Martinghoul
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"PV" stands for 'present value' and everyone should know this. While 'calculating' PV makes all the sense in the world, I have no idea how one would go about 'designing' it.
GammaJammer
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A touch odd that you're writing a book about it and asking what it means. But hey ho...
You are right to laugh, but the client has given me a list of 40 survey questions, as asked by the public, one of the questions was;
''How to design and calculate PV?'
If the person who questioned that really meant Present Value as
Intrinsic Value, again is puzzling, this book is about day trading and technical indicators...
Anyway, the client is always 'right' so I am not gonna argue with what he wants...:cheesy:
I will take that, thanks!!
I will rephrase it as
''How to calculate intrinsic value''
The book's main purpose though is to present swing trading and
day trading techniques, but I can write about people's perception of intrinsic stock value...now as for calculating it, I only know one valuation model which is intimidating enough to make them pass the chapter..
A Dashing Blade
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Note that there's a huge difference between "Present value" and "intrinsic value"
PV = the sum of all future cashflows where each one has been discounted at the appropriate rate (usually calculated off a swap curve)
Intrinsic value = the difference between an option's strike price and the price of the underlying
PV = the sum of all future cashflows where each one has been discounted at the appropriate rate (usually calculated off a swap curve)
Intrinsic value = the difference between an option's strike price and the price of the underlying
Actually that's NPV Net Present Value. Each separate item of cashflow has its own future value, discounted at the interest rate to give its present value. Therefore a share each item would be dividends and the last would be sale proceeds. For a company it would be the estimated quarterly cashflow.
The question still makes no sense, however.
Hoggums
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Why are you interested in PV if you are writing about day trading? PV is as Blade describes it - but a single trade can have potentially an infinite number of PV's calculated for it based on simulated shifts in exchange rates/volatilities/interest rates etc.
The only PVs I've seen calculated for derivatives and other exotics have been done on overnight positions using end of day figures, but you're writing a book about day trading - which begs the question - does your client know what the hell he's asking you to write?
The only PVs I've seen calculated for derivatives and other exotics have been done on overnight positions using end of day figures, but you're writing a book about day trading - which begs the question - does your client know what the hell he's asking you to write?
GammaJammer
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As well as the question - why is he asking you to write this?
