Friends,

I’m currently en route to Italy and Malta for a few weeks so Moontower will be back in mid-July. It’s a good time to share some updates and business admin stuff. I’ll leave you with some consumables at the end.

Price increase on moontower.substack

I’m raising subscription fees to $240/year (or $22/month without an annual commitment).

The price increase goes into effect on 7/13/2025.

If you are currently a paid sub or sign up before 7/13/2025 you retain your lower rate. This holds for subscribers on both monthly and annual plans.

If you cancel and re-up after 7/13/2025, you’re subject to the prevailing rate.

Moontower.ai subs on the Pro Plan continue to get the substack for free so there’s a built in cross-subsidy there but that’s not the reason for the price increase (actually, I personally lose to it as I have a 100% delta to the substack while I’m a co-founder on software but my interest is for all of it to grow and be awesome for everyone not optimize for the present.).

I’m raising rates to better reflect the time devoted to writing since I added the paywall 18 months ago.

I don’t like self-promoting on the regular so I’ll concentrate some salesmanship right here:

• What paid subs say about the substack and what pros say

A sub just emailed me this yesterday:

I’m graduating and interning at an OMM right now and the content you provide about this space is genuinely unreal, unique and absolutely amazing… I appreciate what you’re doing and hope it can serve as a tiny reminder of the positive impact you are bringing to people in my position.

A word on those paid calls I offer

Who calls and why?

• Professional traders needing someone to spar on from everything to how to think about trades, business initiatives, and career. Some of these turn into consulting gigs, although I don’t actively seek this as I’d rather build than advise, but sometimes it just makes the most sense.
• People that want to discuss life decisions or parenting (someone willing to shell out $500 hour for this is self-selected as highly thoughtful and I have actually learned a lot from this group!)
• A tiny percent is retail traders and that’s because they must persist through my deterrence.

I only reserve a few hours a week for calls. In order of preference of things I enjoy doing:

1. Trading when markets are crazy (rare enough that I got tired of trading as a day job)
2. Building
3. Advising

What I’ve discovered from doing these calls

1. The calls with pro traders seems to be very valuable to the caller but I also expected this. Long ago, I knew some of the best content you could create would be to livestream the discussion on an actual trading desk in production mode or the car pool I used to drive with 3 other Parallax traders where we often recounted the day’s action, how we played it, etc. Of course, this could never be allowed. But these calls are a way to extract tribal knowledge applied to your problem.
2. The calls that look more like life-coaching I think are even more productive. This is unexpected. First of all, I didn’t expect calls like this to be the majority (~2/3) and I have no f’n training in this coaching. But I find people seem to walk away from this “unlocked”. I’m convinced this has to do less with me, so much sharing your situation with a 3rd party is a good way to find your blind spots quickly. Not to talk myself out of $500 but you can probably get this benefit for less. But some of the unlocks seem profound to the caller so some of what I’m thinking is beta is probably alpha.
3. Despite offering a money-back guarantee, I’ve only had one person ever take me up on it. It was a retail trader who sought advice after selling options and getting rinsed, getting some straight talk from me on the effort required to even have a chance at success, then proceeding to tell me that other traders they’ve taken advice from who are very successful don’t say I need to do those things. You can see the bizarre loop at work.

    

🗣️What people say from having calls with me

I’ll add one more thing.

Right now, just via Whatsapp, I’m helping some folks working on an interesting options biz idea. They are not native to the options world but strong on tech and product. And while one part of me wants to yell “gimme the wheel, let me show you how to do this” I’m not looking for that job yet I want to see it done right. In coaching them up, I realize that every non-product problem they are struggling with is something I’ve written in detail about. So I dumped a bunch of stuff on them and in doing so, and I say this as reluctantly as possible (I’m a 90s anti-hustle kid at heart), realize that there is no place on the internet that is actually addressing the questions they have in as practical or approachable way as the millions of words I’ve somehow leaked from my experience in options.

In a few years, all of it will become part of the LLM substrate, unattributed, and treated as if it were always common knowledge. Part of me has made some peace with that as how could it be any other way. In fact, I want to automate myself as fast as possible and keep moving to the next problem faster than the prior work becomes common knowledge. That’s the promise of working on moontower.ai.

Then again, I don’t know if the future of my broad goal of “helping people make better decisions by breaking down or re-framing complex ideas into useful comparisons” even has space for humans. Maybe this stripmining, grift mentality we see all around us is the rational response to “we don’t know how anyone will make a living in the future so better secure a liferaft”.

In the meantime, I’ve gotten way more than enough confirmation from people who know better, those running large books, hiring talent, vying for jobs, or contemplating big decisions, that this moontower project is a scarce value.

(and can be yours for only $240 per year 🤑)

 

Moontower Jobs

💫Moontower is hiring a PT intern (job description & instructions to apply)

🚀Moontower.ai is hiring a PT developer (job description & instructions to apply)

 

Advertise in Moontower

Hiring? Selling? Growing?

Learn why you might want to place an ad in Moontower and the terms.

Ok thanks for accommodating all that.

Today I’ll point you to a mix of fun and useful.

First the fun…

STFU (2 min read)

Joachim Klement shared an amusing study. Like Joachim, I’ll say nothing, and leave this for you to debate at your next dinner party.

A question I have for the chart I saw in the post:

Money Angle

Non-self weighting strategy

We watched Ocean’s Eleven with my older son Friday night (we’ve recently established a Friday night ritual where we rotate who picks the movie and who picks the pizza. This past Friday we did a double feature — Dodgeball, which the kids loved and O11 once the little guy went to bed).

Clooney gives a tiny speech in response to Pitt’s skepticism about his motive behind the heist.

Rusty: I need the reason. And don’t say money. Why do this?

Danny: Why not do it?

[Rusty shakes his head]

Danny: ‘Cause yesterday I walked out of the joint after losing four years of my life and you’re cold-decking “Teen Beat” cover boys. [pause] ‘Cause the house always wins. Play long enough, you never change the stakes, the house takes you. Unless, when that perfect hand comes along, you bet big, then you take the house.

I emphasized that part because it’s a catchy encapsulation of what Mason Malmuth writes in Gambling Theory & Other Topics, a book I read as a trainee. The most important principle in gambling is to employ a non-self-weighting strategy. In other words, vary your bet size with the opportunity.

I don’t want to get too hung up on whether this is the “most important” as Malmuth contends (you can certainly make the case for “having an edge” in the first place), but it might be the most underappreciated with respect to how we port it to real life. Varying your bet size in blackjack is well-understood, but Malmuth argues for more obscure examples like the brevity of the Gettysburg Address, a masterful bet on the right words and quantity of words in which Lincoln varied his rhetoric for maximal payoff.

