with a faulty screen to the online retailing arm of Yahoo Taiwan after using it for over a week.

"I got a full refund promptly, no problem," said Mr Lee, who is one of the company's "platinum" members, having racked up more than NT$1 million worth of purchases, including a washing machine and a refrigerator.

"I don't think a bricks-and- mortar shop would have been as generous," he said.

In China, shoppers at clothing retailer Vancl do not need to pay a cent until after the item is delivered to their door and they are happy with the size and fit. Those who are not satisfied with the garment - or are stricken with buyer's remorse - can send it back.

And lest shopping from the comfort of one's desk is not convenient enough, the prevalence of smartphones these days promises to bring the mall to consumers, wherever they may be.

In South Korea - home of Samsung - 10 million out of 37 million online shoppers last year made purchases on their mobile devices, according to the Korea Chamber of Commerce and Industry.

In Japan, purchases using smartphones make up 30 per cent of all online sales, while Hong Kong saw 13 per cent of online purchases carried out on mobile phones and 11 per cent on tablets, according to the findings of a Visa survey of 8,000 Internet users from Hong Kong, South Korea, Japan, Singapore, Vietnam, Russia, the Philippines and South Africa this year.

Still, the online retail industry lags far behind its bricks-and-mortar counterparts.

Online retail sales in Japan, for instance, reached 8.5 trillion yen (S$125 billion) last year, but the figure accounted for just 2.8 per cent of total personal consumption in Japan.

The potential for the industry is thus immense, even though growth is showing signs of slowing years in the mature economies of Japan, South Korea, Taiwan and Hong Kong.

But a MasterCard survey of online shopping attitudes in 25 economies early this year found a bigger increase in the number of consumers in the emerging markets of Thailand, Malaysia, the Philippines and Indonesia who access the Internet to do their shopping or have bought something online in the past three months, compared to the developed economies.

Singaporeans signing up for online courses

 

 

By Melissa Sim
The Straits Times
Tuesday, Nov 20, 2012

     

Every Sunday, Ms Tan Yan Ling, 24, attends two hours of design lectures conducted by a professor from an Ivy League university.

But she did not have to to fill in application forms to get into the course or university, and she did not have to leave the comfort of her home in Singapore.

All she did was sign up for an account with online learning site Coursera and register for the University of Pennsylvania course.

What's more, the course is completely free.

Sites offering mass open online courses such as Coursera, edX and Udacity are partnering top universities and industry professionals, and leading the way in providing free world-class online education.

At the moment, Coursera offers 204 courses, while edX has nine courses and Udacity has 18.

These courses span an array of subjects from music and history to science and computing.

So anyone with a computer and an Internet connection can take Introduction To Computer Science from Harvard or Introduction To Astronomy from Stanford just by signing up.

Udacity, launched in January this year, has 800,000 enrolments, while Coursera, officially launched in April, has more than a million students. EdX was unable to respond by press time.

The Coursera spokesman told SundayLife! that as of August this year, about 9,000 of their students are from Singapore.

Associate Professor Manu Kapur, who heads the Learning Sciences Lab which researches learning and teaching at the National Institute of Education, says mass open online courses are catching on because of increasing competition among universities, the higher costs of tertiary education, and "a real hunger and enthusiasm for learning specialised skills and knowledge around the world".

Ms Tan, a design consultant, spends two hours a week watching video lectures, and two to three hours on her assignments, which include drawing a chair from different perspectives, and solving design problems and submitting them for peer grading, which she says has been very constructive and helpful.

Most courses are structured this way, with lectures, quizzes, peer-graded assignments and optional online forum discussions.

Udacity's head of business strategy and planning Clarissa Shen says the platform is "not just about streaming a physical classroom and putting what works in the classroom online".

Students also learn by "doing and not by listening", as is the case in a regular distance learning course, she says.

Courses usually last from four to 15 weeks and require anything from two to 15 hours of commitment each week.

Ms Tan says it was difficult having to juggle work, social commitments and the course.

She and a friend, Ms Samantha Yuen, 34, tried sharing notes and ideas to help each other through a course offered by the University of Pennsylvania on Gamification - applying game scenarios to solve real-life problems - but both were unable to complete the final assignment in time, and were not given a completion certificate.

Certificates of completion are offered for some courses, at the discretion of the university and instructor, and can be a real motivating factor for students.

Ms Erin Jeong, 24, an account executive, managed to complete an Introduction to Computer Science offered by Stanford University and received a completion certificate for her work.

"This particular course was for beginners like me and I managed to finish each week's worth of work way ahead of the deadline."

She says the certificate was a big motivator because it is "physical proof to show others, and yourself even, that you studied a particular course".

For Ms Yuen, a digital content manager, taking a Coursera course in Human-Computer Interaction, meant being able to take a course not usually offered in Singapore.

The hospitality graduate says she picked up most of her IT skills on the job and could not find "much digital training in Singapore".

Previous attempts to look for such courses were unsuccessful as the ones she found were held in Australia and cost between $2,000 and $4,000, which she felt was too expensive.

So when Coursera offered a Human-Computer Interaction course taught by Stanford University, she immediately signed up.

"It's definitely an opportunity to learn something not typically offered as a structure course in Singapore, and for free."

National University of Singapore computer engineering undergraduate Goh Eng Wei, 24, says the quality of the course he is getting at Coursera is "comparable if not better than what he is getting at university", in terms of teaching and content.

He is currently taking two courses: Cryptography from Stanford University and Neural Networks for Machine Learning from the University of Toronto.

But how is it possible that quality education is being dished out for free?

Coursera says it has secured US$22 million (S$27 million) in funding, while Udacity says it has a Series A investment, which in Silicon Valley speak usually means between US$2 million and US$10 million in venture capital investment.

EdX did not respond to press queries, but reports show that its founding partners Massachusetts Instutute of Technology and Harvard have committed a combined US$60 million in institutional support, grants and philanthropy.

The platforms are also exploring revenue streams such as opt-in job placement programmes and the possibility of paid certification.

But not all are convinced of the efficacy of such courses. Associate Professor Cho Hichang, from the department of communications and new media at the National University of Singapore, points out that "online learning can be a one way transfer where the teacher talks to the students. There are no group projects and the personal touch is missing".

He adds that findings on e-learning are "mixed".

"Some studies show it is almost comparable but not better than traditional classroom learning (although others have found the opposite). Some studies have found that students are less satisfied with online learning," he says.

