I’m in Vegas this weekend to celebrate a friend’s 50th. Between March Madness, Dead & Co returning to the Sphere and the ETF Exchange conference, it’s a zoo.
I went on the website for the conference. Lots of familiar faces amongst speakers. Yinh and I will grab a coffee with
today if we can steal a moment.
Fun fact, but Kyla is the single largest referrer to this substack with more than 4k subs driven. I’ve known her since she had me talk to the On Deck Investing cohort back in 2021. She used to write about options long ago! I started following that first blog of hers which must feel like a lifetime ago given her rise.
This is from her interview with Tyler Cowen:
I’m such a fan of seeing such a sharp, upright mind successfully find traction in the influencer/journalistic/author world. The incentives there always threaten to corrupt or get lead to audience-capture but she has navigated the minefield with a rare combination of maturity, groundedness, and honesty.
It’s funny, I can’t imagine thinking about options at 16 years old. But those stories exist. If I recall, Jeff Yass started noticing arbitrages in the option prices published in the newspaper as early as 12 or 13. He said something about liking TV dinners, so he looked up the company Swanson to buy calls on it. Munger said that Buffet also had a very strong grasp of options by the time he was a teen and understood the theory intuitively.
The subtitle of this substack is a clickbait riff on the whole moontower theme:
“a stoner dad explains options trading to his kids”
But this past weekend I really did start teaching the 11-year-old options. We refreshed the idea of what a stock is.
His imaginary company teaches kids to “vibe code” (these are some games he’s made. He hosts them on a page he made in Github and to be completely forthright, I don’t really understand what he did nor did I know he had a Git account).
I started by explaining calls and puts, moneyness, and what an option is worth at expiration.
His 1st homework:
This is the curriculum for the foreseeable future:
- hockey stick diagrams
- minimum and maximum arbitrage bounds
- hockey stick diagrams with stock positions
- Put-Call Parity
- Synthetic stock
- What makes options worth more (time and volatility — he grasped this immediately just in conversation which impressed me but we’ll tighten it up so that’ll mean a foray into standard deviation. Which shouldn’t be tough, he just did mean absolute deviation in Math Academy which I learned is a seventh-grade topic. I mean it when I say all the math we do here is high school at best!)
My goal is after some options ed he vibe-codes a timed put-call parity game which our devs can then wire into moontower.ai.
I told him I want him to be able to work with me for money and he seems to like the idea but I’m not clenching too hard. Even work that is fun can be a chore so you need to cross a certain motivational threshold to sustain through when it’s a drag. There’s a fragile period from where one sits today and crossing that threshold so I find it’s best to tread lightly until you see the renewable glimmer.
[This has happened with Math Academy. I had to push at first although not even that much but as he got into it, I’m more likely to tell him to chill out on the lessons and come play video games with me because he got to the point of self-motivation. But this is a big change from prior years where I had to nudge more. Even though, I never pushed that hard bc of my own childhood PTSD.]
Anyway, I’ll report back on how this experiment develops.