Pedagogical Study of Options Education Tools: Statistical Methods and Analysis

Location: Remote, based at the Candidate’s University

Duration: 4 months

Proposed start date: September 2019 (Proposed 1 Month pause in October 2019)

Project Background

The RoToR Payoff Diagrams® was developed as an options learning tool for retail traders, providing a teaching path from the basics (essentially objective – theoretically based definitions / concepts) to practical trading (highly subjective / unstructured / laissez-faire methods). This model was developed to fill a perceived deficiency in the current, widely accepted method where fundamental concepts were taught in isolation from the underlying price chart, from which retail traders would ultimately trade from.

Enhance Your Options Pty Ltd has developed a proprietary product, the RoToR Payoff Diagrams® where the majority of concepts relating to options theory and trading can be displayed in a single view with a full range of customizable parameters for the simulation of scenarios and whatifs. This is orientated consistent with and overlaid onto the historical price chart, unique amongst the trading platforms presently available. The RoToR Payoff Diagrams® is a registered trademark and the subject of a patent application in several jurisdictions.

It is envisaged that the research will

  • Introduce the model to the academic realm, both establishing intellectual property rights amongst academia and formally validating its anticipated benefits.
  • Assist in the patent examination process, in establishing that it is not merely the graphical depiction of information, but that it provides underlying, inherent benefits to the user in applying concepts and, improving their subjective assessment of the risk-reward profile of the proposed trade.

Research to be Conducted

The experiment, well advanced in its design, involves the provision of an online fundamental options course, with time limit of 6.5 hours over a period of one month, presently expected to be in November 2019, with a pilot run in the preceding month. The course will be supplemented with online assessments, pre- and post- the course itself.

Experimental Design

  • Participants will be randomly assigned to one of two groups
    1. Group A – Traditional method of teaching options fundamentals using traditional, established depictions. (Control group)
    2. Group B – New method of teaching options fundamentals using RoToR Payoff Diagrams® depiction of the related concept.
  • The minimum number of participants required is 30 per group from a statistical standpoint, but it is envisaged that the numbers may exceed 300 per group.

Research Subjects Criteria

  1. We are looking for participants with a range of options trading, Technical Analysis (TA), general trading and investing experience, with the only pre-qualifiers that they have some knowledge and interest in financial markets, and a desire to understand more about Exchange Traded Options (ETOs).
  2. Participants (Research Subjects) are anonymous, except their country for statistical purposes and email address for registration and communication. We do not require their names and addresses.
  3. The participant’s email addresses cannot be used for marketing purposes, or any other purpose outside of the immediate study.
  4. Participation in the project is voluntary and they can opt out at any stage.
  5. Participants are required to complete several activities; assessments and a course online, with no human interaction during the study.
  6. Participants will not be financially compensated for their participation.

Participant Activities

  • The activities will include the following with an expected maximum duration of 7.5 hours, to be completed over the course of a month, at this stage November.
  1. Pre-Course Assessment
  2. Online Options Course – maximum 6.5 hours
  3. Post-Course Assessment
  • The project has already garnered the support of several associations involved with investing, trading options and technical analysis who are willing to promote the project to their members, resulting in a pool in the region of 40,000 prospective participants.
  • Ethics approval from the relevant institution will be required.

Skills Required

We are looking for a PhD student with the following:

ESSENTIAL

  • Experimental design – to ensure that the present structure of the experiment is sound and can conceivably produce statistically valid results.
  • Data manipulation, Statistical Analysis – to ascertain any statistically significant differences between the two groups, in relating to several criteria and concepts.

DESIRABLE

  • Interest in any or all the following; studies of pedagogical methods, options trading, behavioural finance concepts – Whilst this research project being offered is essentially an empirical task, an interest in the underlying concepts that the data pertains to would be a significant benefit.

Expected Outcomes

The assessment is designed to tease out underlying issues in the learning and applying of key concepts in relation to options trading. Merely comparing overall scores between the two groups, or improvement in scores between the two groups, pre- and post- the course would likely yield little insight.

To attempt to identify underlying issues that may be evident, the assessment is divided into two parts, an objective part and a subjective part and it is expected that detailed analysis of the responses,

  • between the two groups
  • between the pre- and post- assessment
  • between related questions

will provide considerable insight.

It is the design of the assessment that is considered the “secret sauce” and will only be revealed to the successful candidate and their mentor.

Regardless of the outcomes of the experiment, the research asks questions that very few in relevant fields have even pondered, and would likely produce interest and discussion, as outlined in the three avenues described below.

  • Research Publications

It is expected that the findings will be published in a series of papers, targeting a range of peer reviewed international academic journals; including those related to financial derivatives, data visualisation, education theory and behavioural finance. A large amount of data is expected to be collected, and the analysis and interpretation of segments of the data will be of interest to various disciplines in different ways.

  • Conferences and Symposiums

The findings will be presented at symposiums and conferences relating to several disciplines as detailed above.

  • Further research

It is anticipated that further projects will emanate from this, in relation to risky decision making, options trading, behavioural finance and technical analysis building on from the findings and questions raised.

Additional Details

The intern will receive $3,000 per month of the internship, usually in the form of stipend payments.

It is expected that the intern will primarily undertake this research project during regular business hours, spending at least 80% of their time on-site with the industry partner.  The intern will be expected to maintain contact with their academic mentor throughout the internship either through face-to-face or phone meetings as appropriate.

The intern and their academic mentor will have the opportunity to negotiate the project’s scope, milestones and timeline during the project planning stage.

Applications Close

 28 August 2019

Reference

APR – 1084