It was exactly two years ago that I published a blog entry on the old Dream and Hustle blog about creating a stock market exchange for the hood (link). I spoke about how we can create our own trading platform using modern technology to raise capital among ourselves. I also talked about how we were planning to situate the exchange in Detroit to help revitalize the financial sector there.
Well, I’m pretty sure some lurking and side-hating brothas and sistas back then were laughing and talking behind my back about Ed and Dream and Hustle couldn’t and wouldn’t do it. Well, I’m about to announce officially that those cats going be real mad by the time they finish reading this article because I have a two year secret they ain’t going to like to hear. Because me and the 30 Rotten Dissidents put in some underground work and this article is going to discuss our upcoming binary option exchange operation called DBEXX.
What is Binary Options?
A binary option is a market trading mechanism that involves the buying and selling of options. If you have done options trading before, then you already know what I’m talking about. A lot of cats overseas, especially brothas in the military stationed overseas like to do binary options trading as their side hustle. The best way to explain binary options is to first go to Wikipedia:
In finance, a binary option is a type of option where the payoff is either some fixed amount of some asset or nothing at all. The two main types of binary options are the cash-or-nothing binary option and the asset-or-nothing binary option. The cash-or-nothing binary option pays some fixed amount of cash if the option expires in-the-money while the asset-or-nothing pays the value of the underlying security. Thus, the options are binary in nature because there are only two possible outcomes. They are also called all-or-nothing options, digital options (more common in forex/interest rate markets), and Fixed Return Options (FROs) (on the American Stock Exchange). Binary options are usually European-style options.
For example, a purchase is made of a binary cash-or-nothing call option on XYZ Corp’s stock struck at $100 with a binary payoff of $1000. Then, if at the future maturity date, the stock is trading at or above $100, $1000 is received. If its stock is trading below $100, nothing is received.
This is exactly how the DBEXX binary option trading platform works, on a cash-or-nothing basis. You basically can list an asset on the market or you can purchase options through the trading platform. I can get real technical but I think the best way it to basically narrate the hustle so you cats can understand how it works.
Binary Option Scenario
Let’s say someone named Tamiko wanted to list an asset and offer options. Tamiko would need to define the option as a condition and specify a numeric value of that condition and the date and time of the maturity date. For example, Tamiko can list a binary option that the Chicago Bulls will win more than 65 season games with a maturity date of June 1, 2013 with a strike price of $10 per option. Tamiko puts up $1000 to offers 100 options at $10 each on the options market.
Kevin sees the option and think the Chicago Bulls will win more than 65 games and the NBA preseason haven’t even started. So he buys 10 options at $1 that has a strike price of $10 that Tamiko put on the market. Now, the season started and the Chicago Bulls are on the run, other cats see the options and have more confidence the Chicago Bulls will do 65 games and buy up the rest of the 90 options at $1.
But guess what – other cats want those options and now Kevin and everybody can sell their options on the same market. Kevin offer his 10 options on the market with an ask price of $4 and somebody buys it meaning Kevin gets $40, meaning he made a profit. Now the last buy price is at $4 and other cats see the demand and they put of $6 around All-Star. Some cat late in the game sees they can make at least $4 profit off the $10 strike price, so they buy at $6 and the other cats made a profit.
Now it’s June 1, 2013 which is the maturity date and this is what happens. If the Chicago Bulls won more than 65 games, Tamiko has to honor the strike price and she can kiss that $1000 goodbye. Everybody who has options will receive $10 per option as promised and profited. However, if the Chicago Bulls do not win, Tamiko gets her $1000 and profits from the options.
For example, Kevin bought at $1 and sold 10 shares to Joe at $4 so the $30 goes to Kevin and the $10 goes to Tamiko. Mike buys the 10 options from Joe for $80 and that means Joe gets $40 profit and $40 goes back to Tamiko. So what Tamiko gets back is $50 from those 10 options. So Tamika make back around $300-$400 from her $1000 option if it went in her trading favor and made a profit. So either way it goes, cats on either side can either make profits or incur a loss.
