YGOLANA|ANALOGY

A blog about analogies found on the web.

Trading is like Golf

 
"...traders should approach trading the way they would approach a golf course like Pebble Beach. The goal should be to play for pars and look to capitalize on any birdie opportunities that arise. To the extent possible, this means keeping the ball away from hazards and obstacles, as well as avoiding low percentage plays. It also means not compounding small mistakes by pressing and trying to make up lost shots in a hurry. Impulsive play is almost always penalized; patience and discipline are the only way to survive.
In golf and in trading, it is better to be able to drive the ball into the fairway than to hit it 300 yards and not control where it is going. Consistency, precision, patience and opportunistic aggression. That is the recipe for winning golf and winning trading – at Pebble Beach or in your own back yard."
 
Source: vix and more

Covered Call is like Season Ticket

 

 

According to Wikipedia a covered call is a financial market transaction in which the seller of call options owns the corresponding amount of the underlying instrument, such as shares of a stock or other securities. If the trader buys the underlying instrument at the same time as he sells the call, the strategy is often called a "buy-write" strategy. In equilibrium, the strategy has the same payoffs as writing a put option. 
The long position in the underlying instrument is said to provide the "cover" as the shares can be delivered to the buyer of the call if he decides to exercise. 
Writing a call generates income in the form of the premium paid by the option buyer. And if the stock price remains stable or increases, then the writer will be able to keep this income as a profit, even though the profit may have been higher if no call were written. The risk of stock ownership is not eliminated. If the stock price declines, then the net position will likely lose money. 
If you did not understand, perhaps this analogy helps:

Imagine that you are the season ticket holder of 4 good seats for a major league football team at the beginning of the season. A lot of people think the team is headed for the Superbowl, but you are pessimistic. You’d like to cash in on the current hype and get some money now for the last home game of the season. On craigslist you offer to sell the rights to this game. Your offer doesn’t force the buyer to buy the tickets, but gives the buyer the right to buy the tickets from you at face value any time before the game.

If your team is undefeated 4 games into the season the value of your offer will go up. If the last game of the season determines whether the team goes to the playoffs or not your offer could become quite valuable–essentially the difference between what the scalpers are charging for comparable tickets and the face price of the tickets.

On the other hand, if your team is near elimination from the playoffs halfway through the season your offer will be almost worthless—who would pay money for the right to buy tickets at face value that will probably be cheap on the street? If the last game of the season ends up being a meaningless contest between two loser teams you will probably have to sell your tickets at a discount if you don’t want to go yourself.

Your offer on Craig’s list has similar characteristics to selling stock options on stock you own—a covered call. You give up the upside on an asset you own in exchange for money upfront. No laws of nature have been broken—relax…

via sixfigureinvesting.com

 

Earthquake is like Ice skating

 
How analogy helps to explain the recent devastating earthquake in Chile.
 
Scientists at NASA’s Jet Propulsion Laboratory have used computer models to predict that the cataclysmic Chilean earthquake may have shifted the Earth’s axis by three inches, which will ultimately result in shorter days.
Days are estimated to have been shortened by 1.26 microseconds, and more visible changes include islands changing their position. One of them, Santa María, may have risen two meters as a result of the quake.  “It’s what we call the ice-skater effect,” David Kerridge, head of Earth hazards and systems at the British Geological Survey in Edinburgh, provided an analogy, “As the ice skater puts when she’s going around in a circle, and she pulls her arms in, she gets faster and faster. It’s the same idea with the Earth going around if you change the distribution of mass, the rotation rate changes.”
 

Objectivity in journalism is like Basketball referee

Interesting analogy on why taking no sides in journalism actually means taking a wrong side:

"When a basketball referee fails to call a foul late in a close game, broadcasters will often say the referee "didn't want to decide the game" or "wanted to let the players decide the game on the court."  The implication is that if the referee calls a last-second foul, he is deciding the outcome of the game -- but that if he doesn't call it, he is letting the players determine the outcome.  This may be aesthetically and dramatically pleasing to some, but as a basic matter of fact and logic, it is incorrect.  By not blowing the whistle on a clear foul, the referee is doing the opposite of what the announcers say he is doing.  He isn't really letting the players decide the game on the court; he's giving one team a distinct advantage.  When the people in charge of enforcing the rules stop doing so, their actions are the opposite of neutrality. Not calling a foul is a decision, too -- and it, too, has consequences."

Skicross is like NYC cab driving

American skicross Olympian Daron Rahlves explains what the skicross is about:

"Almost like a cabbie in New York trying to race through traffic and not crash. That's kind of what we're trying to do out there."

Skicross is making its Olympic debut [in Vancouver], added after the wildly successful debut of snowboardcross at the 2006 Turin Games. Athletes compete in groups of four, racing through an obstacle course of sorts down the mountain, navigating a series of turns and jumps as they go. The fastest one down the mountain wins.