While Prof Cho acknowledges that online learning is convenient and cost effective as one video can reach out to people all over the world, he feels that a combination of online and traditional learning is probably the best approach.

Ms Joyce Huang, who founded a group called SG Geek Girls, which teaches computer skills to women at minimal cost, says she often sends her students online videos to watch and then holds weekend tutorials for those who need extra help.

The 25-year-old marketing executive, who takes only a $10 administrative fee from students, is very much in favour of "democratising education and making it available to everybody".

Undergraduate Goh also thinks the concept of free online courses is "an amazing idea". "Education should not be restricted to only those who are rich, but those who want to do something good with their lives."

So perhaps mass open online courses are not just another passing Internet fad.

Nanyang Technological University Professor Kam Chan Hin, associate provost for undergraduate education, says the university has developed an e-learning platform for its own students but is "exploring partnerships with leading players of the e-learning consortia such as Coursera, edX, and Udacity".

NIE's Prof Kapur says: "Given that there are now efforts to look into designing accreditation systems for such courses, they have the potential to become even more popular because they allow learning no matter where you are, as long as you have an Internet connection."

Three timeless investment tips

September 24, 2012

          

Avoid predicting the future. You will get it wrong more often than you think. Nobody has a crystal ball.

 

FEATURE

By Lee Ching Wei
1. Pay attention to the cost of investingCost matters.

It is one of the few things in investment that is predictable and controllable. Every dollar paid in cost is a dollar less in potential profit. And it all adds up over the long term.

The obvious costs of investing include administration/processing fee, entry fee, transaction fee, brokerage, commission, stamp duty and taxes.

The less obvious ones are opportunity cost (what you give up for taking a specific action), personal flexibility (e.g. obligation to service your mortgage for the next 20 years), and stress (e.g. losing sleep over an investment).

2. You know less than you thinkAvoid predicting the future. You will get it wrong more often than you think. Nobody has a crystal ball.

Yet, people do it all the time. Investment analysts/stock brokers compile lists of stocks with Buy/Sell recommendations based on their predictions of future company performance. Economists make calls on whether interest rates would rise or fall ahead of reserve bank meetings. Real estate agents produce charts showing the price paths of property prices for the next 20 years.

It’s ok to say “I don’t know”. Really.

Because the sooner you realise what you don’t know, the sooner you can direct your energy and effort to the things you do know.

3. Keep it simple and focus on the things that matter
There are a million ways to make a million dollars, and you don’t need to learn them all to be a millionaire. You just need to know a few really, really well.

The same goes for investing. Tens of thousands of different investment products and strategies exist, and more are being “invented” every day. Yet, only a few really matter. Focus on the things that matter, and understand them really, really well.

The writer is the founder of www.iMoney.my, a price comparison website in Malaysia. They can be contacted at hello@imoney.my.

Why diversification in investment is important

September 10, 2012

          

Here's some guidelines why you should never "put all your eggs in one basket".

 

By Lee Ching Wei

Diversification is by far the most underrated and least understood concept in investing. Intuitively, it should make sense. You shouldn’t “put all your eggs in one basket”.

The US Securities and Exchange Commission provides an excellent example of this concept on its website:

“Have you ever noticed that street vendors often sell seemingly unrelated products – such as umbrellas and sunglasses? Initially, that may seem odd. After all, when would a person buy both items at the same time? Probably never – and that’s the point. Street vendors know that when it’s raining, it’s easier to sell umbrellas but harder to sell sunglasses. And when it’s sunny, the reverse is true. By selling both items – in other words, by diversifying the product line – the vendor can reduce the risk of losing money on any given day” Source: www.sec.gov

The key takeaway is in the last sentence. When we diversify, we reduce the risk of losing money. Many investors claim to understand this, but their actions suggest otherwise.

Think having a 50 stock portfolio provides you with enough diversification? Not if all 50 companies operate in the same country and are susceptible to the same economic forces.

Think having all your money in the local bank gives you virtually no chance of losing money? Not if the currency depreciates sharply (yes, you may not “lose” money when the currency depreciates but the purchasing power of your money decreases. We are living in a “global economy” after all).

Think having a few investment properties protects you from a weak property market? Not if all your properties are of similar type (e.g. residential apartments) and are located in the same geography.

In fact, multiple mortgages often increase the risk, as any gains or losses are amplified.
So what constitutes a well diversified portfolio?

Generally, a well diversified portfolio has little exposure to any particular factor or event. These factors or events could be as broad as the economic conditions of a country, or as specific as the location of a property.

The difficulty is in identifying and reducing your exposure to as many of these factors or events. As a rule of thumb, there are two ways you could improve the diversification of your investment portfolio:

• Increase the number of investments, or

• Increase the type of investments.

A portfolio of 50 stocks is almost always less diversified than a portfolio of 5,000 stocks, and the latter is almost always less diversified than a portfolio of 5,000 stocks with some allocations to bonds and cash.

People often think you need a large pool of money to have a diversified portfolio. After all, how else can you own a portfolio of 5,000 companies if you only have a few thousand ringgit to invest?

The good news is – this is a myth. Today, with as little as a couple of thousand ringgit, it is possible to own thousands of companies and hundreds of residential apartments, office buildings or shopping malls from all around the world – through exchange trade funds (ETFs) and Real Estate Investment Trusts (REITs).

The best part is – it often does not cost much to do this.

The writer is the founder of iMoney.my, a price comparison website in Malaysia. They can be contacted at hello@imoney.my.
 

Millionaires’ secret to success

Report from The STAR (Malaysia) dated 18 August 2012 :-

Millionaires’ secret to success

PETALING JAYA: Ganesh Kumar Bangah made his first million at the age of 23.

The secret, he said, was as simple as knowing what people needed and delivering it to them.

“I knew what I was good at, which was IT. I used that to come up with something of value to the world.

“I also worked hard and persevered until I reached the goals I had set for myself,” said Ganesh, now 33 and the CEO of MOL Global Bhd, a company worth over RM1bil.

Young and rich: Ganesh (left) and Yap made their first million at the age of 23 and 26 respectively.

He said that even when he was only 15, he had been using his skills to make money, like repairing his teachers' computers for a fee.

At the age of 20, he started his own company, which made him a millionaire in three years.

“Be focused and set new goals for yourself to keep climbing higher. Real wealth is the satisfaction you get when you overcome a new challenge that brings rewards. Financial wealth should just be a by-product.”

Feng shui master and multi-millionaire Joey Yap said learning to make good use of time was a key ingredient to achieving financial success.

