Method of trading in real estate derivatives

• US 7,974,904 B2
• Filed: 05/11/2007
• Issued: 07/05/2011
• Est. Priority Date: 01/31/2007
• Status: Expired due to Fees

• Current Assignee: Paul Frischer
• Original Assignee: Paul Frischer
• Inventors: Frischer, Paul
• Primary Examiner(s): CAMPEN, KELLY SCAGGS
• Application Number:
  US11/747,874
• Publication Number:
  US 20080183611A1
• Time in Patent Office: 1,516 Days
• Field of Search: 705/36.R, 705/37, 705/35, 705/38, 705/26, 705/10, 705/39, 705/1.1
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 30/08 Auctions
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• 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 50/16 Real estate

Abstract

A method of computing a real estate derivative index value includes: selecting asking rent data; selecting lease rent data; and combining the selected asking rent data and the selected lease rent data to form the index value. The method may further include further combining the combined data with a value representative of general market conditions; forming a composite index of data from plural markets; or computing the index at the end of a time period as:
Δ FKI or as Δ RP+Δ CPI+Δ FKI.
The method may further include trading based on the index by deriving a trade value from the index value, and executing a trade based on the derived trade value. The method may be carried as instructions on a machine-readable medium and may be carried out using a computer for part or all of the method.

Claims

1. A method of computing a real estate derivative index value, the method comprising:

receiving at least one of asking rent data and lease rent data for an individual market including ending market pricing data and beginning market pricing data; and

generating, by a processor, the real estate derivative index value according to;

Δ

FKI=(R1-R0)/(R0)*100,

wherein,

Δ

FKI is the real estate derivative index value corresponding to a value change in commercial real estate in the individual market,

R1 is the ending market pricing data for a predetermined period, and

R0 is the beginning market pricing data for the predetermined period, and

wherein the asking rent data and lease rent data are based on an evaluation of supply and demand pricing in the individual market.

2. The method of claim 1, further comprising the steps of

receiving a predetermined risk premium (Δ

RP);

receiving an inflation rate (Δ

CPI); and

generating a total market return based on the real estate derivative index value according to;

Total Market Return =Δ

RP+Δ

CPI+Δ

FKI.

3. The method of claim 1, further comprising the steps of:

generating a total return for a plurality of individual markets by;

performing a weighted sum of the real estate derivative index value for each individual market of the plurality of individual markets; and

dividing the weighted sum by the number of the plurality of individual markets.

4. The method of claim 1, wherein the real estate derivative index value is a composite formed of data from a plurality of individual markets.

5. A non-transitory computer-readable medium storing instructions for computing a real estate derivative index value, which when executed by a computer cause the computer to perform:

receiving at least one of asking rent data and lease rent data for an individual market including ending market pricing data and beginning market pricing data; and

generating, by a processor, the real estate derivative index value according to;

Δ

FKI=(R1-R0)/(R0)*100,

wherein,

Δ

FKI is the real estate derivative index value corresponding to a value change in commercial real estate in the individual market,

R1 is the ending market pricing data for a predetermined period, and

R0 is the beginning market pricing data for the predetermined period, and

wherein the asking rent data and lease rent data are based on an evaluation of supply and demand pricing in the individual market.

6. The computer-readable medium of claim 5, further storing instructions for causing the computer to perform:

receiving a predetermined risk premium (Δ

RP);

receiving an inflation rate (Δ

CPI); and

generating a total market return based on the real estate derivative index value according to;

Total Market Return =Δ

RP+Δ

CPI+Δ

FKI.

7. The machine-readable medium of claim 5, further carrying instructions for carrying out in a computer:

generating a total return for a plurality of individual markets by;

performing a weighted sum of the real estate derivative index value for each individual market of the plurality of individual markets; and

dividing the weighted sum by the number of the plurality of individual markets.

8. The computer-readable medium of claim 5 further storing instructions for causing the computer to perform:

forming the real estate derivative index value as a composite of data from a plurality of individual markets.