Skip to content
Ownly

Teacher guide · Unit 9 of 13

Advanced Investing

Options, futures, and the private markets — mostly so you understand what you are choosing not to do.

Lessons
5
Reading
41 minutes
Unit quiz
5 questions
Class time
2 periods

Class time is a guide: 45-minute periods, with the lessons, the unit quiz and a discussion. Students can read lessons at home and take the quiz in class, or the other way round.

Share to Google Classroom (opens in a new tab)

By the end of the unit, students can

  • explain calls and puts, and how an option buyer can be right about direction and still lose
  • explain how futures and margin work, and how oil futures went below zero in 2020
  • describe how venture capital and private equity funds work, including dilution and leverage
  • explain the main hedge fund strategies and fees, and what Buffett’s bet against them showed

The lessons

Each ends with a one-question check, and students who pass the unit quiz can go on to three optional stages of harder lessons, for bronze, silver and gold medals.

  1. 9.1Options9 min

    You can be right about direction and still lose money because you were right too slowly.

  2. 9.2Futures8 min

    In April 2020, oil futures went below minus $37. A contract obligating delivery has no floor.

  3. 9.3Venture capital8 min

    The best investment in a good fund equals the entire rest of the fund combined.

  4. 9.4Private equity8 min

    Leverage does not create value. It concentrates whatever happens.

  5. 9.5Hedge funds8 min

    Buffett bet $1 million that an index fund would beat a basket of hedge funds. He won decisively.

New Jersey Standard 9.1

This unit goes beyond Standard 9.1: none of the state’s grade 12 expectations is mapped to it. See the full alignment for the units that teach them.

Questions for discussion

  1. In April 2020, oil futures traded below minus $37 a barrel. Who was stuck holding those contracts, and why would anyone pay to get rid of them?
  2. In a good venture fund, the best investment can be worth as much as all the others combined. How should that change the way a venture investor picks companies?
  3. Hedge funds charge high fees and often trail a simple index fund. Why do some investors still pay them?

Unit quiz answer key

Checking whether you teach a class…