Amusement devices: games – Including means for processing electronic data – In a game requiring strategy or problem solving by a...
Reexamination Certificate
2000-08-18
2004-03-23
Hotaling, II, John M (Department: 3713)
Amusement devices: games
Including means for processing electronic data
In a game requiring strategy or problem solving by a...
C273S278000, C273S256000, C434S107000
Reexamination Certificate
active
06709330
ABSTRACT:
BACKGROUND OF THE INVENTION
1. Field of the Invention
The present invention relates generally to the field of information processing. More particularly, the present invention relates to a game engine for simulating a real world options trading environment.
2. Related Art
For many years a sub-culture of the investment community has gathered daily on the floor ofthe Chicago Board Options Exchange to engage in a high-risk contest of the most nerve-wracking order. Success is measured in portfolio size, and tomorrow's news can ruin even the most savvied investor.
An option is a contract that gives the buyer the right to purchase or sell the underlying security at a specific price for a specific time period. The contract obligates the seller to meet the delivery terms if the buyer exercises the contract right. A call is an option contract that gives the buyer (holder) the right to buy 100 shares of the underlying stock at the strike price any time on or before the expiration day. A call gives the seller (writer) the obligation to sell 100 shares of the underlying stock at the strike price if the option is exercised. A put is an option contract that gives the owner (buyer) the right to sell 100 shares of stock at the strike price any time on or before the expiration day. A put gives the seller (writer) the obligation to buy 100 shares of stock at the strike price if the option is assigned. Strike price is the price at which an option holder can purchase (for a call) or sell (for a put) the underlying security.
Options trading on the floor of an exchange is about speculation. If an investor anticipates a certain directional movement in the price of a stock, the right to buy or sell that stock by purchasing an option contract can offer an attractive investment opportunity. The decision as to the type of option to buy depends on whether an investor's outlook with regards to the particular stock is positive (i.e., bullish) or negative (i.e., bearish). If an investor anticipates an upward movement in the stock, a call option offers an opportunity to share in the upside potential of the stock. Alternatively, if an investor anticipates a downward movement in the stock, a put option protects against the downside risk without limiting profit potential. Options give investors the opportunity to leverage a relatively small investment into a large profit by purchasing an option contract at a fraction of a stock's market value. Options can also be used in a less speculative, less risky manner. In either case, options, used intelligently, are just another investment tool, and as such, must be understood to be used effectively.
One reason more investors do not trade options is simply lack of knowledge. Options trading is sophisticated, and the strategies are complex. Presently available options trading products are designed for professional traders. These products are based on heavy mathematics and require a user to have strong mathematical skills.
What is needed is an options game that explains options trading in a language that regular investors can understand. What is also needed is an options game that enables a player to interactively apply what they have learned about options in a fun and interesting way. What is further needed is an options game that simulates real world options trading in the marketplace.
SUMMARY OF THE INVENTION
The present invention satisfies the above mentioned needs by providing an options game engine that simulates real-world options trading in the marketplace. In the present invention, option prices are driven by the effect of news stories on the stock price ofthe companies in a player's portfolio, as well as by semi-random movements of the price of each stock.
Briefly stated, the present invention is an options simulation engine for an options trading game. The present invention comprises a game engine for keeping track of game time and game settings, an options market simulator for providing a real-world options trading environment, and a portfolio manager engine for keeping track of a player's portfolio.
The options market simulator comprises a basic stock price generator for moving stock prices, a news/rumor generator for moving stock prices, and an options pricing generator for pricing options.
The portfolio manager comprises an available cash/minimum balance mechanism for determining how much a player is charged for buying and/or selling options and stocks, and for maintaining a players positions, a risk analysis mechanism for determining the amount of money a player can lose for any given stock or option, a margin requirements mechanism for keeping track of the minimum equity required in a player's account to support the player's total investment position, a profit and loss mechanism for determining a player's profit and loss throughout the game and on a weekly basis, and a trading rules/limitations mechanism that prevents a player from breaking a trading rule or exceeding a limitation during game play.
An advantage of the options game of the present invention is that it appeals to the novice as well as the professional trader. The options game of the present invention includes an options tutorial section and an options history section to bring the novice up to speed in the trading of options.
Further embodiments, features, and advantages of the present invention, as well as the structure and operation of the various embodiments of the present invention, are described in detail below with reference to the accompanying drawings.
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Lawrence J. Gitman, Michael D. Joehnk, Fundamentals of Investigation, Sixth Ed, 1996, pp. XXVI, XXVII, 25, 68, 121, 172, 226, 266, 315, 359, 397, 433, 485, 528, 568, 615, 650, 691, 729, B-1.*
Chicago Board Options Exchange (CBOE), “The Basics”, Aug. 11, 1999, 4 pages.
Berlin Lawrence Scott
Del Palacio Jaime Rockwell
Klein Cynthia Ann
Kostolansky Timothy J.
Ameritrade Holding Corporation
Hotaling, II John M
Sterne, Kessler, Goldstein & Fox P.L.LC.
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