Apparatus and process for executing an expirationless option transaction

• US 5,884,286 A
• Filed: 09/17/1996
• Issued: 03/16/1999
• Est. Priority Date: 07/29/1994
• Status: Expired due to Fees

• Current Assignee: Economic Inventions, LLC, Ramey Lane, LLC
• Original Assignee: Vergil L. Daughtery III
• Inventors: Daughtery, Vergil L. III
• Primary Examiner(s): MacDonald, Allen R.
• Assistant Examiner(s): Irshadullah, M.
• Application Number:
  US08/718,630
• Time in Patent Office: 910 Days
• Field of Search: 705/1, 705/36, 705/37, 705/4, 705/35, 273/138.2, 364/918
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 30/08 Auctions
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

The present invention introduces an apparatus and process which may be implemented on a vast variety of computer systems. The apparatus and process of the present invention use a computer system to receive and store data representative of a particular asset, a type of option (call or put), requested exercise price and a multitude of other variables related to the asset. The apparatus and process then generate data representative of an expirationless option premium for use in transacting an expirationless option.

Claims

1. A data processing apparatus for executing an expirationless option transaction on a particular asset, said data processing apparatus comprising:

(A) means for receiving data representative of a particular asset, an option type, an exercise price for the particular asset, the current price of the particular asset, the historic price volatility of the particular asset and the margin requirement for the particular asset;

(B) a storage medium adapted to store the data received by said receiving means and an expiring option premium algorithm;

(C) means, responsive to the data received by said receiving means, for generating data representative of an option premium for the expirationless option on the asset using the expiring option premium algorithm;

(D) means for outputting the option premium data; and

(E) means for executing the expirationless option transaction.

2. The data processing apparatus of claim 1, further comprising a means for inputting at least part of the data received by the receiving means.

3. The data processing apparatus of claim 2, said inputting means selected from the group consisting of:

a keyboard and a mouse.

4. The data processing apparatus of claim 1, further comprising one or more data source for sending at least part of the data to the receiving means.

5. The data processing apparatus of claim 1, said outputting means selected from the group consisting of:

a video display and a printer.

6. A process of operating a computer system for executing an expirationless option transaction, said process comprising the steps of:

(A) prompting a user to input data representative of a particular asset;

(B) receiving a first signal from the user, wherein said first signal is representative of data for the particular asset;

(C) prompting the user to input data representative of an option type;

(D) receiving a second signal from the user, wherein said second signal is representative of data for the option type;

(E) prompting the user to input data representative of an exercise price for the particular asset;

(F) receiving a third signal from the user, wherein said third signal is representative of data for the exercise price for the particular asset;

(G) receiving a fourth signal from a data source or the user, wherein said fourth signal is representative of data related to the current price for the particular asset, the current risk-free interest rate, the historic price volatility for the particular asset and the margin requirement for the particular asset;

(H) in response to said first, second, third and fourth signals and using an expiring option premium algorithm;

(i) setting each variable of the option premium algorithm to its associated data value received in steps (B) and (G),

(ii) setting the exercise price variable equal to the current price for the particular asset data from said fourth signal,

(iii) setting the option premium variable equal to the margin requirement for the particular asset data, and

(iv) generating data representative of an implied time;

(I) using the expiring option premium algorithm;

(i) setting the exercise price variable equal to the exercise price data of said third signal, and

(ii) generating data representative of an option premium for use in transacting the expirationless option; and

executing the expirationless option transaction.

7. The process of claim 6, wherein said second signal is representative of data for the option type selected from the group consisting of:

a put or a call.

8. The process of claim 6, Further comprising the step of:

recording the option premium data on a storage medium.

9. The process of claim 6, further comprising the step of:

outputting the option premium data.