“In business, time is money, so make sure you use your time to acquire things of good value. Find out what your strengths are, work on your weaknesses and hone your talents,” said Yap, 35, who made his first million at age 26 by selling his first feng shui home study course.

However, having RM1mil does not necessarily make people feel rich, especially for those raising children in the city.

Carol Leong, 57, a mother of three, said it costs more than the amount for an average family to live in the city and raise a child to adulthood.

“There are medical bills, tuition fees, various expenses and their education to pay for. For our family, it has definitely come up to more than RM1mil per child,” she said.

Leong, a lawyer, said she and her businessman husband had placed their money in various investments, which in the long run had helped pay for tertiary education overseas for their three children.

“I would advise young parents living in the city and who are just starting a family to invest to secure some income for the future,” she added.

China's online population rises to 538 million

China's online population rises to 538 million

Published on Jul 19, 2012

BEIJING (AP) - China's population of Internet users, already the world's biggest, has risen to 538 million, driven by rapid growth in wireless Web surfing, an industry group said on Thursday 18 July 2012.

The latest figure represents an 11 per cent increase from a year earlier, according to the report by the China Internet Network Information Center. The government sanctioned group said that raised the share of China's population that uses the Internet to 39.9 per cent.

The number of people who go online from mobile phones and other wireless devices rose to 388 million, the group said. That was up 22 per cent from a year earlier.

China's communist government encourages Internet use for business and education but tries to block access to material considered subversive or obscene. Authorities tightened controls after social networking and other websites played a key role in protests that brought down governments in Egypt and Tunisia.

How to look good in every photo

July 13, 2012

Get the perfect profile picture

 

Fed up of being tagged looking terrible? Check out our tips for mastering the perfect pose and start looking your best in every shot.

Look to your rightA US study conducted by Wake Forest University has revealed that the left side of the face is more attractive than the right, apparently due to the fact that this side of the face shows more emotion. To capture the perfect profile picture, look slightly to the right to reveal your ‘best’ side. This can also help to give the illusion of a slimmer face for those with rounder faces.

Choose your makeup carefullyFor the perfect photo-ready appearance, make sure you avoid light reflective or mineral foundations containing high amounts of titanium dioxide (a reflective pigment). Although these foundations are great for an everyday luminous look, the flash of a camera can quickly transform your dewy complexion to a ghostly white one as the white light reflects back from the camera. Once you have applied a suitable foundation, finish your look with some face powder to help eliminate shine.

Accentuate your best featuresTo look your sparkling best in photos, make sure you emphasise your favourite features to make them the standout feature in your snapshot. Try playing up your eyes with some eyeliner or false lashes. Alternatively, perk up your pout with some bright lipstick. Also, make the most of your best body features with an outfit that complements your shape and colouring.

Look away from the lensNobody wants glaring red or half-shut eyes ruining an otherwise great photo, so make sure you avoid this by focusing your eyes just slightly above or below the lens. Looking directly at the lens causes light to flash off the retina, leading to the red eye effect. Looking slightly away from the camera will also reduce the risk of those mid-blink shots.

Avoid “red eye” shotsAs “red eye” in photographs is caused by light reflecting off the back of the eye, those with large pupils are more likely to suffer from this pesky problem. If averting your gaze from the camera is not doing the trick, another tip for alleviating the red eye effect is to make sure photos are taken in well lit environment or to look at a bright light just prior to the photograph being taken to make your pupils smaller.

Banish the double chinThere’s nothing worse than spotting a picture of yourself sporting a double chin where you previously only had one, yet sadly this happens to the best of us. To avoid the appearance of a double chin in photographs, make sure that the camera is just above or at your eye level. Also, try tilting your head up and jutting your jaw out slightly – you may want to practise this one first in the mirror to stay looking natural!

7 simple ways to make your day better

Easy ways to improve your day.

July 4, 2012

FEATURE

Having a rubbish day? Well, turn that frown upside down because we’ve compiled a list of seven simple ways to transform your day from drab to fab:

How to make your day better 1: Wake up a few minutes earlier
You know the scenario; you wake up in a flurry of panic the moment your alarm goes off because you need to be on time for work. You rush around the house trying to get ready but somehow get more cereal down your crisp white shirt than in your mouth; you put the milk in the dishwasher instead of the fridge; and, as you rush from room to room your sleeve gets stuck on the door handle, sending you hurtling back a metre as you were mid-way through marching out of the living room on a mission (is there anything more annoying when you’re in a rush?). As you can probably relate to from this example, being short of time makes your stress levels rise and you’re in a pickle faster than you can say “should have set my alarm earlier”. Make your mornings easier by setting your alarm 15 minutes before you need to get up. This will leave plenty of time for your body and mind to wake up so you can get ready without the stress.

How to make your day better 2: Make a happy listSometimes we dwell on the things that make us sad rather than concentrating on what makes us happy. It takes a little brain training to change your thought process from negative to positive, and a good way to do this is make a list of things that make you happy and keep referring to it every time you feel sad. Whether you want to write down your favourite quote from a movie, the date of a holiday you have booked, or you stick down a photograph of yourself on one of the happiest days of your life, it’s sure to lift your spirits when you’re feeling down in the dumps. Corny? Yes. Helpful? Most definitely.

How to make your day better 3: Sniff a lemonYep, you read that right. To improve your day, simply sniff a lemon. Scientists at Tel Aviv University suggest that citrus fragrances – particularly lemon – can alleviate depression and boost our mood. Indeed, the smell of a lemon boosts your levels of serotonin (a feel-good hormone) and lowers levels of norepinephrine (a stress hormone), so improve your day by burning a lemon scented candle or spritzing on a lemony fragrance, or you could just go all out and sniff a lemon.

How to make your day better 4: Cuddle someoneWith the soaring popularity of the ‘cuddle party’ phenomenon, more and more people are discovering the benefits of a good snuggle. A warm embrace boosts the natural feel-good hormones released by the body, reduces stress, and creates a feeling of mutual trust. Beware though, whilst cuddling is a great mood-enhancer, we do recommend that you be selective over whom you choose to embrace; your boss or the window cleaner may not appreciate a cuddle as much as your spouse or your pet. If you prefer something a little less intimate, there’s nothing to stop you from expressing your feelings through a man hug (yes, this can be done by the ladies too), or maybe even a high-five to release those happy hormones.

How to make your day better 5: Sweat it outEncourage your body’s natural feel good hormones to give your mood – and ultimately your day – a boost. Walk the dog, go for a run, or dance around the living room for half an hour; anything that gets your blood pumping and makes you sweat will do the trick. The endorphins released during exercise are scientifically proven to boost your mood, making any form of physical activity a sure-fire way to boost your day.

