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Professor Bunsen
Optech Scientific
Posted - 2007.09.25 10:24:00 - [1]
 

Edited by: Professor Bunsen on 04/10/2007 10:44:29
Edited by: Professor Bunsen on 03/10/2007 21:36:15
ArrowBackground
Optech Scientific was formed on 1st March 2007. The corporation's first public investment was the successful Optech Startup Fund (Eve-O thread here). Building on this initial success was OPTUT (Eve-O thread here) New Edens first public Unit Trust which returned 75% profits over 2 months (results thread).

Following a brief period of intensive psychotherapy to deal with "issues" surrounding capital ship production, I have returned to my quarters onboard my flagship Ibis at Isanamo, re-invigorated by my sabattical.

ArrowEve-Index launching

Over the next few days Optech will be launching Eve-Index, the first traded mineral options market in New Eden. Pilots will be able to trade mineral futures, pitching their wits against the market in an effort to predict and profit from either a rising or falling market. Holders of minerals will be able to "hedge" against market fluctuations to reduce risk in their mineral portfolio.

The Eve-Index market is not on offer here. The market will be conducted with no trading fees and will be open to all who wish to use it, with the only fee being a 1% withdrawal fee to cover the only manual bit of the process.

Eve-Index is not yet open for live trading, but should be so by Thurs 27th Sept.

ArrowHow will Optech Mineral Ventures profit?

The purpose of the IPO is to raise funds to "write" option contracts. For example in a call option the buyer purchases the right to buy (say) trit at 3.3 isk per unit before a certain date in the future. Contracts of course have two parties, and the other side of the coin is that the person creating the call option (the "writer") enters into the obligation to sell trit at that price.

All options on Eve-Index will be 100% "covered", in other words in order to sell the call contract I must actually hold the trit in case the option holder exercises his right to buy the trit off Optech at that price. This means that to offer 1000 trit call options Optech must buy 1000 contracts worth of trit. As each contract is for 1 mil units of mineral thats about 3.2 bil worth of trit.

Similarly to "write" a put option (which gives the buyer the right to sell at a fixed price) Optech will have to deposit the full cost of the contract with Eve-Index. If we write 1000 put options for Trit at 3.3 isk we require 3.3 bil to cover the possibility that those contracts will be "exercised" (cashed in).

Of course if we correctly predict the market movements the money made from selling the option contracts is our profit to keep.

Arrow What could go wrong?
I could be a hopeless mineral trader and consistently predict the markets incorrectly. However, I'm investing 5 bil of my own isk in this so I'm betting on Bunsen!

Arrow What capital are you looking to raise?

It is a somewhat flexible feast. I'm hoping for somewhere north of 5 bil, but the larger the sum raised from the market the greater the opportunity to put the money to work.

(Continued below.)

Professor Bunsen
Optech Scientific
Posted - 2007.09.25 10:24:00 - [2]
 

ArrowIs there demand for mineral option trading?
Well it's always tough to be the first to market with a new product and truth be told I don't know for sure, but clearly I'm expecting there is. If theres no demand there's no profits and no risk to the capital. My guess is a lot of players may well take a flutter with isk for fun and major manufacturers holding large mineral stockpiles may use the options to insure their positions against falls in the market.

Mineral options trading may be too complex to appeal to Eve players, however I think Eve is somewhat unique in attracting a playerbase which thrives on complexity so whilst I'm not expecting this will be for everone I'm hopeful there's enough potential market gurus out there.

ArrowScamming risk

Yes its there, and is impossible to control with this type of venture. OPTUT had over 10 bil of funds under management when it was wound up so I've had my hands on similar amounts of public money before without scamming, but I may have gone bad since then.

ArrowCautionary note

Clearly the Optech Mineral Ventures (OMV) may make a lot of money or lose a lot. Unlike a lot of Eve investments which are pretty much a one way bet (scamming aside its hard to lose money in Eve trading unless you take big chances) the value of OMTF shares is likely to rock about somewhat. The share value is actually going to increase and decrease on this one (opportunities on the secondary market anyone?) so caveat emptor!

ArrowThe bottom line

I'm looking to sell shares in Optech Mineral Ventures to add to my own capital of 5 bil and intend to use the isk to speculate on the mineral markets, mostly through Eve-Index as outlined above. Shares are priced at 1 mil per share. I intend to apply for a stock market listing in due course. Isk for share purchases directed to "Professor Bunsen" please.