It’s a provocative reminder to be careful where you enable life-decision autopilot. If you need inspiration to find areas of your life where you can vary your metaphorical bets, paste this whole section into an LLM and prompt it to give examples in your real life.

[There’s probably an interesting essay to be written about the tension between the value of habits vs the punchy payoff of straying from them in deliberate ways.]

Money Angle For Masochists

🔘Interview riddle

You press a button that gives you a randomly uniformly distributed number between $0 and $1

Each time you press, you have two choices:

1. Stop and take this amount of money

2. Try again

You can try 2 times total.

What’s the game worth?

Full discussion on Twitter with solutions as well as general solutions to harder versions of the same question.

📱9:16 Aspect Ratio

This week we had a Moontower.ai community zoom. I like that forum because it’s cozy trust tree. I can:

1. help users get the most out of the app
2. teach
3. not censor my opinions on finance and biz topics (if you haven’t been living under a rock you know there has been a major retreat from common spaces into private forums and group chats over the last several years as the algos, social media design, and their incentives have poisoned the commons. There are countless articles and thought pieces around this idea but my favorite comes from Nadia because it surfaced 2 books that look promising.)

While we record the zooms they are only available to the software subs. This one had several teachable moments that I didn’t want to waste so I spent an afternoon using Riverside to edit videos to extract what is broadly shareable.

These are the 4 videos.

🔍 Moontower Volatility Visualizer Tool Walkthrough (YouTube)

Key Features Covered: Click-to-Visualize Workflow. Quickly jump from the Vol Scanner or Tickers page into a detailed vol view by clicking on any IV cell (e.g., Tesla 60-day maturity).

🧠 Moontower Hedge Analysis Tool Explained (YouTube)

Why This Tool Exists: Born from a live trade idea during a market dislocation. When SPY sold off, the 2-month VIX futures looked too cheap. The trade: Long SPY + Long VIX futures — expecting both to rise.

⚠️ Using Moontower to see the geopolitical unease in the market (YouTube)

Geopolitical Risk, Oil Volatility, and the Market’s Risk Premium — we analyze the elevated risk premiums embedded in the options market, from geopolitical stress to oil price shocks.

🧾 Decoding the Moontower Attribution Visualizer (YouTube)

Explore the powerful Attribution Visualizer — a new tool that breaks down daily P&L attribution for delta-hedged options trades using Vega, Gamma, Theta, and unexplained P&L.

Riverside uses AI to create “Magic Clips” — TikTok and YouTube Short-friendly clips. They are ~1 min long and use the 9:16 aspect ratio (ie 16:9 flipped vertically for phones).

I watched a bunch of the Magic Clips and some were a good start but ultimately decided to create a few shorts of my own as an experiment.

(Btw, YouTube treats videos under 3 minutes as shorts).

These are the 3 shorts I published:

On hedge ratios:

This was ambitious…can I break down option p/l attribution arithmetic in a YouTube short? You tell me if you can follow it.

I didn’t expect any of my videos to get any views organically from the YT algo. The 2 above just got a handful each.

The next one got 700 within minutes of me posting which tells you everything about the f’n algos.

Look at the title I gave it:

From My Actual Life

I’m off to Naples right now. We are staying in Sorrento and exploring Amalfi for most of the week before we head to Sicily.

My cousin Gabriella is getting married in Taormina. This is a huge family trip and we are touring as a big group with several people having gotten a head start a week ago.

My cousin is half-Egyptian and half-Sicilian which averages out to this is going to be the best Big Fat Greek Wedding event since her parents got married back in 1986 (a wedding I remember because I was 8-years-old and begged to have spiked hair for it. My memory is weird — I’m 90% sure my aunt’s wedding song was Suddenly by Billy Ocean).

Gabriella is also my goddaughter. Why?

Fun family story actually.

I got my NJ driver’s license on July 12th, 1995. My 17th birthday. I only had a driver’s permit for a couple of weeks before I got my license (for reasons I can’t remember, but I just know I had very little driving experience by the time I got my license.)

On July 20th, 8 days later, my aunt frantically calls me in the middle of the day because I was the only driver in the family who happened to be home on this summer afternoon. Her water broke.

I needed to pick her up from Aberdeen (I was in Hazlet) and get her to her OB at the Jersey Shore Medical Center.

Driving experience be damned, I’m doing 95 down the Parkway as my aunt in the passenger seat is yelling that the baby’s coming. I’m screaming “not on the seat” even though I was in a crappy Dodge Lancer that only by providence was even hitting 95.

[The women on my mother’s side of the family all had their babies quickly after going into labor. My sister was born in a doctor’s office, not a hospital, as they couldn’t get there in time. The first car she was ever in was a police car, my mom likes to joke.]

We get to the hospital and Gaby is born 10 minutes later. Cousin Kris gets the godfather title.

And now we go celebrate that little girl getting married in the land of the real godfathers.

 

(Random world collision: Gaby’s groom was the one who informed her that I was a popular fintwitter. Turns out he works in finance. Congrats Mike, see you soon!)

 

I’ll be back in mid-July.

Stay Groovy

☮️

Moontower Weekly Recap

Posts:

• joining the landed gentry
• Netting risk, “The Hopeless”, John Arnold and more

Friends,

First of all,

I want to share this amazing podcast episode recommended by musician and fellow option refugee Mat Cashman:

🎙️Bowie, Jazz, and the Unplayable Piano (Spotify)

This year is the 50th anniversary of the highest-selling jazz solo album of all time. The live performance of Keith Jarrett’s Köln concert. The concert should never have happened but in his Cautionary Tales podcast, economist Tim Harford weaves it into research that makes you stop and think about the value of variance in breaking out of local maximums. [In the episode you’ll hear about fascinating RCTs of exams given in different fonts as well as a natural experiment that occurred during the 48-hour London tube strike in 2014.]

The episode, besides being highly entertaining, strikes a similar chord to Wednesday’s post obvious subtle effect. As a matter of evolution and progress, we are long vol — we discard what doesn’t work and retain what does which is how an option works — options benefit from variance. Experimentation, contrived struggle against arbitrary constraints (when you’re guitar instructor tells you — let’s see what happens if you can only play your low E string) and shower thoughts are all non-deterministic learning or growth. The source of “alien” solutions that avail us the possibility of step-change vs incremental progress. Techniques for growth that appeal to our impulse towards coherence or explainability are sensible. But their payoff is limited because their legibility means they will also be overbid.