How to make your day better 6: Have a bathRather than that quick dash in and out of the shower, make some me-time and have a bubble bath and some time to work on your personal appearance. Our day always seems to go better when we look and feel our best, so gentlemen, have a shave and use a deep moisturising balm. Ladies, apply face and hair masks and paint your nails alongside your bath. It’s surprising how much a little me-time can perk up your day.

How to make your day better 7: Prioritise your tasksA common reason for us to be having a bad day is stress. Having a long list of tasks to do can be overwhelming so tackle any problems head-on at the start of the day to get them out of the way as early as possible. Tackling your problems in the morning will eliminate feelings of worry throughout the rest of your day. A good way to prioritise your tasks is to write them all down and then number them from one to 10, with one being the most important, and 10 being the least important. Work your way through the tasks starting with the most important first, and tick them off as you go along. You will feel a sense of achievement each time you tick a task off.

What women In Singapore want: To marry up

Report from The New paper (Singapore) dated 22 April 2012 :

What women In Singapore want: To marry up




SINGAPORE - There are graduate women in Singapore who are willing to date and eventually marry blue-collar workers.

But they are few, said seven dating agencies.

Mr Matthew Chan, managing director of Love Express Services, said 80 per cent of his graduate female clients want to be matched with someone just as educated, if not more so.

Of his 5,000 clients, 60 per cent are women.

And 80 per cent of these women are degree holders.

"Women generally want to marry 'up'," he said.

"And education is linked to career prospects, salary and the company one keeps.

"While graduate women might be friendly to non-graduate men during events, they would still prefer to date someone of the same social strata.

The subject of graduate women dating blue-collar workers became a hot topic after The New Paper on Sunday (TNPS) featured a rich graduate woman who plans to marry her chicken-rice seller boyfriend.

The report followed a speech by Deputy Prime Minister Tharman Shanmugaratnam, who had called on Singaporeans to rediscover the pride in blue-collar jobs and regard them as core to the workforce.
Speaking at a ministerial forum organised by the National University of Singapore's Students Political Association on April 4, he said: "We need to be a society where customers treat blue-collar workers with respect and that requires some attitudinal changes."

Since the TNPS report, there has been a lot of debate online over whether women in Singapore are too fussy.
In the report, a straw poll of 50 undergraduate and graduate women was the talking point.
All 50 women said they would not date a blue-collar worker.
Some people are not surprised by the result.
Of the seven dating agencies The New Paper contacted, none said they had a graduate woman client willing to be matched with a blue-collar worker.
Mr Chan of Love Express Services said women who might be open to dating "beneath" them tend to be over the age of 38.
"But it has not come to my knowledge of any successful cases leading to marriages in my three years in the business," he added.
Ms Maggie Lim, director of My Perfect Link, felt a few female graduates may be open to dating a diploma holder.
But none would want to date a blue-collar worker.
"Women who approach an agency already pay a premium to engage the agency's services," she said. "Of course, they have high expectations."
Ms Lydia Gan, co-founder of Clique Wise, was sceptical that such matches would last because of the difference in their background.

Regret?
She said she has had women clients who married less-educated men while they were in their 20s only to become unhappy a decade later.
By then, the women would be doing well in their careers, but the men would still be holding low-paying jobs.
Said Ms Gan: "These women would ask themselves why their peers can afford caviar, but they cannot. "I'm not saying it's impossible for such relationships to work, but the tendency to compare is always there."
Miss Indranee Rajah, Member of Parliament for Tanjong Pagar GRC, told TNP that she hopes women will choose their potential partners based on how well they can "click" and not just on paper qualifications.
She acknowledged that being of the same educational background can help some couples to gel.
But there can be other sorts of commonalities, like religion, ethnicity or cultural background.
"We are all human and influenced by society," she said.
"But I hope people can see others in their entirety, and not be fixated on labels.
"If couples find it difficult to understand each other because of their differing jobs or educational backgrounds, then fair enough.
"But women should not write somebody off just because he doesn't have a piece of paper."

Unhappy men
Going by the online reaction to the poll results, most Singaporean men were unhappy with the women's responses.
One, Mr Ivan Tan, in his 20s, wrote on Facebook: "The more girls feel this way, the more I am determined to rise up above them and make them stare in awe before me, yet not being able to own and achieve (sic) me."
Business development officer Royston Ang wrote: "I believe those girls being interviewed will not mind being with an uneducated guy who (has) millions.
"With money anyone can be educated easily."
But there were also men who accepted the pragmatism of graduate women as being realistic.
A married man, Mr Zack Kong, 28, posted on Facebook: "Sad but true... Status, money, education are the new currencies in this modern world."

How to maximise your laptop battery life

How to maximise your laptop battery lifeEver had a situation where your laptop dies during a critical moment? Practising these seven tips can help to prolong laptop battery life.

1. Simple ways to maximize your battery life
To stretch the run time of your laptop battery, be sure to dim your display when you are not connected to an AC supply. The screen draws the most power from your battery.

In addition, disabling unnecessary processes such as Bluetooth and WiFi network connections when they aren’t being used will save you valuable juice. Disconnecting external devices like USB flash drives will also help extend your run time.

2. Do not constantly charge your battery
A battery constantly kept at full charge will degrade at a faster rate. If you connect your laptop to an AC supply most of the time, reducing the maximum charge threshold with an application like Lenovo’s ThinkVantage Power Manager will help prolong the lifespan of your battery.

We recommend 80 per cent as a starting point, then increasing that percentage if it does not provide the necessary run time when your computer is running on battery power. Some Lenovo computers, such as the ThinkPad X1 and ThinkPad Edge E420s, will automatically determine how the battery is being used and will adjust the charge parameters accordingly.

3. Keep your battery installed even when your laptop is plugged into a power source
We recommend keeping the battery installed in your computer even if it is always connected to an AC supply. In some cases, the computer may not be operating at 100 percent without the battery installed. In addition, by removing the battery, there is no protection against the power being disconnected accidentally, causing a shutdown and potential loss of data.

4. Store your extra battery well
If you have an extra battery and intend to store it for a long period of time, do get it to a 50 percent charge level before removing it from the computer for storage in a cool environment.

