Online Trading and Investment Simulator
Faculty Author: Marshall E. Blume
Students buy and sell equities, options, and future contracts using real data from today's market
Wharton's OTIS is a tool for teaching students a set of financial management skills. The application underscores several key concepts taught throughout the course:
- Portfolio balance and diversification — How portfolios are constructed and how to keep them balanced given the vagaries of the market.
- Benchmarking — Many funds are built and measured against a standard, allowing investors to see how the fund is doing in comparative terms. Fund managers strive to show better performance than the benchmark; students running OTIS seek to outperform the S&P 500.
- Liquidity — The mechanics of constructing the desired type of portfolio, strategies for entering and exiting the market, and the need for cash on hand.
- Pricing — Funds have the potential to move the market with their buys and sells; students must learn how dramatic changes in the composition of their funds may affect the market as a whole.
- Sector Analysis — Creating industry sectors and assessing the relative returns of securities within and across sectors.
- Short Selling — Learning how to use various types of trading orders, including short selling and stop limits, to profit from market declines as well as increases.
- Margin Trading — Understanding the mechanics, risks, and requirements of margin trading.