The willingness to take risk or look foolish or just be a bit weird is paradoxically useful when you’re trying to achieve conventional success.

[Counterrealization I haven’t fully thought out — a lot of risk-coded behavior these days is just herding and therefore is unlikely to come with the rewards you’d want for the risk.]

Harford emphasizes that “injecting randomness” into computer algorithms is common practice in a quest to avoid local maximums. I asked Gemini if RL (reinforcement learning) requires injecting randomness — lo and behold the explore-exploit problem shows up:

Reinforcement Learning (RL) extensively uses concepts of injecting randomness, primarily for the purpose of exploration.

Here’s why and how randomness is used in RL:

• The Exploration-Exploitation Tradeoff: RL agents need to balance exploiting their current knowledge of the environment to get rewards with exploring new actions and states to discover better strategies or higher rewards.
• Preventing Suboptimal Policies: Without exploration, agents might get stuck in local optima and fail to find the best possible strategy.
• Examples:
  • Epsilon-Greedy Strategy: A common method where the agent takes the best-known action most of the time (exploitation), but with a small probability (epsilon), it takes a random action (exploration).
  • Adding Noise to Action Outputs: In continuous control tasks, noise (like Gaussian noise) can be added to the agent’s action outputs to encourage exploration.

I’ve got a pile of dry-erase index cards scattered in my office as I try to organize a long essay of how explore/exploit relates to option theory and decision-making IRL — but the notes only seem to grow — especially when I come across something like this episode.

Nat’s tweet will need to haunt me for another day.

On that note — Happy Father’s Day.

This McSweeney listicle caught me yesterday morning just as I was making coffee and listening to War on Drugs on Spotify’s Fleet Foxes radio (h/t Dave Nadig):

What Your Favorite Sad Dad Band Says About You

Money Angle

 

This week we released the moontower.ai Hedge Ratio tool to both Starter and Pro subs. I recorded a video demonstrating it using Tesla (TSLA) and QQQ (Nasdaq 100 ETF).

It’s practical but also educational (for example understanding how to interpret correlation vs beta).

📌 Key Takeaways:

• The hedge analysis tool provides a visual understanding of asset relationships.
• Discover how correlation and the individual volatility of each “leg” contribute to beta.
• Learn the practical steps to convert beta into a precise hedge ratio.
• Understand idiosyncratic risk – the inherent risk that persists even after a position is hedged.
• Explore the critical impact of correlation on the overall effectiveness of your hedges.
• See how remaining risk ramps up when correlation drops below 0.85.
• Uncover how market makers leverage these concepts to reduce hedging costs while balancing “idio” risk.🧠

Chapters

00:00 – Introduction to Hedge Analysis Tool

02:42 – Understanding Beta and Correlation

06:40 – Exploring Idiosyncratic Risk

12:17 – Practical Application of Hedging Strategies

16:11 – Market Making and Delta Management

22:46 – Correlation and Risk Remaining Insights

Money Angle for Masochists

Thursday’s post the dirties are down the cleans are up took the form of an extended interview question. If you are high-volume professional vol trader, the topic of vol time is fundamental but I don’t see much written about it. I hope my posts on it fill the gap.

For non-pros it probably best serves as a bicycle for the mind or a seed of inspiration but I wouldn’t stress over it. I suspect it does since tweets like this are popular even though I’m pretty sure the engagement on them isn’t coming from a bunch of practitioners in the middle of the trading day:

Most IVs you encounter use a 365-day model. To convert to a 251-day model (or any other tenor model) you multiply by the square root of the DTE ratio.

In the spirit of Thursday’s post and the tweet, I’ll pose 2 “interview-style” questions that can be answered in seconds. They require making a reasonable assumption. I’ll give the questions here, then I’ll post an assumption as a hint after the questions for those who need help forming one. The answers are at the end of the post. (Ignore cost of carry — also if you asked about that you’re way ahead of the game).

You do not need any calculators to answer these (just mental artithmetic).

❓#1: Volatility

It’s the close on Wed. Options expiring next Tuesday and next Friday have the same dirty vol (ie the same vol in your off-the-shelf 365d model). Does one of them have a higher clean vol? Explain. List any assumptions.

❓#2: Price of a straddle

It’s Friday close. Next Friday’s ATM straddle is $5. What price is the Friday ATM straddle expiring in 2 weeks to be the same clean vol? You do not need option calculator.

 

Stay groovy

☮️

Answers to the “interview” questions

Relative to a “dirty” year where each day is treated as equal vol, a “clean” year in which variances passes more slowly over a weekend, the Tuesday expiry has less time to expiry than Friday’s ratio of clean to dirty DTE.

If the model implies the same dirty vol for Tuesday and Friday, we can infer Tuesday must have the higher clean vol bc it has relatively less vol time vis a vis a dirty model.

 

#2: The second Friday straddle must be $7.07

The approximation for an ATF straddle is .8*S*σ*√t

Since there is no cost of carry we can assume ATF straddle = ATM straddle which is what the question asks about.

We don’t know S or σ but the question asserts the same dirty vol for both Fridays.

We know there’s twice as much time to expiry for the 2nd Friday and we know the earlier Friday straddle is $5 so the second Friday straddle can be computed as

$5 * √2 since there’s 2x as much time til expiry.

So the second Friday straddle = $7.07

💡This is one of those useful trader math ideas — for a given vol the price of the straddles only varies by square root of the ratio of DTE. One of those mental arithmetic things I found myself using constantly especially with short-dated options where you’re like “if the 1-week straddle is X, the 2 week is…”. This is also a clue to the degree to which I ditch the idea of “volatility” altogether in near-dated options and “think in straddles” and move sizes. This intuition is habitual but you can also see why it has theoretical support — vega p/l is a less of an influence on short-dated options. Results mostly come down to “how much did this thing move vs how it was priced”.

Returning to the question.

The $7.07 straddle is based on the same dirty vol.

But does that translate to the same clean vol the same as the first Friday straddle?

Yes — the ratio of dirty to clean DTE is the same for both expiries!

 

Moontower Weekly Recap

Posts:

• obvious subtle effect
• the dirties are down the cleans are up

Friends,

I got so excited to tell you about Alright, Alright, Alright when I finished reading it that I never got shared the passage I loved from the prior book I read Three Cheers for Anarchy by James C. Scott.

This happens all the time. Stuff that I read or see that I want to share but gets buried in my editorial calendar by something else that is frankly just more recent. Eventually, the buried item just gets archived. I seldom look at the graveyard and when I do it’s rare that I find something worth re-instating. Recognizing this pattern is not good for my self-esteem. If my taste is as discardable as F21 why am I writing? Well my dear coquette I am not in the mood to take that question as seriously as I should so shall we just get back to Mr. Scott’s writing. I think we shall.

