Money Math

a winner that’s really a loser

The Earth rotates around the Sun at a speed of 67,000mph. When I go out for my occasional run, my…

2 years ago

how arbitrage pricing creates opportunities for directional investors

This post starts with a response to a reader question but leads to a deeper question -- do arbitrage-free prices…

2 years ago

Volatility Depends On The Resolution

Friends, Today we jump into another large learning post including a chart book and commentary. In this document, you will:…

2 years ago

GLD vol post-mortem

Last Sunday, I sent out a paywalled flash post explaining why I thought GLD November volatility looked like a sale…

2 years ago

Dynamic Hedging & Option P/L Decomposition

In Connecting Vol Surfaces To Option P/L, we showed how a position in the 6-month 25d put or 25d call…

2 years ago

understanding the realized vol portion of option p/l

Thursday’s paid post was cutting to the heart of vol trading — dynamic hedging to isolate vol mispricing. There’s a…

2 years ago

why home prices could fall with mortgage rates

Just based on my local observations, it still feels like the bid-ask on residential real estate is wide. I wrote Staring…

2 years ago

Connecting Vol Surfaces To Option P/L

The small cap leg of the rotation in mid-July 2024 can be seen in IWM. I cherry-picked points before the…

2 years ago

a deeper understanding of vertical spreads

This is part 2 of "building an options chain in your head" In part 1, we reasoned through the following problem…

2 years ago

building an option chain in your head (part 1)

On my way to Portugal, I was stuck on a plane with no internet and was thinking about hedging downside…

2 years ago