Bunsen

Shar Tegral
Posted - 2007.09.25 12:46:00 - [3]
 

Unable to get in game today or tomorrow. Would you please earmark 250M for me. I'd also like to option another 250M for pickup/refusal by Saturday. Wink

Shiva Shakti
Gallente
Hi-Tech Industries
Posted - 2007.09.25 12:47:00 - [4]
 

Hi I'm interested in investing, got some questions for you if OK?

1) Share Holding and potential dilution of value:
How many shares exist at present? 10,000 or 100,000?
Initially I work it out as
5,[email protected] 1million held by you
5,[email protected] 1million sold to the public?
How many more shares are lurking for release onto IPO/secondary market?
How many more do you plan to create?
Is this an open ended corporation, or does it have an envisaged end date?
Is there, or will there be, a buy back option, and if so at what % of initial value?

2) Accounts issues:
a)Estimated Return on Investment (ROI), is it 0-10% or 5%/month approx etc? I understand the venture is new gambit but even so an initial thought on the breakdown of costs/risks and rewards could help (i.e. have you done test trading and were the results worthwhile?).
b) Breakdown of % of "profits/surplus" which is kept for i) management; ii) staffs wages; iii) reinvestment; and iv) dividends for investors

3) Investor security:
Will there be: secured assets? Trustees? Other corp mates who could help out/take over if your away with RL stuff?

Thats what I can think of off the cuff, thanks for your time, looking forward to backing you venture.

Shiva Shakti
Gallente
Hi-Tech Industries
Posted - 2007.09.25 12:48:00 - [5]
 

Edited by: Shiva Shakti on 25/09/2007 12:51:01
Originally by: Shar Tegral
Unable to get in game today or tomorrow. Would you please earmark 250M for me. I'd also like to option another 250M for pickup/refusal by Saturday. Wink


Same for me, I will take an initial gamble, but its patch on patch on patch day as well, so forums will be swamped and they will be taken up fast I would imagine (depending how many there are) lol.

250mil will be sent asap Prof, with another 250mil when I find where CCP have hidden it :) Ooo and maybe some more depending on the structure etc

Cheers

Ionia
Advanced Manufacturing
Posted - 2007.09.25 13:39:00 - [6]
 

Professor, why are you going with this model of mineral trading rather than buying/selling on the open market?

Crescens
Caldari
Euphoria Heavy Industries
Posted - 2007.09.25 15:07:00 - [7]
 

I would also be interested in reserving 250m isk worth of shares.
I won't be able to get in game until Friday so if you could hold some for me until then that'd be much appreciated Smile

Luther Cixouss
Union Aerospace Corporation
Posted - 2007.09.25 16:23:00 - [8]
 

Hi,

I'm interested but I'd be a small-time investor.

Is there a minimum amount of shares that one investor can buy?

Thanks

Hachip Sygos
Posted - 2007.09.25 16:43:00 - [9]
 

I am potentially interested. This sounds like a good proposal.
I am however relatively poor and would only be willing to invest 5mil
What kind of return would i recieve on this?

Pang Grohl
Posted - 2007.09.25 16:47:00 - [10]
 

Sign me up for 50mil, please. And I have another 50 slated for opening day at the exchange. YARRRR!!

Shadarle
Posted - 2007.09.25 17:39:00 - [11]
 

Originally by: Ionia
Professor, why are you going with this model of mineral trading rather than buying/selling on the open market?


Ditto.

Ricdic's Hoe
Posted - 2007.09.25 17:40:00 - [12]
 

I will invest 50m through this character. Please reserve, isks to be sent in about 30 mins

Korrigon
Blackwater USA Inc.
Against ALL Authorities
Posted - 2007.09.25 18:10:00 - [13]
 

100m isk sent for 100 shares Smile

Shadarle
Posted - 2007.09.25 18:45:00 - [14]
 

Originally by: Professor Bunsen

ArrowBackground
Optech Scientific was formed on 1st March 2007. The corporation's first public investment was the successful Optech Startup Fund (Eve-O thread here). Building on this initial success was OPTUT (Eve-O thread here) New Edens first public Unit Trust which returned 75% profits over 2 months (results thread).


Is this the reason most are investing? The 75% number? I'm curious as I still am curious what the point is instead of just buying/selling minerals on the open market. Even if I wasn't an investor I don't see why I'd use this... I'd love to have someone explain the benefits of this system to me.