5. Keep your battery cool
Heat causes a battery to degrade at a faster rate, hence it is best to minimize the amount of heat that the battery is subjected to. Ensure that cooling vents are not blocked, and have good power management profiles to keep the system components working as cool as possible. For example, Lenovo’s IdeaPad U300s Ultrabook has a breathable keyboard which uses Intel’s Advanced Cooling Technology to improve airflow so that it can run cooler on your lap.

A good system design also keeps heat from the CPU and system components from impacting the battery. In addition, avoid storing your battery or computer in hot environments, like in a car on a hot day.

6. Lithium ion batteries are free from memory effects
Modern-day lithium ion batteries do not have any memory effects present in other battery types such as NiCd and NiMH, so it is not necessary to do full charges and discharges. However, doing a full discharge and charge cycle periodically will help keep your battery fuel gauge accurate.

7. When to replace your battery?
Batteries are a consumable item and their capacity will be reduced due to usage and aging. The fully charged power of laptop batteries will gradually diminish with the number of accumulated charge cycles. As a result, the standby time of your battery will become shorter over time. We recommend you replace your battery when it cannot hold a full charge, or when its actual run time significantly falls below its original run time. 

We stole your money: How the big boys and insiders manipulate the stock market

We stole your money: How the big boys and insiders manipulate the stock market         

Written by Sam Chee Kong, Malaysia Chronicle    

Anything that has to do with investments will be subjected to risk and return. Normally, the higher the risk the higher will be the return. Is there any investment that will provide you the opposite, where the potential risk is reduced while the return will actually increased? The answer is YES and it is through Options.

Before we delve into how ‘Big money and Insiders’ use options to manipulate the Stock Market, I think we should educate ourselves on the inner workings of the options market so that we as an investor will also can benefit from the versatility that options can offer.



Understanding Options
The beauty about options is it offers limited downside (through premium) and unlimited upside potential (through profits). If you get too adventurous by speculating on ‘naked options’ or uncovered options then you are in deep trouble because your downside will be unlimited.

Another thing about options is that it enables you to play the market both ways and that is up or down. By buying a put option, you are hoping to for the price of underlying securities to go down.

 However, if the price of the security goes up, your losses will only be capped by the premium. If you are doing short selling on the physical securities, your downside will be unlimited because you don’t know what level the price of the securities will go up to. Hence it will give you sleepless nights.

Not knowing how to make money both ways in the market is like knowing how to drive ahead but don’t know how to reverse.

The thought of investing in Options actually terrified most people because to them anything that sounds sophisticated must be very risky. What is a stock option? A stock option gives the right to the to the owner to buy or sell a listed stock at an agreed upon price and an agreed future date. Stock options are contracts that consist of 100 shares of a particular stock.

Or we can put it in layman’s term, an option is simply a contract entered between two parties. One party is the buyer of the contract and the other is the seller of the contract.

For the sake of illustration, say you own a piece of land, and you want to sell it for $50,000. You can either sell it through the real estate agent or you can enter into an agreement (option) to allow someone to purchase your land for $50,000 for the duration of a year. You sell the agreement (option) to the person for a premium of $5000. During the duration of one year, the price of the piece of land may fluctuate. Under the terms of the contract, the purchaser has the right to exercise his right to purchase the land if the market price went up to say $70,000. You, as the seller will have to sell at the predetermined price of $50,000 plus the premium of $5000, which totaled up to $55,000. The buyer of the agreement will make $15,000 ($70,000 - $50,000 - $ 5,000) from this deal.

But what happens if the price of the property declined to $40,000 during the one year period. The purchaser of the agreement will have two options whereby;

1) To purchase the price of the land at $50,000
2) Abandon the deal and lose the $5000 premium

In this case the seller is the winner because even though the price of the land declined to $40,000, he will ended up being $5000 richer because the buyer did not exercise the option.

Types of Options
There are two types of options, either puts or calls options.

A put gives the holder the right to sell a specific number of shares (normally in 100 shares lot) at a fixed price and date in the future. A purchaser of a Put option is hoping for the stock price to go down.

Options are normally quoted in the following format;

1 IBM Jun 145 Put – Premium 9

Terminology explained
a) 1 – number of contracts of 100 shares
b) IBM – Underlying securities
c) Jun – the expiry month
d) 145 – the exercise or strike price
e) Put – type of options
f) 9 – denotes the premium paid by buyer to seller

Say an investor purchase the above option. What this means is it allows the investor the right to sell (put) 100 shares of IBM at $145 from now till June. For this privilege, the investor will have to fork out $900 ($9 x 100 shares) as a premium. The premium of $900 will be given to someone on the other side of the trade who already sold the contract.

A call gives the holder the holder the right to buy a specific number of shares at a fixed price and date in the future. A purchaser of Call option is hoping for the stock price to go up.

A normal Call option look like the following;

1 Microsoft Nov 300 Call – Premium 15
a) 1 – number of contracts of 100 shares
b) Microsoft – Underlying securities
c) Jun – the expiry month
d) 300 – the exercise or strike price
e) Call – type of options
f) 15 – denotes the premium paid by buyer to seller

Achieve Low Risk but High Return
This option allows the purchaser of the option the right to buy (Call) 100 shares of Microsoft at $300 from now till November. For this, the purchase had to pay $1500 ($15 x 100 shares) as the premium.

For this case if the price of Microsoft shares goes up above $300 say to $350, the purchaser can then exercise his option by buying at $300 and sell it at $350. The net profit will be $50 x 100 shares = $5000 and then minus off the premium which is $1500. Hence, net profit will be $3500 and so by investing $1500 the investor is able to realize a profit of $3500, which is more than 200%. If the price goes down below $300, the investor will not exercise the option and will lose his premium, which is $1500.

So this is what we call the limited downside ($1500), but unlimited upside (more than $3500) if Microsoft share price goes above $350.

Factors affecting Options Pricing

The following table shows a typical listing of an option data.

Below is a description of the above table;

1. Opsym Option Symbol
2. Bid buy price
3. Ask sell price
4. Extrinsic time premium to expiration
5. IV future volatility calculated by Black-Scholes Model
6. Delta see below
7. Gamma see below
8. Vega see below
9. Theta see below
10 Volume Volume
11. Open Int. Total amount of contracts that have been open but not offset
12. Strike Strike or Exercise Price

Five Factors affecting option pricing
Basically there are five factors that are affecting the options pricing and they are;

1. The current stock price and strike price
If you have purchase the below Call option, the amount of profit is determined by the amount in which the Stock price exceed the exercise price.
A normal Call option look like the following;
1 Microsoft Nov 300 Call – Premium 15
a) 1 – number of contracts of 100 shares
b) Microsoft – Underlying securities
c) Nov – the expiry month
d) 300 – the exercise or strike price
e) Call – type of options
f) 15 – denotes the premium paid by buyer to seller
Say if Microsoft is now trading at $320 then you will have a profit of $20 ($320-$300) x 100 shares, which is equivalent to $2000. Therefore, the Call option will be more valuable if the Stock price is increasing and less valuable if the Exercise price is increasing.

