School trading competition - what should I bet on

My school is hosting a student trading competition that'll run from November to December, and I want to win this. I can trade equities, FX, commodities, futures, and options.

What should I bet on? I want something highly volatile that I can bet on with a lot of leverage (that's the best strategy right?).

 
Best Response

let me get this straight, you want the prestige that comes with winning a trading competition without the knowledge/aptitude that comes with it. If you get a trading job, I hope you have a parachute for the size of the fall you'll take.

How about you post some ideas and we'll see how good they are.

But because I'm nice, here's a play I'm putting money on.

Buy puts DJIA Dec 13, betting on a 10% dip in the main basket of companies in the US economy.

Rationale: Obama reelected, US output stifles, the printed money inflates the economy driving the value of hte dollar down but because you dont make anything any more, its not like your exports dent the value of the dollar. This dip in consumption will hit China hard, causing a massive global recession.

It's not bulletproof but its something to go by (and i have my own money on this).

 

A one month trading competition that measures only your absolute return? This is why these competitions are retarded...the 'winner' of this will employ a strategy that you never would with real money.

In my opinion, your best bet is to buy a strangle on a major index with all of your capital. You will either end up with zero or be a hero. Whether other people do something similar or not, who knows, but at least you'll have a shot. Diversifying and generating risk adjusted returns are usually pointless in competitions like this.....especially with this short of a time frame.

 
JDawg:
My school is hosting a student trading competition that'll run from November to December, and I want to win this. I can trade equities, FX, commodities, futures, and options.

What should I bet on? I want something highly volatile that I can bet on with a lot of leverage (that's the best strategy right?).

Trading competitions without money are a completely stupid idea, because the risk-reward structure is completely different than in actual trading: Why? Because it doesn't matter if you lose it all!

So the strategy is: Bet on something really, really risky and hope for the best. If it pays off then you just take that money and wait for the competition to be over. You can probably invent some strategy after you won why you did that trade. People will think you're really smart. Of course you were just plain lucky.

If you are actually smart and make less risky bets that you will not win. You might end up with 120% or 130% of your initial money and had a way smaller chance to lose it all, but the price will go to the guy who just got plain lucky and has 300%.

 

Like has been said, you can just pick some all or nothing option play...

I gamed a few of these in college by trading stocks that didn't have the liquidity in real life that simulators will give you with fake money. Stuff like ISRL. Stick a limit for your full size in front of the best bid, wait for 100 shares to trade, get your "fill", flip it to the other side, profit. In the real world 100 shares probably traded $110 on the bid and 100 shares traded $115 at the offer - but depending on how dumb the simulator is you can get filled and flip your 10k shares for a quick $50k.

Maybe you could get away with it if your instructor doesn't have any idea how stocks really trade. But I agree with others above. This is just another example of how many of these competitions are stupid.

 
JDawg:
What should I bet on? I want something highly volatile that I can bet on with a lot of leverage (that's the best strategy right?).
Definitely. This is a great way to overpay for vol and then get wiped out when your 100:1 leveraged position moves 1 point against you, or when vol comes in a point or 2, or when you get eaten by theta within a week. And if you weren't talking about options, then you don't even understand why traders benefit from volatility.

you should do your own work. I would love to see kids who seek credit from others' work blow themselves up

 
gammaovertheta:
JDawg:
What should I bet on? I want something highly volatile that I can bet on with a lot of leverage (that's the best strategy right?).
Definitely. This is a great way to overpay for vol and then get wiped out when your 100:1 leveraged position moves 1 point against you, or when vol comes in a point or 2, or when you get eaten by theta within a week. And if you weren't talking about options, then you don't even understand why traders benefit from volatility.

you should do your own work. I would love to see kids who seek credit from others' work blow themselves up

i say we help OP to win this thing.

an easy way to do is to buy otm options on stocks where you expect vols to go up. theres obviously a high chance that it doesnt play out but if it does youll make a killing

 

in other words: you google some company where you expect that vols will go up for whatever reasons. then you pick some simple warrant that sell for close to 0, e.g. a some put option with a strike way below the current market price. Then you pray. If vols go up your put option will maybe increase from $0.07 to $0.15 you sell and you win. Needless to say you'll want to generally avoid this when dealing with actual money you kinda need.

 

Sell some covered calls on MSFT and hedge away your delta every morning. Alongside that just run some different bullish spreads on financials through an options pricing model and bet on things with 70% profitability or higher.

"Well, you know, I was a human being before I became a businessman." -- George Soros
 
Futures Trader Man:
Sell some covered calls on MSFT and hedge away your delta every morning. Alongside that just run some different bullish spreads on financials through an options pricing model and bet on things with 70% profitability or higher.
Sell MSFT vol - why? Writing a covered call and then gamma trading... You kind of have to choose which you want to do. You can't have directional risk (like you would with a covered call) and still delta hedge (trade vol).

And regarding your options calculator idea, most probability calculators are determined by implied vol as far as I can tell. This means you are already paying for that high probability. Think about it: if something as unsophisticated and accessible as a retail brokerage's options calculator tells you it is a good idea, don't you think the market already knows and has priced that into the spread?

Summary: Futures Trader Man, learn the basics before you mislead others

 
gammaovertheta:
Futures Trader Man:
Sell some covered calls on MSFT and hedge away your delta every morning. Alongside that just run some different bullish spreads on financials through an options pricing model and bet on things with 70% profitability or higher.
Sell MSFT vol - why? Writing a covered call and then gamma trading... You kind of have to choose which you want to do. You can't have directional risk (like you would with a covered call) and still delta hedge (trade vol).

And regarding your options calculator idea, most probability calculators are determined by implied vol as far as I can tell. This means you are already paying for that high probability. Think about it: if something as unsophisticated and accessible as a retail brokerage's options calculator tells you it is a good idea, don't you think the market already knows and has priced that into the spread?

Summary: Futures Trader Man, learn the basics before you mislead others

We should be friends.

Because when you're in a room full of smart people, smart suddenly doesn't matter—interesting is what matters.
 
Futures Trader Man:
...t just run some different bullish spreads on financials through an options pricing model and bet on things with 70% profitability or higher.

lol

 

Accusantium possimus ut ipsum ducimus. Enim possimus quisquam voluptatum eos quo. Vel dolorem quibusdam consequuntur hic inventore et qui. Odio impedit quam recusandae est qui voluptatum repellat.

Fugit quo deleniti quas quis. Occaecati quod aut dolorem iure error expedita excepturi.

Odit officiis adipisci corrupti aut odio. Nam atque eos modi eligendi nulla aut. Voluptatem maiores voluptatem quia nesciunt. Quasi ullam non est voluptatibus sunt.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
GameTheory's picture
GameTheory
98.9
6
dosk17's picture
dosk17
98.9
7
DrApeman's picture
DrApeman
98.9
8
CompBanker's picture
CompBanker
98.9
9
kanon's picture
kanon
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”