10. A process of operating a computer system for an expirationless option transaction, said process comprising the steps of:

(A) prompting a user to input data representative of a particular asset;

(B) receiving a first signal from the user, wherein said fist signal is representative of data for the particular asset;

(C) prompting the user to input data representative of an option type;

(D) receiving a second signal from the user, wherein said second signal is representative of data for the option type;

(E) prompting the user to input data representative of an exercise price for the particular asset;

(F) receiving a third signal from the users, wherein said third signal is representative of data for the exercise price for the particular asset;

(G) receiving a fourth signal from a data source of the user, wherein said fourth signal is representative of data related to the current price for the particular asset, the current risk-free interest rate, the historic price volatility for the particular asset and the extinction date for the particular asset; and

(H) in response to said first, second, third and fourth signals and using an expiring option premium algorithm;

(i) setting each variable of the option premium algorithm to its associated data value received in steps (B), (F) and (G),

(ii) setting time variable equal to the extinction date for particular asset data from said fourth signal, and

(iii) generating data representative of an option premium; and

(I) executing the expirationless option transaction.

11. The process of claim 10, wherein said second signal is representative of data for the option type selected from the group consisting of:

a put or a call.

12. The process of claim 11, wherein said fourth signal is further representative of data related to a percentage for an extinction band, and wherein step (H), prior to substep (iii), further comprises the step of setting the asset price variable equal to the percentage data plus one times the current price for the particular asset data if the option type is a call or setting the asset price variable equal to one minus the percentage data times the current price for the particular asset data if the option type is a put.

13. The process of claim 11, wherein said fourth signal is further representative of data related to a dollar amount tick for an extinction band and a dollar amount for the extinction band, and wherein step (H), prior to substep (iii), further comprises the step of setting the asset price variable equal to the extinction band data divided by the tick data plus the current price for the particular asset data if the option type is a call or setting the asset price variable equal to the current price for the particular asset data minus the extinction band data divided by the tick data if the option type is a put.

14. The process of claim 10, further comprising the steps of:

recording the option premium data on a storage medium.

15. The process of claim 10, further comprising the step of:

outputting the option premium data.

16. A process for executing an expirationless option financial

(A) prompting a user to input data representative of a particular asset;

(B) receiving a first signal from the user, wherein said first signal is representative of data for the particular asset;

(C) prompting the user to input data representative of an option type;

(D) receiving a second signal from the user, wherein said second signal is representative of data for the option type;

(E) prompting the user to input data representative of an exercise price for the particular asset;

(F) receiving a third signal from the user, wherein said third signal is representative of data for the exercise price for the particular asset;

(G) receiving a fourth signal from a data source or the user, wherein said fourth signal is representative of data related to the current price for the particular asset, the current risk-free interest rate, the historic price volatility for the particular asset and the margin requirement for the particular asset;

(H) in response to said first, second, third and fourth signals and using an expiring option premium algorithm;

(i) setting each variable of the option premium algorithm to its associated data value received in steps (3) and (G),

(ii) setting the exercise price variable equal to the current price for the particular asset data from said fourth signal,

(iii) setting the option premium variable equal to the margin requirement for the particular asset data, and

(iv) generating data representative of an implied time;

(I) using the expiring option premium algorithm;

(i) setting the exercise price variable equal to the exercise price data of said third signal, and

(ii) generating data representative of an option premium; and

(j) executing the expirationless option transaction.

17. An expirationless option financial transaction performed by the process of:

(A) prompting a user to input data representative of a particular asset;

(B) receiving a first signal from the user, wherein said first signal is representative of data for the particular asset;

(C) prompting the user to input data representative of an option type;

(D) receiving a second signal from the user, wherein said second signal is representative of data for the option type;

(E) prompting the user to input data representative of an exercise price for the particular asset;

(F) receiving a third signal from the user, wherein said third signal is representative of data for the exercise price for the particular asset;

(G) receiving a fourth signal from a data source of the user, wherein said fourth signal is representative of data related to the current price for the particular asset, the current risk-free interest rate, the historic price volatility for the particular asset and the extinction date for the particular asset;

(H) in response to said first, second, third and fourth signals and using an expiring option premium algorithm;

(i) setting each variable of the option premium algorithm to its associated data value received in steps (B), (F) and (G),

(ii) setting time variable equal to the extinction date for particular asset data from said fourth signal, and

(iii) generating data representative of an option premium; and

(I) executing the expirationless option transaction.