This is James C. Scott on history (emphasis mine):

The job of most history and social science is to summarize, codify, and otherwise “package” important social movements and major historical events, to make them legible and understandable. Given this objective and the fact that the events they are seeking to illuminate have already happened, it is hardly surprising that historians and social scientists should typically give short shrift to the confusion, flux, and tumultuous contingency experienced by the historical actors, let alone the ordinary bystanders whose actions they are examining.

One perfectly obvious reason for the deceptively neat order of these accounts is precisely because they are “history.” The events in question simply turned out one way rather than another, obscuring the fact that the participants likely had no idea how they would turn out and that, under slightly different circumstances, things might well have turned out very differently. As the saying has it: “For want of a nail, the shoe was lost; for want of a shoe, the horse was lost; for want of a horse, the rider was lost; for want of a rider, the message was lost; for want of the message, the kingdom was lost.”

Knowing what in fact happened, unlike the participants, can’t help but infect the story and drain much of its actual contingency. Think for a moment of someone who takes his or her own life. It becomes almost impossible for the suicide’s friends and relatives not to rewrite the dead person’s biography in a way that presages and accounts for the suicide. It is, of course, entirely possible that a brief chemical imbalance, a momentary panic, or an instant tragic insight may have led to the act, in which case rewriting the entire biography as leading up to suicide would be to misunderstand that life.

The natural impulse to create a coherent narrative to account for our own actions and lives—even when those lives and actions defy any coherent account—casts a retrospective order on acts that may have been radically contingent.

Jean-Paul Sartre gives the hypothetical example of a man torn between the obligation of staying and caring for his ill mother or leaving for the front to defend his country. He can’t make up his mind, but the day—like an onrushing train—arrives, and he must do one thing or the other, though he still hasn’t decided.

Let’s say he stays with his sick mother. The next day, Sartre notes, he will be able to tell himself and others why he is the kind of man who would choose to stay with his sick mother. He must, having acted, find a narrative that accounts for what he did. This does not, however, explain why he did what he did; rather, it retrospectively makes sense of—creates a satisfying narrative for—an act that cannot be explained in any other way.

The same could be said for the momentous, contingent events that have shaped history. Much history as well as popular imagination not only erases their contingency but implicitly attributes to historical actors intentions and a consciousness they could not possibly have had.

The historical fact of the French Revolution has, understandably, recast virtually all of French eighteenth-century history as leading inexorably to 1789. The Revolution was not a single event but a process; it was contingent on weather, crop failures, and the geography and demography of Paris and Versailles far more than on the ideas scribbled by the philosophes. Those who stormed the Bastille to free prisoners and seize arms could not possibly have known (much less intended) that they would bring down the monarchy and aristocracy, let alone that they were participating in what later would come to be known as “the French Revolution.”

Once a significant historical event is codified, it travels as a sort of condensation symbol and, unless we are very careful, takes on a false logic and order that does a grave injustice to how it was experienced at the time.

Chambon-sur-Lignon, now held up as moral exemplars, appear, more or less monolithically, as acting on Huguenot religious principles to aid the persecuted, when, as we saw, their bravery had more complex and instructive wellsprings. The Russian Revolution, the American Revolution, the Thirty Years’ War (who knew in year five that it would last another twenty-five years?), the 1871 Commune of Paris, the U.S. civil rights movement, Paris in 1968, Solidarność in Poland, and any number of other complex events are subject to the same qualifications. Their radical contingency tends to be erased, the participants’ consciousness is flattened and too often inoculated with a preternatural knowledge of how things turned out, and the tumult of different understandings and motives is stilled.

What history does to our understanding of events is akin to what a television broadcast does to our understanding of a basketball or ice hockey game. The camera is placed above and outside the plane of action, rather like a helicopter hovering above the action. The effect of this bird’s-eye view is to distance the viewer from the play and apparently slow it down. Even then, lest the viewer miss a crucial shot or pass, actual slow motion is used to further slow the action and allow the viewer to see it in detail again and again. Combined, the bird’s-eye perspective and slow motion make the players’ moves seem deceptively easy to viewers, who might fantasize mastering such moves themselves. Alas, no actual player ever experiences the actual game from a helicopter or in slow motion. And when, rarely, the camera is placed at floor level and close to the action in real time, one finally appreciates the blinding speed and complexity of the game as the players experience it; the brief fantasy is instantly dispelled.

Money Angle

Is there an inflation-protected rate at which you would just push in all your chips and never spend another brain cycle on trying to make your money make money?

This question and its dependencies are at the heart of Elm Wealth’s latest:

The Most Revealing Question in Personal Investing…and How Warren Buffett Helps Us Answer It (9 min read)

This is our single favorite question for shedding light on how you’re thinking about investing:

What is the lowest risk-free, after-tax, after-inflation rate of return you would accept in order to forgo all other investment opportunities for the rest of your life?

The answer, along with the thinking behind it, speaks to whether and by how much you think you can beat the market in the long run, your level of personal risk-aversion, and the average tax rate you think you’ll pay on your investment returns. It’s a useful reference point to keep in mind when evaluating real-world investments, and also as one of the key inputs to figuring out your long-term spending policy.

Over the past ten years, we’ve discussed this question with about 50 of our friends and clients, resulting in many animated and productive conversations. We’d like to briefly explain our thinking, and then invite you to use our calculator, where you’ll also have the option to submit your answers for a survey we’re compiling.

 

Money Angle for Masochists

I just want to say that you people are sick. This is the most viral tweet I can remember sending in recent times.

Because I happened to be helping the 3rd grader with improper fractions recently I saw 1.25 as 5/4 which is immediately recognizable as a square root of 25/16.

Sprinkle in some trader math that condemns you to see the sqrt(251) as 16 and you get an even more compact version:

Step by step:

The real masochism in that thread happens further below…

📈 Trading bootcamp on June 3-5th

It’s back again. If you are in the Bay Area it’s your chance to learn at a quant bootcamp that I repeatedly say should not exist outside of a trading firm. Attendees seem to agree — the demand for it is high and the Arbor team is growing to serve these more frequently. Don’t worry, they always keep spots for those coming from Moontower so let them know.

