Money Math

The Coastline Paradox in Financial Markets

I started researching/writing this post about a month ago. It took a strange arc. It began with me wondering about…

23 hours ago

Positive delta puts

Yesterday in “trader” is a uselessly broad term, I boosted several of Euan Sinclair’s insights about option trading. I saved one…

23 hours ago

Moontower Binomial Tree Explainer

Last week, in American options are not vanilla, we covered not only the concept of early exercise for American options, but…

2 weeks ago

American options are not vanilla

I’ve always found it amusing that the most commonly traded options, American-style equity options contracts, are considered “vanilla”. Because they…

2 weeks ago

Prediction Market Arbitrage: Using Option Chains to Find Mispriced Bets

Horse tweeted: The moment you see a bet on a platform like Kalshi, Polymarket, or the soon-to-be Robinhood+SIG exchange, your…

4 weeks ago

Options on Levered ETFs (Part 2)

Last week, in part 1, we backfilled prerequisite knowledge: Distance in return space: equal percentage moves aren’t equal in compounded or…

1 month ago

Option on Levered ETFs (Part 1)

“They” say human labor will be irrelevant by 2027. By then, any business you can think will be solved by…

1 month ago

the arbitrage reflex is more profitable than the opinion reflex

A traditional way to think of a stock price is the expected value of its future prices weighted by their…

1 month ago

the art of paranoia

This is a fun one. A good friend and mentor from the pit sent me this (lightly edited and hyperlinked):…

1 month ago

the messiness of options in the real-world

Recently, I’ve been writing a lot about option funding — implied rates, reversal/conversions, and financing stock positions, and even a…

2 months ago