Professor Bunsen
Optech Scientific
Posted - 2007.09.25 18:50:00 - [15]
 

Originally by: Shadarle
Originally by: Ionia
Professor, why are you going with this model of mineral trading rather than buying/selling on the open market?


Ditto.


2 reasons. First is gearing, there's a lot more movement on an option if you make the right predictions than with minerals directly. 10% on a mineral may give 50% on an option. Secondly I like the idea of developing futures market and enjoyed doing the back end programming to create that.

Shadarle
Posted - 2007.09.25 18:55:00 - [16]
 

Originally by: Professor Bunsen
Originally by: Shadarle
Originally by: Ionia
Professor, why are you going with this model of mineral trading rather than buying/selling on the open market?


Ditto.


2 reasons. First is gearing, there's a lot more movement on an option if you make the right predictions than with minerals directly. 10% on a mineral may give 50% on an option. Secondly I like the idea of developing futures market and enjoyed doing the back end programming to create that.


I'm sorry... can you repeat that in English please? I understand you understand futures and such quite well... but can you explain the benefits to someone who has no clue what the terms you're using mean.

Such as "gearing", "options", etc.

Explain the 10% on a mineral may give 50% on an option comment as I have absolutely 0 clue what you're talking about.

FastLearner
Fury Holdings
Brutally Clever Empire
Posted - 2007.09.25 18:57:00 - [17]
 

Originally by: Shadarle
Is this the reason most are investing? The 75% number? I'm curious as I still am curious what the point is instead of just buying/selling minerals on the open market. Even if I wasn't an investor I don't see why I'd use this... I'd love to have someone explain the benefits of this system to me.


The benefits vary depending on which end of the action you're on.

If you're a manufacturer - and think the price of Trit is going to rise - you can buy options to guarantee you can get your Trit in a few months time at a maximum of a certain price. Similarly if you're a mining corporation you can guarantee you'll get sales at a certain price in a few months time.

If you write options then potentially you can play both sides off against the middle and make a much greater return on your ISK than if you had to actually buy/sell the minerals.

But all of that depends on a collateral system which doesn't involve tieing up anything like 100% of the minerals in advance - otherwise writing options isn't profitable.

Ricdic's Hoe
Posted - 2007.09.25 19:03:00 - [18]
 

Originally by: Shadarle


Is this the reason most are investing? The 75% number? I'm curious as I still am curious what the point is instead of just buying/selling minerals on the open market. Even if I wasn't an investor I don't see why I'd use this... I'd love to have someone explain the benefits of this system to me.


I didnt even read his business plan, I am just investing because I remember the time he refused to pay back an investor who declared war on him Laughing

Shadarle
Posted - 2007.09.25 19:32:00 - [19]
 

Originally by: FastLearner
Originally by: Shadarle
Is this the reason most are investing? The 75% number? I'm curious as I still am curious what the point is instead of just buying/selling minerals on the open market. Even if I wasn't an investor I don't see why I'd use this... I'd love to have someone explain the benefits of this system to me.


The benefits vary depending on which end of the action you're on.

If you're a manufacturer - and think the price of Trit is going to rise - you can buy options to guarantee you can get your Trit in a few months time at a maximum of a certain price. Similarly if you're a mining corporation you can guarantee you'll get sales at a certain price in a few months time.

If you write options then potentially you can play both sides off against the middle and make a much greater return on your ISK than if you had to actually buy/sell the minerals.

But all of that depends on a collateral system which doesn't involve tieing up anything like 100% of the minerals in advance - otherwise writing options isn't profitable.


Ok. So if you can do collateral free options on both sides then obviously you'll make money... either you can sell higher than you should or you can buy cheaper than you should... or you can choose to do neither. Great for the the person doing this. But how in the heck does the business profit off this? The way I'm understanding this is that the business is going to be doing this buying/selling from them? Sounds like they'd just be losing a lot of money. Or if it instead other traders buying/selling then why would they do this at an obvious loss?

And then, lets say there is a collateral... as you say it is not profitable, thus what is the point?



I don't understand how this works well for all sides. I either can understand why someone would partake in this or I can understand why the business would make a lot of money... but they don't seem to be able to both be true.

Can I get some more clarification/examples of how this is supposed to work so I can understand why I will personally invest and then also why the company wants me to invest... and finally, who it is exactly that has the minerals I would be buying or who would be buying my minerals.

FastLearner
Fury Holdings
Brutally Clever Empire
Posted - 2007.09.25 19:35:00 - [20]
 

Originally by: Shadarle
Originally by: Professor Bunsen
Originally by: Shadarle
Originally by: Ionia
Professor, why are you going with this model of mineral trading rather than buying/selling on the open market?


