Ivey Publishing
Lucas Wang: Stop-Loss Strategy
Product Number:
9B16E023
Publication Date:
07/07/2016
Revised Date:
07/07/2016
Length:
4 pages (3 pages of text)
Product Type:
Case (Gen Exp)
Source:
Ivey
On February 29, 2016, an investor, who was a business school graduate, purchased one share of Tesla Motors, Inc. stock for $191.93. In doing so, the investor wondered what trading strategy should be followed over the next six months to maximize returns while minimizing risk. In choosing a strategy, he wanted to make good use of the knowledge gained from his financial analytics classes. To that end, he did not know if he should choose a buy and hold, or a stop-loss strategy with an optimal stop-loss threshold. The investor wondered how he would make this decision. Would a six month comparison of the stop-loss strategy with thresholds from 1 per cent to 99 per cent versus the buy and hold strategy resolve his dilemma?
Learning Objective:
This case is suitable for use in MBA and other graduate-level programs in courses on financial analytics and stock trading strategies. After completion of the case, students will be able to:
  • evaluate stop-loss and buy and hold strategies;
  • calculate the lognormal model for a stock price;
  • determine an efficient frontier for stop-loss strategies;
  • use simulation to evaluate trading strategies and risk preference; and
  • use @RISK software to calculate returns.
    Issues:
    Disciplines:
    Management Science
    Setting:
    Canada, 2016
    Intended Audience:
    Undergraduate/MBA
    Price:
    $5.30 CAD / $5.00 USD Printed Copy
    $4.50 CAD / $4.25 USD Permissions
    $4.50 CAD / $4.25 USD Digital Download
    Associated Materials
    Supplements: 7B16E023 (74 KB)
    Translations: Simplified Chinese (4 pages)
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