[I’ve gotten to know Ricki, Ross, and David — you are in great hands with this crew. I’ve got so much to learn from them as well, I got “not enough time” anxiety]

What you need to know

Arbor’s Trading Bootcamp teaches the fundamentals of trading: markets, order books, auctions, risk and sizing, adverse selection, arbitrage, and how quant trading firms make money. It’s taught by former Jane Street traders Ricki Heicklen, Ross Rheingans-Yoo, plus David Holt and a team of scrappy, smart, chaotic lackeys. The philosophy of this bootcamp is that the best way to learn to trade is by trading. We’ll use a fake economy and exchange, run through many sessions of trading games designed to teach progressively more complex concepts, and auction off prizes at the end using our internal currency. Our next one is in Berkeley CA, starting Tuesday, June 3rd at 10am and running through Thursday night June 5th(with optional, more relaxed programming the preceding Monday evening and following Friday morning)—register here!

No formal prerequisites, but you should be generally mathematically inclined (e.g. comfortable with the concept of expected value). For this bootcamp, you don’t need to know how to program. More FAQ here. Also, we have a fun auction-based afterparty that everyone is welcome to attend!

Join our Discord here: bit.ly/qtb-discord“

Stay groovy

☮️

Moontower Weekly Recap

Posts:

• diploma season
• the price of a halted stock

Friends,

Happy Mother’s Day all. I’ll keep it short today with a few quick hits of useful things, stuff that picked me ears up, or otherwise found enjoyable.

✍🏽AI is not magic. It’s just math (12 min read)
Khe Hy

“A non-technical breakdown of how ChatGPT actually works”

This is a cool post even a middle-schooler can follow. Khe geeked out on Andrej Karpathy’s video How LLMs Work. The video is 3.5 hours so Khe distilled major points into a story. Readers might remember a 1-hr Karpathy vid I shared over a year ago called Intro to LLMs. He’s amazing at explaining the tech.

3D Printer Fun

It took about 90 min of assembly, downloading the app, getting the Bambu A1 mini 3D printer online, and loading the filament — but I did nothing — the 11 and 9 year olds managed it all on their own. That alone, made me a fan of this printer (ty Dave Nadig for the rec!).

By Thursday, Zak sold his classmate this fish for $1:

By Thursday night he rolled his eyes at me for inserting arithmetic into everything. By now he doesn’t complain, he just works it out to shut me up.

Me: How much material does it take to make a fish?

Kid: 10 grams

Me: The filament cost about $20, how much filament do we have?

Kid: 1 kilo

Me: So how much does it cost to make the fish?

Kid: $.20…I make 80 cents.

Me: What about the electricity?

Kid: Oh come on dad, I’m not paying for electricity.

Me: Ok fine, but you need to know the cost at least. [Quick Google search on how many watts the Bambu mini takes.]

It takes about 60. That means it uses 60 watts per hour.

Kid: How much does electricity cost?

Me: Here it costs about $.40 per kilowatt/hr. This is much higher than most places by the way. It’s more like $.11 where [uncle] lives. How long does it take to print the fish?

Kid: Half an hour.

Me: So what’s the electricity bill for the fish?

Kid: $2.40

Me: Bruh

Kid: [Laughs] Uhh, 2.4 cents

Me: Bruh, half an hour

Kid: [Laughs] 1.2 cents

Me: Cool. I cover the electricity, you use the profits to buy filament.

[We had 2 tangent discussions. He brought up the idea of higher-margin items. He has a friend selling a 30-gram fidget for $3 and he noted that it was the “same profit per gram”.

The other discussion was about heat and watts. We talked about one of the best YouTube videos we ever watched together about the discovery of the blue led. We learned that most of the energy, about 85%, in an incandescent bulb is turned to heat. Very inefficient. While LEDs, light-emitting-diodes, are way more efficient but also that they are an astounding and relatively recent innovation because it took so long to crack the mystery of the blue led. You’ll remember from the 80s that we had red and green LEDs in all kinds of electronics but we didn’t get white LED light bulbs until about 30 years ago. We needed blue. The blue led saga deserves a movie.]

Anyway, I’m sharing this because parents always tell me they like this stuff. I apologize to your kids in advance:

🚸Games and Word Problems For Kids

[Someone I’m close with who escaped the world of drug-dealing joked that my kid selling stuff in school (he’s not supposed to do that) is a gateway. That we bought filament by the kilo and Zak sold the fish an implied price of 5 kilos is a bit too on the nose.]

Full-body MRIs getting cheaper

I mentioned last week that Yinh and I are getting our full-body MRI scans soon. When Function acquired Ezra they slashed the price of scans for Function members. Since we had our scans booked before the acquisition they actually refunded us the difference. The price was lower by $499 which is the annual cost to be a Function member. Nice to see synergy on day 1!

This is the link to the scans.

[FD: Long Function; it was both a cash and stock acquisition of Ezra. I pay full price for the services though.]

Money Angle

🎙️Recap of The Sloan Sports Analytics Conference (Bet The Process podcast)

Jeff Ma and Rufus Wainright attend the conference every year. They talk about what panels and meetings stood out. It’s a great podcast in general because you pick up insights in passing just as they banter. The grout of the conversation always oozes gambling wisdom. When they echo the trope “if your model shows that you’re like a 10% edge, you probably should like re-evaluate your model” it reminded me of the pick-off story Kevin Muir told…hey mate, check your price.

I was doing a consult call recently with an option group and we were talking about those moments when you see an option structure trade at a strange price and how a surprising proportion of the time you come away thinking…”Oh, I see why they’d do that. I like their side.” It’s usually someone buying [selling] something that everyone would agree looks optically high [low] but the weird print snaps your mind out of autopilot to think about the scenario harder — only to come to the same conclusion as the aggressor — the underlying distribution is doesn’t conform to what conventional surfaces presume. [A good example was the emergence of the “teepee” vol surface ahead of earnings my friends and I referred to it. Voladynamics calls it the “W”].

Money Angle for Masochists

A new vid for the options audience.

Demonstrating the new Volatility Visualizer tool in the context of my IBIT May 60c position.

It covers what I see in the vol surface now to make me want IBIT vol using:

• The DASHBOARD view to get a snapshot of overall vol levels and term structure.
• The REAL Tool to compare implied volatility (IV) against realized volatility (RV).

We also discuss the misleading nature of realized vol after high-volatility periods, and how that impacts volatility risk premium (VRP) readings. I show how VOL CONES can help correct these distortions manually — and preview a coming feature that will do it automatically.

⏱️ Chapters
00:00 – Introduction
02:33 – Exploring the Moontower AI App
05:57 – Understanding Volatility and Z-Scores
09:45 – Using the Volatility Visualizer Tool
12:08 – Current Position and Delta Management
16:03 – Analyzing IBIT’s Volatility Trends
20:41 – Comparing Implied and Realized Volatility
25:36 – Evaluating the Market’s Volatility Expectations
30:34 – Final Thoughts on IBIT Options Trading

From My Actual Life

My mother-in-law who lives with us is 1 of 12 (all from 1 mother!). Most of the siblings and their families live in the Bay Area so we are expecting over 50 people today for festivities. Including my mother-in-law’s mother.

