
Options on Facebook ads as a financial product - mjnet
Traditional stock options allow people to buy the right for a certain amount of an underlying product for a fixed price and sell it later to market value...<p>I can imagine business owners would be interested in the idea of a virtual market around Facebook ads. It would work in a way such that people&#x2F;traders are betting on reaching a certain conversion value, generated by the predefined ad they invested their money in. The difference between the invested money and the total generated conversion value will be the win&#x2F;loss of this deal. Assuming the business owner is at least break-even with paying the difference to the conversion rate, if positive, this would boost his business as well.<p>Thoughts&#x2F;comments&#x2F;ideas? :)
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spoonie
The main point of stock options is a tax hack: it's a way to give someone
something (a promise) that has a face value but no taxable value. Generally
speaking, you pay taxes on stock options when you exercise them, not when you
earn them. The difference between strike price and market value at exercise
time is incidental. I don't think stock options are a good analogy here. Maybe
you want 'ad futures', like 'pork belly futures'.

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kasey_junk
Options as pre-ipo startups may or may not be primarily a tax hack, but
options more generally are much more than that. Like most instruments they are
a mechanism for pricing risk.

With that in mind you could see some sort of ad derivative. I'm not sure if it
would be options, futures or bundled tranches. Its not clear what the OP
means.

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bbcbasic
Business owner with great conversions won't participate. Business owner with
sucky conversions will.

See [http://www.investopedia.com/terms/l/lemons-
problem.asp](http://www.investopedia.com/terms/l/lemons-problem.asp)

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AznHisoka
Impossible. Forget if anyone would want it. The Government would never allow
it. Otherwise we'd have eBay options a long time ago.

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bbcbasic
You can buy racehorse options though :-)

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thenomad
Slightly confused - who's generating the ads in this scenario, and who's
paying for the ad space?

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notahacker
or what the ads are being converted into and who monitors the conversion...

Now there _is_ a room for ad agencies with a close relationship with the end
product to link their pricing to conversion rate and eliminate the campaign
buyer's downside risk. But even if Facebook positively encouraged it, I don't
think a market for third parties to speculate on something as complex,
heterogenous and generally low value as social ad campaigns exists.

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noodlio
Interesting, but how do you control/check that there was (not) a conversion?