Ditto.


2 reasons. First is gearing, there's a lot more movement on an option if you make the right predictions than with minerals directly. 10% on a mineral may give 50% on an option. Secondly I like the idea of developing futures market and enjoyed doing the back end programming to create that.


I'm sorry... can you repeat that in English please? I understand you understand futures and such quite well... but can you explain the benefits to someone who has no clue what the terms you're using mean.

Such as "gearing", "options", etc.

Explain the 10% on a mineral may give 50% on an option comment as I have absolutely 0 clue what you're talking about.


The 10% on a mineral may give 50% on an option is pretty much what the "gearing" is. I'll pick totally hypothetical values to try to illustrate the point.

Let's say trit is at 2.5 and you correctly predict it's going to hit 3.0 in a certain time-scale.

With buying actual minerals you have to invest 2.5 ISK per unit of trit - meaning that IF you're right, you've invested 2.5 ISK for every 0.5 ISK profit you stand to make if you're correct. So if everything gos to plan you make a 20% profit on your investment.

With options you'd buy call orders (the right to buy trit) at 2.5. These may cost you, say 0.2 ISK per unit. On the face of it you may think you're worse off doing this - after all, you're only standing to make 0.3 ISK per unit of trit, rather than the 0.5 you'd make buying the Trit directly. But the opposite is in fact true - as you're only investing 0.2 ISK for every 0.3 ISK profit you stand to make if you're correct. So if everything gos to plan you make a 150% profit on your investment.

It's that ability to focus your ISK on the margins of the mineral price, without having to tie cash up in the actual mineral itself, which makes for potentially much larger profits from dealing in options rather than in actual minerals.

Of course the potential losses if you get it wrong are also much higher. And, until the collateral issue is sorted, there's little to no benefit in writing options - but plenty in buying them.

FastLearner
Fury Holdings
Brutally Clever Empire
Posted - 2007.09.25 19:43:00 - [21]
 

Edited by: FastLearner on 25/09/2007 19:44:10
Originally by: Shadarle
Ok. So if you can do collateral free options on both sides then obviously you'll make money... either you can sell higher than you should or you can buy cheaper than you should... or you can choose to do neither. Great for the the person doing this. But how in the heck does the business profit off this? The way I'm understanding this is that the business is going to be doing this buying/selling from them? Sounds like they'd just be losing a lot of money. Or if it instead other traders buying/selling then why would they do this at an obvious loss?

And then, lets say there is a collateral... as you say it is not profitable, thus what is the point?

I don't understand how this works well for all sides. I either can understand why someone would partake in this or I can understand why the business would make a lot of money... but they don't seem to be able to both be true.

Can I get some more clarification/examples of how this is supposed to work so I can understand why I will personally invest and then also why the company wants me to invest... and finally, who it is exactly that has the minerals I would be buying or who would be buying my minerals.


Ignoring the collateral issue (for now) it works perfectly well for both sides. The IPO would make money off of two sets of customers:

1. Ones who want to "hedge" to ensure price stability. i.e. they buy options which both they AND the company believe will never be exercised - so that they have an absolute guarantee of sales/purchases at a future date. The expectation of both parties in these transactions would be no exercising of the options - and the options would typically be cheap ones.

2. People who believe they can predict mineral price trends better than Bunsen can. If he believes Trit price will fall then he'll write Call options on it. People who believe the price will rise will then buy those options. The IPO makes a profit/loss based on whether Bunsen is better or worse at predicting mineral price trends than those buying the options he writes.

There are also tactics available to reduce exposure and to minimise your losses when you realise you've written options which are likely to be exercised.

Shadarle
Posted - 2007.09.25 19:54:00 - [22]
 

So you're saying that you are actually paying ISK to buy these options? I had not understood that to this point.

But on the trit example, this is a long term profit situation right? Such as buying trit at 2.5, hoping it goes to 3.0 you may have to wait a few months. So buying the options at 3.0 for .2 would also take you a few months to get your profits, assuming the market does indeed get there, right? And if they don't get there then the .2 is basically lost and the company profits?

I guess I somewhat understand it now... but I'm not sure I do if people can write their own as people could simply refuse to honor their options if there isn't collateral... and if there is collateral it seems to make it pointless as you could just be doing the actual mineral trading then and get out/in whenever you want.