Put options behave exactly the opposite of Call options. If you have purchase the below Put option, the amount of profit is determined by the amount in which the Exercise price exceed the Stock Price. Buying Put options is like performing a ‘Short Selling’ of the underlying security. When you buy a put option at $145, to make a profit IBM share has to decline so that you can buy back at a cheaper price to cover your short position. The difference is the profit.

1 IBM Jun 145 Put – Premium 9

Terminology explained
a) 1 – number of contracts of 100 shares
b) IBM – Underlying securities
c) Jun – the expiry month
d) 145 – the exercise or strike price
e) Put – type of options
f) 9 – denotes the premium paid by buyer to seller

Say if the IBM share is now trading at $135 then you will have a profit of $10 ($145 - $135) x 100 shares, which is equivalent to $1000. Therefore, the Put option will be more valuable if the Stock price is decreasing and less valuable if the Exercise price is increasing because profit is equivalent to Exercise price – Stock Price.

The relationship between the Stock price and the Option price (premium), is measured by the Greek symbol Delta (Δ) . The Delta value indicates how much the Option price will move in response to a movement in the Stock price. If an option with a Delta value of 0.5, it indicates that a 1 cent movement in the Stock price will result in a ½ cent move in the Option price.
So, the higher the value of the Delta (Δ) , the closer will be the will be the movement of the Option price in relative to a change in the Stock price.

2. Time to Expiry Date (Time Decay)

As you can see from the above chart, the longer the time to expiry, the more valuable will be the option. Hence, an option with 120 days left to expiry will be more valuable than an option that has only 30 days to expiry. The holder of a 120 days to expiry option has more exercise opportunities than a holder of 30 days to maturity option.

Time decay is measured by the Greek symbol Theta (θ). The nearer to expiration date, the higher the Theta value and vice versa. The Theta value is an indication on how much a stock option’s value will lose by each day. A theta value of -0.02 indicates that the option will lose 2 cents per day.
So for the duration of a week, the option will lose a total of 14 cents because both Saturday and Sunday will also be included in the calculation even though there is no trading during those days.

3. Volatility of the Stock Price
The Volatility of a Stock is measured by the Standard Deviation of the return provided by the stock in a year and normally express in percentage terms. In other words the volatility of a stock price is a measure of how uncertain we are about the future movement of its price. As volatility increases the profit or loss of a particular stock also increases due to the wild swings of the stock price. How does this affect an options investor?

If a stock price increases, it will benefit the owner of a Call option while at the same time it will be detriment to the owner of a Put option.

Similarly, if a stock price decreases in its value, it will benefit the owner of a Put option and it will be detriment to the owner of a Call option.

The volatility of the Stock option can be measured with the Greek symbol Vega (υ).

If Vega is high then the stock option is very sensitive to changes to Volatility. Changes Vega value is determine by the changes in the volatility, which is expressed by every 1 percentage point. Suppose we have the following scenario;

- Vega value of 0.20
- Stock price at 2.00
- Volatility is at 15%

If the volatility increases from 15% to 16% then the stock price should move up 20 cents which will then be $2.00 + 0.20 = $2.20. Vega value of options with long expiry date (>= 90 days) tends to be larger than options with shorter expiry date (<= 30 days) because the implied volatility for long expiry options tends to be lower and hence risk.

4. Interest Rates movements
Movement in interest rates affects the stock price and hence the options price as well. Whenever there is an increase in the interest rate, stock prices tend to fall. A fall in stock prices will have detrimental effect to Call options. Holders of Call options will certainly lose out because if the exercise price is lower than the stock price then they will suffer losses. Holder of Put options will stand to gain when stock price decreases because their exercise price will be higher than the stock price
Similarly a rise in the stock price will have the opposite effect.
This relationship between the sensitivity of the movement of interest rate and the stock price can be measured with the Greek symbol Rho (ρ). If an option has a Rho value of 0.15, then a 1 % increase in the interest rate will raise the price of the option by $0.15.

5. Cash Dividends, Stock Dividends and Stock Splits
When a corporation declares a dividend, it establishes a record date. This record date will be used to record the owners of the stock on that date so that they will be entitled to the dividend. Since a normal transaction in the security industry requires 5 working days to complete, naturally the transaction need to be carried out 5 days before the record date. So, it is essential to establish that stocks had to be purchased 5 working days before the record date so as to qualify for the dividend and it is called the ‘ex-dividend date’.

Cash Dividends have the effect of reducing the price of the stock on the ex-date. The stock price will go down in relation to the amount of dividend declared. This will invariably have effect on the Option price.

For those who bought Call options, this will be bad news as the price of the option will also had to be calibrate downwards so as to reflect the changes in the stock price.

Whereas for those who bought Put options, then it will be good news to them as the decrease in the stock price will add up to their profits. Since by buying a Put option, you are hoping for the underlying stock price to go down.

Stock Dividends (or Bonus Issue) will greatly affect the terms of the options contract. Say if AAPL stock trading at $400 a share declares a Stock Dividend of 50%. What happened next is that each shareholder will receive extra 50 share for every 100 they owned. The amount of shares is also adjusted in this case from 100 shares to 150 due the extra 50 shares from the dividend. But then the price of the share will also need to be adjusted to reflect the additional new shares.

Hence the new price of the share will be $400/150, which is $266.67. This exercise, can be shown by the following.

1 AAPL Jan 400 Call becomes
1.5 AAPL Jan 266.75 Call
The .67 will be rounded to the nearest which is .75
Stock Splits will also works the same, with adjustment to the number of Shares and its price.

Options Trading Strategies
There are various strategies that can be employed using options to counter different market conditions. Equity Options can be used as a hedge and also speculate on the underlying securities. For example if an investor thinks that underlying security is getting bearish in the coming weeks. He can counter the downturn with the following moves.

a) Sell a call option
b) Buy a put option
If he is bullish on the underlying security then he may employ the following moves.
a) Buy a call option
b) Sell a put option

However there are more complex strategies that are available in trading options and it is not suitable for many investors.