For my mom, love you, I’ll call you in a bit. And happy Mother’s Day AND happy birthday to my sis. Good luck in pickleball today 😛

Stay Groovy

☮️

Moontower Weekly Recap

Posts:

• alright, alright, alright
• the 2 vectors of volatility scaling

YouTube:

🎥demonstrating the new Volatility Visualizer tool in moontower.ai

Friends,

If you google “origin of the term meme”, you are served a snippet from Wikipedia:

The word meme was coined by Richard Dawkins in his 1976 book The Selfish Gene as an attempt to explain how aspects of culture replicate, mutate, and evolve (memetics). Emoticons are among the earliest examples of internet memes, specifically the smiley emoticon “:-)”, introduced by Scott Fahlman in 1982.

A meme, like a gene, compresses information. A killer headline can be a powerful meme. You might even parrot it, participating in a culture-wide game of telephone where nobody actually reads the article they just re-post, re-share, re-tweet.

We’ve substituted virality for nuance. You can probably feel the effects but naming them takes work.

With that in mind, I point you to Kyla’s outstanding post:

What Happens When Everything Becomes a Meme? (8 min read)

She doesn’t need an introduction from me, but just in case, you should know she’s a very smart writer who happens to be an influencer. A highly self-aware one. She brings Bane’s weight to the discussion — she didn’t merely adopt the meme she was born in it.

Her latest writings on this topic have all been fantastic but that post is the one you should start with.

I’m no fan of treating ideas like people. That’s what ideology feels like to me. I’ve expressed this many times (Antidote to Abstraction, How the need for coherence drives us mad)

I just wrapped James C. Scott’s Three Cheers for Anarchism. I have seen Scott’s work referenced in many places, usually Seeing Like A State, but this is the first time I’ve read him directly. I did a lot of nodding which is probably not an accident since I picked up the book in the first place.

But this Fragment 27 [the book is a collection of essays or fragments as he make no attempt to force them into a single song . I not only appreciate that but sensed he did, it would be off-key irony given his resistance to exactly the type of just-so reasoning that successfully sells books in terminal 3] amplifies my sense that abstraction is ethically expensive. I reprint it here with my emphasis.

Fragment 27: Retail Goodness and Sympathy

The heroism of the French town of Le Chambon-sur-Lignon, in the Haute-Loire, which managed to shelter, feed, and speed to safety more than five thousand refugees in Vichy France, many of them Jewish children, is by now enshrined in the annals of resistance to Nazism. Books and films have celebrated the many acts of quiet bravery that made this uncommon rescue possible.

Here I want to emphasize the particularity of these acts in a way that, though it may diminish the grand narrative of religious resistance to anti-Semitism, at the same time enlarges our understanding of the specificity of humanitarian gestures.

Many Le Chambon villagers were Huguenot, and their two pastors were perhaps the most influential and respected voices in the community. As Huguenots, they had their own collective memory, from at least the St. Bartholomew’s Day Massacre forward, of religious persecution and flight. Well before the Occupation, they had manifested their sympathy for the victims of fascism by sheltering refugees from Franco’s Spain and Mussolini’s Italy. That is, they were well disposed both by conviction and experience to sympathize with the plight of refugees from authoritarian states, and with Jews in particular as a biblical people. Translating that sympathy into practical and, under Vichy, far more dangerous acts of assistance, however, was not so simple.

Anticipating the arrival of Jews, the Huguenot pastors began trying to mobilize the clandestine shelter and food they knew would be required of their parishioners. With the abolition of the Free Zone in southern France, both pastors were arrested and taken off to concentration camps. In this menacing setting, the wives of the two pastors took up their husbands’ work and set about lining up food and shelter for Jews within their community. They asked their neighbors, both farmers and villagers, if they would be willing to help when the time came. The answers often were not encouraging. Typically, those they asked expressed sympathy for the refugees but were unwilling to run the risk of taking them in and feeding them. They pointed out that they also had a duty to protect their own immediate family and were fearful that if they sheltered Jews, they would be denounced to the local Gestapo, who would put them and their entire family at grave risk. Weighing their obligations to their immediate family and their more abstract sympathy for helping Jewish victims, family ties prevailed, and the pastor’s wives despaired of organizing a network of refuge.

Whether they were ready or not, however, the Jews began to arrive, and to seek help. What happened next is important, and diagnostic for understanding the particularity of social (in this case, humanitarian) action. The pastors’ wives found themselves with real, existing Jews on their hands, and they tried again. They would, for example, take an elderly Jew, thin and shivering in the cold, to the door of a farmer who had declined to commit himself earlier, and ask, “Would you give our friend here a meal and a warm coat, and show him the way to the next village?” The farmer now had a living, breathing victim in front of him, looking him in the eye, perhaps imploringly, and would have to turn him away. Or the women would arrive at the farmhouse door with a small family and ask, “Would you give this family a blanket, a bowl of soup, and let them sleep in your barn for a day or two before they head for the Swiss border?” Face-to-face with real victims, whose fate depended palpably on their assistance, few were willing to refuse them help, though the risks had not changed.

Once the individual villagers had made such a gesture, they typically became committed to helping the refugees for the duration. They were, in other words, able to draw the conclusions of their own practical gesture of solidarity—their actual line of conduct—and see it as the ethical thing to do. They did not enunciate a principle and then act on it. Rather, they acted, and then drew out the logic of that act. Abstract principle was the child of practical action, not its parent.

François Rochat, contrasting this pattern with Hannah Arendt’s “banality of evil,” calls it “the banality of goodness.” We might at least as accurately call it the “particularity of goodness,” or, to appropriate the Torah, an example of the heart following the hand.

People don’t easily identify with or open their hearts or wallets for large abstractions: the Unemployed, the Hungry, the Persecuted, the Jews. But portray in gripping detail, with photographs, a woman who has lost her job and is living in her car, or a refugee family on the run through the forest living on roots and tubers, and you are likely to engage the sympathy of strangers. All victims cannot easily represent one victim, but one victim can often stand for a whole class of victims.

We trample over each other in the name of some contrived ideal of consistency…which we don’t ever achieve anyway. And thankfully. Because that is the cover for history’s greatest butchers.

[If interested…my Zeroth Commandment]

Money Angle

I impulsively tweeted this on Wednesday while procrastinating taking a break.