Professor Bunsen
Optech Scientific
Posted - 2007.09.25 19:57:00 - [23]
 

Edited by: Professor Bunsen on 25/09/2007 21:34:10
Whilst I am genuinely delighted at the discussion of the pros and cons of options in general I am going to politely ask that you do that bit here.

I'm trying to keep this thread nice and clean for the IPO proposal itself.

If a passing mod could tidy up for me it would be appreciated.

Originally by: Shiva Shakti
Hi I'm interested in investing, got some questions for you if OK?.


1) Share Holding and potential dilution of value:

Corp not yet incorporated, if 7 bil is raised there will be 7,000 shares. If further shares were to be created I would only ever suggest that they were sold at or slightly over NAV to avoid dilution issues for existing shareholders. Although there is no formal buy back committment being made, funds permitting buying back corp shares at say 90% of NAV would almost always be a good move. There is no planned wind up date, if it's making money and remains enjoyable it will go on for some considerable time! When I got into cap ship production with OPTUT and hated it I gave notice, sold up and returned full value to the shareholders (unit holders in that case).

2) Accounts issues:

a)Estimated Return on Investment (ROI) - really tough to predict. I can tell you I'm aiming at distributed profits (i.e post salary) somewhere between 5 and 10% /month. If I can't deliver above 7%/month I'll be disappointed and after some months running at it would either propose a new strategy to the shareholders or wind it up.

b) Handling of "profits/surplus". As with OPTUT last time I'm planning on all profits being re-invested for growth and no dividends. Salary scale (can't believe I overlooked that one!) 20% of monthly profits.

3) Investor security:
None, its just Bunsen. YARRRR!!

Proton Power
Amarr
Retirement Retreat
Posted - 2007.09.25 20:31:00 - [24]
 

Contact me in game if you can. May be interested in investing a few bil.

Shadarle
Posted - 2007.09.26 00:42:00 - [25]
 

Originally by: Professor Bunsen
If a passing mod could tidy up for me it would be appreciated.



So you want a mod to be your own personal housekeeper/censor?

I'm sorry that you don't like that I am trying to figure out what your IPO even does in this thread... but from my reading your IPO wasn't even starting yet. So I was trying to determine if this was a good investment or not.

You do realize that this is the market discussion forum, not the sales forum correct? Even on the sales forum people are allowed to ask questions to some degree... but this forum is meant for discussion. Perhaps you simply posted this on the wrong forum?

But I'll stop asking questions about your IPO and thus will not be investing, per your request.

Letias
Caldari
Poofdinkles
Posted - 2007.09.26 10:04:00 - [26]
 

I would like to take 150 shares if you have them :) will contact you in game as well.

Block Ukx
Forge Laboratories
Posted - 2007.09.26 11:20:00 - [27]
 

I agree with Shadarle. Itís not very clear what people are investing into. Options are not a common matter for eveís population and you need to do a better job explaining it. Make sure you do it in simple terms and avoid assuming people understand what you are talking about.

You have talked about trading options, and how you can make a lot of money trading options. But I donít think investors realize that you need option writers before you can begin trading. This IPO is for writing options, not trading. From what I understand, you will be the only one writing options, so there will be no competitive calls/puts.

Investors need to realize that for this to work you need both, options writers and traders.


Hachip Sygos
Posted - 2007.09.26 17:33:00 - [28]
 

I would be interested in buying 5 shares or 5 million ISKs worth.

(Every little helps right)

Contact me in game, and I will sort it out.

Professor Bunsen
Optech Scientific
Posted - 2007.09.27 07:49:00 - [29]
 

I'm sorry if I am not communicating clearly enough. As I said in the first post, the purpose of the IPO is to raise funds to create a war chest to undertake mineral trading, in particular using the Eve-Index options market. I'm putting 5 bil of my own isk into the venture but feel that there are greater profits to be made with more isk to play with.

A little over 2 bil isk received so far and acknowledged by Eve mail.

Kayleigh Snow
Posted - 2007.09.27 12:19:00 - [30]
 

Originally by: Professor Bunsen
I'm sorry if I am not communicating clearly enough. As I said in the first post, the purpose of the IPO is to raise funds to create a war chest to undertake mineral trading, in particular using the Eve-Index options market. I'm putting 5 bil of my own isk into the venture but feel that there are greater profits to be made with more isk to play with.

A little over 2 bil isk received so far and acknowledged by Eve mail.


Still don't really understand what we would be buying in to. Are you saying you are raising money to use this system, or to fill it with minerals?


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