Happy Hedging
Source of inspiration is the following historic example of an early use of derivatives, such as options applied to mating. Derivatives have apparently been around before the time of Christ. In the Genesis, Chapter 29 (believed to be about 1700 B.C.)
Jacob purchased an option costing him seven years of labor that granted him the right to marry Laban's daughter Rachel. His prospective father-in-law, however, reneged, perhaps making this not only the first derivative but the first default on a derivative. Laban required Jacob to marry his older daughter Leah. Jacob married Leah, but because he preferred Rachel, he purchased another option, requiring seven more years of labor, and finally married Rachel, bigamy being allowed in those days. Jacob ended up with two wives, twelve sons, who became the patriarchs of the twelve tribes of Israel. One may argue that Jacob really had forward contracts, which obligated him to the marriages. However, Jacob did derivatives, one way or the other.
Derivatives create windows of opportunities in the future. And allow to bet on these opportunities. These bets can be complementary, which is called hedging. If event x occurs, we benefit. But we may bet at the same time as well, that it does not occur. Then we have to complimentary bets, and whatever the future brings, we win. This is called hedging, which means basically to have a bet for every possible outcome of the future. Of course this comes with costs, therefore the profit is not as big, as if there would have been only one bet and one got it right. The idea of hedging is, that no matter, what the outcome of destiny is, one takes some sort of profit and that the downside-risk is limited.
Hedge your love life. Hedge the end of relationships and the beginning of new ones. Issue options on the loved one, who you may not be able to be with now- but possibly in the future.
Happy endings by happy hedging.
Jacob purchased an option costing him seven years of labor that granted him the right to marry Laban's daughter Rachel. His prospective father-in-law, however, reneged, perhaps making this not only the first derivative but the first default on a derivative. Laban required Jacob to marry his older daughter Leah. Jacob married Leah, but because he preferred Rachel, he purchased another option, requiring seven more years of labor, and finally married Rachel, bigamy being allowed in those days. Jacob ended up with two wives, twelve sons, who became the patriarchs of the twelve tribes of Israel. One may argue that Jacob really had forward contracts, which obligated him to the marriages. However, Jacob did derivatives, one way or the other.
Derivatives create windows of opportunities in the future. And allow to bet on these opportunities. These bets can be complementary, which is called hedging. If event x occurs, we benefit. But we may bet at the same time as well, that it does not occur. Then we have to complimentary bets, and whatever the future brings, we win. This is called hedging, which means basically to have a bet for every possible outcome of the future. Of course this comes with costs, therefore the profit is not as big, as if there would have been only one bet and one got it right. The idea of hedging is, that no matter, what the outcome of destiny is, one takes some sort of profit and that the downside-risk is limited.
Hedge your love life. Hedge the end of relationships and the beginning of new ones. Issue options on the loved one, who you may not be able to be with now- but possibly in the future.
Happy endings by happy hedging.