The trading version of not being in on the joke is to not know which side of the market is fake on the lean. How many times do you have to watch someone hit their own bid to learn?

Offer it to buy it. Bid it to sell it. It’s always the game. Everywhere. Yes in SEC markets you can’t spoof but that’s only one way to do this. And man outside SEC markets, this game is on full display everywhere. I’m more convinced that spending a week in an open outcry pit could teach quite a bit about bottlenecks, the hierarchy of information flows, second-order knowledge You can get all these lessons elsewhere, but the pit speedruns it.

I decided it was needlessly esoteric so I indulged the procrastination for 30 more minutes and explained it on camera. There’s nothing technical here, it’s more about tradecraft and being a bit less naive.

If you’re looking for something meatier this morning, grab a coffee, a cozy chair, and your spectacles:

A Tale of Two Tariffs (27 min read)

Citrini writes terrific investment pieces. But this one is a departure from his typical posts (and unlike the others…free).

It’s been more than two years since I’ve published a history piece to CitriniResearch. After all, our tagline is “you’ll never have to ask ‘what’s the trade?’”, and these pieces are not necessarily actionable. However, the last one I wrote – an examination of how markets have failed to price in geopolitical risks through the lens of WWI (similar to the one we’ve just seen that was…not priced in) – has aged relatively well.

It’s a history lesson and an inquiry into what might be relevant or not from prior tariff expeditions. While I enjoyed the history lesson, my favorite part of the piece was Citrini’s discussion of the current moment.

 

Money Angle for Masochists

I replaced my IBIT shares into long calls when BTC vol got crushed this week while selling my VIX futures which held up quite well on the equity rally, a possibility I suggested when I explained that the elevated but also flat term structure of VIX suggested vol was here to stay in 2025. From vol speed round:

As I was looking at IBIT I thought I’d share a habit I picked up from distant past of ETF arbitrage — estimating the prem/discount baked into the ETF price I’m about to trade:

1. Go to the IShares web page to grab 3 values (highlighted)

2. Enter them in my spreadsheet to compute the ratio of NAV to BTC price. The cells with the box around them are via the previous close values. I then apply the fair ratio to the live BTC price compute IBIT’s live premium or discount.

Stay Groovy

☮️

Moontower Weekly Recap

Posts:

• “not dead yet”
• hedge ratios

YouTube:

 

Friends,

It was a long week in southern CA.

I was pulling out of SAN in a rental car Monday am just as the earthquake hit. Feels like a lifetime ago.

I’m focused on getting back to routine this week. My version of back in black.

Let’s start with 2 education related links.

How to Help Parents and Teachers (12 min read)
Dominic Cummings

Cummings, known for his controversial role as Chief Adviser to Prime Minister Boris Johnson from July 2019 until November 2020, also writes a substack. (The thought of a Trump advisor having a substack is a comedic contrast that we’ll set aside.)

Cummings is an outspoken critic of the British education system especially in mathematics. This post opens with a summary that you can use to decide whether you want to continue. I enjoyed it.

• What books and other materials to use to help children learn maths if your real goal is ‘they learn maths’ and ‘learn to think’ as well as they can — which is not at all the same as ‘follow the national curriculum’ or ‘succeed on government controlled tests’?
• Why does the system generate huge numbers of rubbish material and suppress good material, so much so that many great books are hard to find (and whose judgement should you trust?) and have vanished from teacher training and institutional memories?
• What is the Russian experience with Maths ‘Circles’, why are Circles so treasured by those who participated (an amazingly large number of western faculty), how do these differ from maths in normal English schools, what lessons can we be very confident in, how could these lessons be brought to Britain?
• How much can such things scale, how much is limited by necessarily relatively few excellent teachers, what can/can’t (well) be scaled with the internet?
• What can parents do given almost all schools (including almost all private schools, for complex reasons) are driven by *optimise to the national curriculum and government controlled tests* but this is bad for both those children more or less able than the median? How are these options affected by wealth? (NB. many teachers appreciate that optimising for the National Curriculum and government tests is not the best educational approach but most have no/little choice.)
• What are the core beliefs about education among Westminster players across party allegiance and how do they undermine civilised education? Some of my ideas about this came from working in the DfE 2010-14, creating King’s Maths School and other projects, discussed below.

Yet Another Reason To Hate College Admissions Essays (11 min read)
Astral Codex Ten

Scott Alexander nails this one. It’s paywalled but piles on to a free post by Yascha Mounk’s The College Essay Is Everything That’s Wrong With America.

Yascha sets the scene (X addicts already know the backstory because these kinds of stories always make the poster the “main character” on the app):

A few days ago, an 18-year-old by the name of Zach Yadegari publicly shared his impressive accomplishments—and the disappointing outcome of his attempt to get into an elite college. Zach had a GPA of 4.0. He had a score of 34 (out of 36) on the ACT, a standardized test applicants sometimes take in lieu of the SAT. Perhaps most impressively, he is an accomplished coder who has built a genuinely successful business: an app that allows users to count calories by submitting photographs of their food, and which he claims already earns $30 million in annual recurring revenue.

Despite this impressive record, most schools weren’t interested in Zach. According to his post, he was roundly rejected by every Ivy League school (except for Dartmouth, to which he didn’t apply). Nor did he fare any better at other top colleges, such as MIT and Stanford. Even some comparatively less selective schools such as UVA and Washington University did not take any interest in him.

Scott Alexander starts his post:

His [the 18 year-old’s] essay is well-written on a stylistic level. It sort of, kind of, hits the right beats – “Now, I see that individuality and connection are not opposites, but complements” is approximately the sort of thing you’re supposed to say if you want to sound wise. I don’t feel like I really deeply understand what makes him want to go to college, but whatever, I would hire him for an entry-level writing job somewhere and expect him to pick it up quickly.

The reaction from people with college admissions experience was more negative. Aside from calling it “cocky”, they pointed out that it failed to list hurdles he had overcome, didn’t explain why the particular school he was applying for was a great match for him, and didn’t give the impression that admitting him to college would cause him to make some great contribution to the world.

These are reasonable things to ask from an essay. Why did I feel so uncomfortable with this response?

Writing, done honorably, is a good and valuable skill. Colleges would do well to select for it. Or at least it’s in my self-interest to say that.

But there’s nothing honorable about a college admissions essay. It resembles nothing so much as prostitution – not the fun sort of prostitution you read about in Aella blogposts, but the kind that appears in news stories on human trafficking. You have to twist your innermost self into a marketable commodity – smiling and telling your violators how much fun you’re having, while your soul screams the whole way through.