Straddles
A Straddle is made up of one put and one call option on one underlying security that is having the same strike price and expiry. So in a straddle, the investor buys or sells two identical options except one is put and the other is call. The investor can either have a long or short straddle.

Long Straddle
After studying the volume accumulation of IBM and its price patterns, the investor feels that IBM is going to make a move but not sure whether up or down. What she can do is the following.

Buy 1 IBM Aug 130 Call - Premium 10
Buy 1 IBM Aug 130 Put - Premium 7

By this, it means that she will be participating in either an upward or downward movement of IBM. Please note that the total premium she paid was 17 points, and his initial investment is $1700 (10x100 shares + 7x100 shares).

So by August, IBM shares must be between 147 (130+17) for the call or 113 (130-17) for the put options for a break even. So the beauty about this strategy is that if the IBM stock goes above 147 or below 113, then it will start generating a profit. This represents an unlimited gain versus limited loss, which is the premium of $1700. However, the investor seldom loses all of the premium because the investor can cut loss in between.

Short Straddle
A short straddle is exactly the opposite. What she can do is the following.

Sell 1 IBM Aug 130 Call - Premium 10
Sell 1 IBM Aug 130 Put - Premium 7

Instead of paying for the premium, an investor who sells an option receives the premium. So, as long as the stock price hovers between 147 (130+17) for the call or 113 (130-17), the investor will retain some of the premium as profit. However the risk and reward for the investor who sells a straddle is different from the person who buys a straddle. This is because the maximum profit of the person who sold the above straddle is equivalent to $1700, but he will assume unlimited risk if say the stock price goes above 130.

In other words she is selling (writing in option lingo) an uncovered call in this case. So by selling a straddle, she will be exposed to limited profits but unlimited losses.

# If you are not familiar with options, it will better limit yourself, to buying and not selling options because the risk is too high.

Strip
If the investor feels that the market direction is bearish for IBM, instead of buying a straddle she can buy a strip. A strip consists of 2 puts and one call. An example will be the following.

Buy 1 IBM Aug 130 Call - Premium 10
Buy 2 IBM Aug 130 Put - Premium 7

So if IBM were to go down, the investor will have a bigger profit. Say if IBM dropped to 110, then there will be a profit of 40 points (2 put options x 20 points). The total premium paid is 24 points (1 call x 10 + 2 puts x 7). So the net profit gained will be 40 points – 24 points premium = 16 points.
It will be a different story if the stock price rose. The investor need at lease a 24 points gain in IBM stock to cover its premium so that she will be break even. In other words, IBM stock will need to rise to at least 154 so that so can exercise her call at 130 and sell the stock at 154.

Strap
If the investor feels that the market direction is bullish for IBM, instead of buying a straddle she can buy a strap. A strap consists of 2 puts and one call. An example will be the following.

Buy 2 IBM Aug 130 Call - Premium 10
Buy 1 IBM Aug 130 Put - Premium 7

So if IBM were to go up, the investor will have a bigger profit. The effect will be the opposite of our strip strategy earlier. These are different forms of straddle but varying the degree of puts and calls by capitalizing on the market condition whether it is bullish or bearish.

Combination
A combination will be an event where the underlying stock is the same but the strike price or the expiration date is different. An example of a straddle with a different strike price is shown below.

Buy 1 IBM Aug 135 Call - Premium 10
Buy 1 IBM Aug 130 Put - Premium 7

As you can see, the strike price for the call is 135, whereas the put is 130. To achieve a break even, the stock price had to be at least 152 for the call option or 113 for the put option. Anything above 152 and below 113 will represent ‘additional profits’. However if the stock price is exactly 135 or 130 then the investor will lose all of her premium of $1700. However, this is a highly unlikely scenario.

An example of a straddle with a different expiry date is shown below.

Buy 1 IBM Aug 130 Call - Premium 10
Buy 1 IBM Sep 130 Put - Premium 9

In this case, the strike price is the same at 130, but the expiry date is different. Call on August and Put on September. The extra month of expiry of the Put will raise the premium to 9. In this case the extra risk involve will be the extra month for the Put to expiry. If it is let uncovered, what happen when the stock price go up to 180 in September? The investor will have to bear the losses of 50 points (180-130). So the potential losses in this case will be unlimited.

Other Strategies
There are other more sophisticated strategies, which I think should reserve for professional options traders.

Some of them are dealing in more than 3 options at one time. An example will be the butterfly spreads whereby it involves buying 1 low price call option, 1 higher price call option and selling 2 call options with a price in between the buy call options.
It can be illustrated below.

Buy 1 IBM Aug 130 Call - Premium 10
Buy 1 IBM Aug 150 Call - Premium 12
Sell 2 IBM Aug 140 Call - Premium 9

In this case an investor will only make a profit if the stock price is trading in between 130 and 150. The premium paid by the investor is 10+12-(2x9) = 4 points. So if the stock price, move out of this range, then the maximum the investor can lose is 4 points. Other strategies include the following.

a) Spreads which can be divided to Bull, Bear, Butterfly, Calendar and Diagonal
b) Iron Condor when an investor believes the stock will trade in a range until expiry
c) Collar is used when an investor already own a stock but looking to,
- increase return by writing call option
- minimize downside by buying put option
d) Guts used when bullish in volatility. Buy 2 calls , one with higher strike price

Alright, that basically sums up our Trading Strategies and next we will look into how Big Money and Insiders manipulate the Stock Market using Options

BIG money and Insiders manipulate stock market
The stock market has always been in the influence of Big Money and Insiders. Most of volume generated from stock exchanges around the world are by quantitative or high frequency traders. It is estimated that more than 75% of all trades in New York, 60% of all trades in Europe and 50% of all trades in Asia are generated by Quantitative or High Frequency Traders.

However, there is one tool that escapes the attention of most traders (or rather amateurs) that professionals use, not only to reduce risk but also to influence trades in stock markets. The tool that they employ is Equity Options. How they use it to their advantage?

1. Block Trading
Block trading refers to the buying and selling of large number of shares in a particular security. It normally refers to hundreds of thousands or probably millions of shares and they are common in the security industry. That is why some brokers have a special department just to handle such trades because it is very profitable.
Take for example Broker Morgan Stanley (MS) receives an order from an investor to sell 500,000 shares of IBM at $100 a share. Their investor is not interested in staggered sales or selling by small amounts, which may take up to two months to dispose. The investor wants to get it done ‘all in one shot’. So, MS needs to call up other brokers if they are interested to take up 500,000 shares in IBM at $100 a share. Getting another investor to take up the offer is not easy. Say if they found someone who is interested in only buying 400,000 shares, so what is MS going to do with the remaining 100,000 shares?
MS will have the following options.
a) Sell 400,000 shares to the client and 100,000 in the open market
b) Sell 400,000 shares to the client and sell a call option on IBM
c) Sell 400,000 shares to the client and buy a put option on IBM

Option A will force MS to sell 100,000 shares of IBM at $100 in the open market. By selling such a large block in the open market will tend to arouse attention among other investors and hence might push down the price of IBM shares to below $100. In this case, MS will incur a loss on itself, which is not a good strategy.

