Money Math

N² – n: why shorting is mathematically cursed

Recall the levered silver flows post where we see the quick math of levered ETFs. For a fund to maintain its mandated…

2 days ago

not all averages are created equal

What did we notice? a * b = Mean² − MAD² (where MAD = mean absolute deviation) As soon as…

4 days ago

vega’s finishing move

“Vega wounds, gamma kills” is an esoteric expression that’s still common enough that you can google it and return a…

4 days ago

approximating gamma in your head

By now y’all know option traders have the ATM straddle approximation burned into their retina: straddle ≈ .8 Sσ √T…

4 weeks ago

oil options and the raw gamma paradox

The single biggest adjustment to get my head around when I crossed the chasm from equity options trading to commodity…

1 month ago

the math of investing

As I’ve shared here before, I spun up an investing class for middle and high school kids locally. I am…

1 month ago

the moontower bridge

I sent this to our moontower.ai list this week: If you run a trading or investment book that uses options…

1 month ago

links between options and event prediction markets

Oil vols and calls skews were up a lot this week as the expectation of the US striking Iran increases.…

2 months ago

sticky vs floating strike

Last week, in embedding spot-vol correlation in option deltas, I showed how vol paths use anticipated changes in implied vol as the…

2 months ago

embedding spot-vol correlation in option deltas

Before we get to the heart of today’s education, this is a video follow up to yesterday’s HOOD: A Case Study…

2 months ago