Five, maybe ten percent of applicants are some kind of special snowflake whose father was murdered when they were five years old. As he lay there bleeding out, he said “Daughter, my whole life, I dreamed of being the first LGBT person to get a PhD in the study of ancient Assyria. Now that dream has been taken from me. With my dying breath, I give you my trowel and hand-painted figurine of Tiglath-Pileser III, in the hopes that one day you will succeed where I failed”. She spent the next twelve years sweeping chimneys to support herself and her paraplegic mother, before one day – rotting in jail after protesting police brutality – she started talking to her cellmate and found he was Behnam Abu Alsoof, legendary expert on the ancient Near East. He offered to tutor her in cuneiform, and at age seventeen she published her first paper, a daring thesis claiming that the Elamite Kingdom, long thought a victim of foreign invaders, was actually destroyed by internalized misogyny. Now she wants to attend Dartmouth, the college her father always dreamed of making it to, with the top Assyriology program in the world, in order to continue her groundbreaking work on Bronze Age sexuality.

The rest of us are just some kid who wants to go to college because that’s where all the good jobs are. If you really press us, we’ll say something like “idk biology seems pretty cool”. We encountered an approximately average number of hardships. Once when we got our wisdom teeth taken out, the surgeon said we had the weirdest reaction to anaesthesia he’d ever seen – does that count as a hardship?

He expands his attack on the ritual of the college essay before ending by putting his finger on exactly the same feeling I have about the college essay (in bold):

While reading this, I fantasized about how I – now a professional essayist with more years of experience than the average college applicant has been alive – would address the college personal statement if I could do it all over again. The most damning thing I can say is that I would write it exactly the same. I don’t even remember what I wrote – I assume something about how I struggled with OCD as a child and that made me want to become a psychiatrist – but it was the world’s most boring prose, it used 1% of my talent and explained 0% of how I differ from every other would-be doctor, and every single incredibly clever thing I would write in my fantasies would have been much worse.

I don’t know how to destroy the college essay. But I do earnestly hope that someone destroys it.

Money Angle

Abraham Thomas doesn’t publish frequently but I always make time to read when he does.

This post is terrific:

Making Markets In Time (16 min read)

Abraham’s main point: Just as Wall Street profits from spatial arbitrage (trading across locations), Silicon Valley profits from temporal arbitrage — trading across time by financing different stages of a startup’s lifecycle.

This framing explains several familiar features of venture in terms of well-theorized risk tranfer mechanisms.

• Just as futures allow risk and logistics to be unbundled across intermediaries — like producers and consumers — venture rounds aggregate liquidity allowing investors to “pass the baton” through stage-specific benchmarks and funding expectations. The stages make the startup ecosystem legible which in turn drives volume.
• Consensus is a bug not a feature. VCs are mocked for being herd animals, but shared consensus is necessary to keep the financing assembly line moving. Startups don’t just need to be “good”; they need to be “fundable” to the next investor in the chain.

I found this provocative because Thomas is suggesting that VC is a Keynes Beauty Contest more than long-term investing. A successful early-stage investor reliably front-runs consensus. They are market-makers, less concerned with “value” and more with positioning deals to match future investor appetite — similar to how a trading desk connects buyers and sellers.

But Thomas’ framing becomes even more provocative since I’m so predisposed to utter cynicsm in large scale private asset management.

The [VC majors] are not really hunting alpha. Outperformance is not the point; rather, because of their increasing economies of scale, they just want to be part of every (material) deal. The result is, essentially, beta on the private tech market — it may not be a true ‘index’, but it offers highly-correlated directional exposure to the market as a whole, which is almost the same thing.

LPs love this. Most institutional investors want sector exposure first, and in-sector outperformance second. The venture majors provide precisely this.

And the incentives don’t stop there. Allocator capital scales better than allocator diligence — it’s so much easier to deploy $20M into one fund than $1M into each of 20 funds. And of course GPs are happy to make 2% of the biggest number possible.

Everybody points to the 2024 statistic that 50% of new LP dollars went to just 9 firms; nobody seems to have a theory of why rational LPs would do this. Market-maker concentration provides the answer!

There’s a clear parallel with history here. Many of today’s largest investment banks — Goldman, JP, Citi — got their start as prop lenders during a previous technological buildout: canals, railroads and coal in the 19th century. They then broadened their franchise into more beta-like businesses like brokerage, depository and market-making — less glamorous, but far more lindy. Prop traders come and go, but banks go on forever.

The goal of the venture majors is to become the investment banks of the technology world. And it certainly looks like they’re succeeding! They say venture doesn’t scale, but this is not venture; it’s a completely different product, with completely different risk-return and investor profiles.

 

Money Angle for Masochists

A reminder in the spirit of being attuned to seemingly far-fetched risks:

If short selling were restricted in any way, the value of puts relative to calls on the same strike increases in a put-call parity framework.

Another way to say this is being long stock is more valuable since only long sellers can sell. If puts increase relative to calls on the same strike, as they do when borrow costs increase, that is like a synthetic future on the stock trading at a discount to the stock price.

Similarly, being short futures vs being long index or SPY expresses the same bet. If futures start trading at a sustained discount to the cash index value it could also reflect an implied probability of short-selling restrictions being imposed.

If futures are trading at full carry and you think such a ban is possible it’s an asymmetric bet to put on conversions (ie short futures, long stock or for options short combos long stock).

🔗Related

📽️Teaching Options Basics With Live Data (Moontower YouTube)

📔Synthetics: Alternate Realities (Market Jiujitisu)

From My Actual Life

On Friday night, we saw AC/DC at the Rose Bowl for nephews first concert and my boys second (they liked this one more than the Foo Fighters).

My 8-year old started playing the guitar in December. He has the spark of obsession. He performs his first song with a band next Sunday (7 Nation Army “including the solo” which he emphasizes). We have cute video of him dancing when he was 3 with a small Loog guitar mimicing Angus Young. He was especially psyched to see him. So I play it up a bit. “The band is in a bus behind the tunnel, keep your eyes out for them when the lights go out, maybe you’ll see them coming to the stage…”

But I also told him they have famous friends. He knows all about GnR so I told him that Axl is friends with the band and lives in LA. I said, “I think he’s gonna be here. Watch the area by the stage where people come from the tunnel area.”.

Within 3 minutes…jackpot:

Dad is an f’n wizard.

(People in surrounding seats were impressed by that call and since I totally believed it was possible I was looking for him and was the one who spotted him. I mean Appetite was the first cassette I ever bought — this is stupid lifelong preoccupation paying off on a guess.)

 

Stay Groovy

☮️

Moontower Weekly Recap

• father