Option B will be a better strategy and MS may execute the following.
Sell 1000 IBM Aug 100 Call – Premium 5

So, what the above strategy does is Sell 1000 IBM Call Options, which is100,000 shares (1000 x 100 shares) and in this case there is no risk because MS had already in possession of 100,000 IBM shares from the investor. By selling the 1000 options, it is in a position to receive a 5 points premium, which is amounted to (100,000 x 5 = $500,000).

But in this case, there is a downside risk associated with selling a call option. If the stock price of IBM shares were to go down to below $100 then MS will incur a loss.

Option C will be to buy a put option on IBM, which can be illustrated below.
Buy 1000 IBM Aug 100 Put – Premium 3

Say if the IBM share is now trading at $95 then you will have a profit of $5 ($100 - $95) x 100,000 shares, which is equivalent to $500,000. Therefore, the Put option will be more valuable if the Stock price is decreasing and less valuable if the Exercise price is increasing because profit is equivalent to Exercise price – Stock Price. But buying a put, MS’s profit will be lesser because it has to pay a premium of $300,000 (1000 x 100 shares) x 3 points premium. So, MS profit will only be $200,000 but his risk in protected should IBM share price rise above $100.

But professionals are different from amateurs because they will rather take a risk and make a profit than to just receive a commission for doing the trade. So, professionals will rather go for Option B rather than the rest because it is their job to manage risk. Amateurs probably, will be better of by buying the put and pay the premium, because their risks are protected.

Similarly, block trades can be employed to facilitate large buy orders of shares in a company.

2. Acquiring large position in a company
Investors may use options to disguise their activities in the stock markets. If they are interested to acquire a large position in a company (AB) say 1 million shares, they may do so in the following methods.
a) buy all of the shares in the open market
b) buy half using call options of AB and the other half through open market

Option A. The investors will need to buy all of its 1 million shares in the open market. By purchasing such a large amount of shares, will lead to an appreciation in the price of the target company. Moreover, by buying such a large block in the open market will tend to arouse attention among other investors because it will increase its volume. Hence this will induce other investors to participate into buying the shares and will push up the price of the shares of the targeted company. This will make this exercise very expensive and difficult and hence is not a good strategy.

Option B will be a better strategy and the investors may execute the following.
Buy 5000 AB Aug 100 Calls – Premium 3

So, what the above strategy does is to buy 5000 AB Call Options, which is 500,000 shares (5000 x 100 shares) and pay a 3 points premium, which amounts to (500,000 x 3 = $1,500,000).

In this case, he can buy the shares in the stock exchange without arousing any attention to his activities. He can slowly take his time to accumulate his shares quietly in the stock market while at the same time he purchase 5000 AB Aug 100 Call options.

Since purchase of option is not reported as part of AB’s trading volume and hence other investor’s will not know of his intentions. Also, purchasing of options will not alter the daily trading volume of AB, it will be ‘easier to collect’ his required amount of shares.

Hence, the use of options helped the investors to accumulate their required amount of shares in a particular company, without arousing much attention of other investors, which might make it difficult for them to achieve their goal.

3. Insider Trading
Company Directors, Financial Controllers and Insiders, may use options to hide their activities in the stock markets. If they are in the know that there are good news pertaining to their company such as a larger than expected profit, a Merger or Acquisition activity, a large find of mineral reserve and etc. Instead of buying or accumulating of shares of their company in the open market, they may buy call options of their company.

When the good news is reported, they can cash in their call options. But they might be under the scrutiny of the Securities Commission, as call options is also known as stock equivalents. Since call options can be converted to shares, they may be subjected to insider trading. However, they can get around it by purchasing it under someone else name such as their relatives or some sort.

Similarly, this also applies when Insiders may use options to capitalize on the bad news of their company. If they know that their company will be reporting a larger than expected loss or the canceling of a Merger and Acquisition agreement, they can buy a Put Option. So when the bad news is announced, the price of the underlying security will go down and hence the price of options. So they just exercise their put option for a profit.

4. Hostile or Management Takeover
Due to the diverse amount of shareholders, the ownership of some companies are rather thinly distributed. Sometimes, a 5-10% ownership of the company shares is considered substantial. These companies are prime target for hostile or management takeovers. If an outsider wants to gain control of the company, all they need is to quietly purchase a 10% stake in the company. They can do it through the options market without arousing the attention of the management. By the time they have accumulated enough options, they can exercise it and they will automatically become a substantial shareholder.
When they have gain control of the company, then can blackmail the current management by threatening to discharge the whole management. So in order not lose their jobs and the perks that come with it, management had to conformed to their demand by buying back their shares at a higher price.

The SEC in trying to control such activities enacted Rule 13D, which requires any individual that owns 5% or more of a corporation stocks to file a report. Again, investors can get around it by purchasing the stake with different names.

5. Selling large Block of shares in thinly traded stocks
If an investor is holding a block of 500,000 units ABC shares, which only trades about 2000-3000 shares a day. How can he get rid of his shares in a short time period of say one week? Should he dispose the whole block of ABC shares in the open market, it will crash the share price of ABC. Say if the price of ABC shares is trading at $30. What strategy should the investor employ to sell the shares without hurting its share price?

The answer is the following.
Buy 5000 ABC Aug 31 put – Premium 2

By buying the put it will cost him a 2 points premium. Always remember you will receive the premium when you sell an option and vice versa. So when August arrives, he will exercise his option and deliver his 500,000 shares at the price of $31. After subtracting the premium, he is actually getting $29 for his block of shares. It will be much better selling it in the open market because by doing so he might drive the shares price below $29 and most probably to $25.

So, finally as you can see, there are many uses of options, not only to trade but also to maneuver your trading strategies in the market. Another use of options is to help Multinational Corporations to hedge their risk in their global operations. This will require another article, which I will later address on how Multinational Corporations use Currency Options, Forward Contracts and Currency Swaps to hedge their foreign exchange exposure in international markets.