Now the first thing you cats want to say is this is betting and wagering a bet which is not true. The reason this isn’t a bet or wager because you are selling and buying a financial instrument which is the option. Another thing is the scenario where you holding the Chicago Bulls option at $6 and you see the team sucks winning only 20 games before All-Star weekend and want to dump them for $2 to another buyer taking a $4 loss hoping some other sucker out there still believe in the Chicago Bulls – you can’t do that ish in gambling, okay?
The DBEXX platform is based on an enterprise service bus architecture (ESB) and highly scalable. We can actually start trading from a $5USD/month Godaddy hosting account and can scale out to a serious framework that can thousands of trades a minute. As I spoke to you cats before in terms of this kind of architecture, this allow us to create all kind of clients from mobile apps, to desktop software to tablet apps to gaming console apps to trading through SMS text messaging.
Our goal is to build a platform comparable to other binary options and other exchanges for brothas and sistas to get started. We believe that hood cats will find it easier to trade on binary options because the only assets they can trade on is their opinion and analysis and two-bit commentary. If they think the number of hurricanes hitting America will be 15 by December 1st, then they can bring that to market and sell options for cats to engage in buying and selling around. Lot easier than these stock markets and companies to trade on exchanges which is why we chosen binary options.
Now, cats going to think they slick and try to do some kind of price manipulation and we are aware of that. For example, the person listing the option tries to buy their own shares to create a false psychic demand. Then you got cats who try to scare cats and sell some of their shares for $1 and hoping others sell at that price then try to buy up those shares at $1 based on scare tactics. We are aware of those activities but the problem is that dumbass cat may find themselves behind bars in federal prison trying to play some of those stupid games – we will try our best to advise cats don’t even it try it.
The Economic Goal for the Hood
Our goal for creating and pursuing a trading exchange platform is to create jobs and opportunities for the city of Detroit by establishing the city as a place for creating next generation financial sector. If we setup our trading platform to be based in Detroit and we know they got smart brothas and sistas there and cats across in Canada can come down and put in work, we are hoping to attract more cats to open up financial-based businesses.
That means we can create financial jobs and cats can start moving in and buying property but since they are financial people by trade, they are the best kind of cats who can invest in communities around Detroit and help revitalize communities and blocks at a time. This is our strategy for the past two years to help bring jobs and opportunities back to Detroit, a critical asset of the African-American hubs that we brothas and sistas cannot afford to lose.
However, there is one more x-factor that I didn’t mention about the DBEXX platform. Of course, it is multi-lingual and designed to also allow overseas cats to engage in trading on the platform. Our initial target will be countries with currencies stronger than the US Dollar as they will find it cheaper to put their money in our trading platform infusing international cash for brothas and sistas to trade with.
Yeah, I told you these haters going to be real mad and ish but that’s their problem. We always been on mission to empower our people, our communities and have something for the next generation of brothas and sistas to build upon. Cats were running their damn mouth while the 30 Rotten Dissidents been putting in real work. And we swore to God that we going to make a lot of these fake cats out here look real stupid when we show and tell what we doing and put it in their face and let them see that we about it.
The first step is to help you cats understand what DBEXX is and let you know it is coming. The second step is to release it as a demo version as we work out the SEC and other red tape stuff. This allow you to create, buy and sell options with play money to get familiar with the system before we go real-time. It may be a possibility this may be situated in Aruba or Cayman Islands or Latin America before we bring it to Detroit while we work out the red tape so we definitely got the international options on deck. So that should tell you how deep we already done it and we mean business.
Now go ask Arial Capital Investments in Chicago what the hell they been doing all these years and ask these other cats what they been doing to step up the game for our people. I’m not even a financial person and we setting up a trading market for brothas and sistas to help build up Detroit. I’m not even a social media expert and we setting up Facebook photo kiosks to promote businesses and events. I’m not even a media mogul and working on the IPTV solution with out of home pay-per-view programming. And I’m not even a Black Web 2.0 sellout beotch to the game and created two international geolocation business models that I didn’t sell to Venture Capital firms but gave the code away to brothas and sistas to run with it.
I’m just a caramel complexion Black man from the West Side of Chicago who just doing this sh*t and these fake ass sideline brothas and sistas and these Boule cats and these phony Black media cornballs better get the f*ck over the fact we going do for our people with the knowledge and talent we got and be 100% at the same damn time.