Money Math

It’s Not The Merit It’s The Price

My past self makes me cringe. I remember a weekend Yinh and I spent in Big Sur before having kids.…

3 years ago

Using Log Returns And Volatility To Normalize Strike Distances

Basic Review Consider a $100 stock. In a simple return world, $150 and $50 are each 50% away. They are…

3 years ago

Understanding Log Returns

If you draw  a simple return at random from a normal (ie bell curve) distribution and compound it over time,…

3 years ago

Geometric vs Arithmetic Mean In The Wild

Review In 'Well What Did You Expect'? we learned: Mathematical "expectation" is a simple average or arithmetic mean of various…

3 years ago

Well What Did You “Expect”?

Here’s a simple coin flip game. It costs $1 to play. Heads: you get paid an additional $1 (ie 100%…

3 years ago

Understanding Implied Forwards

These are not trick questions: Suppose you have an 85 average on the first 4 tests of the semester. There's…

3 years ago

Examples Of Comparing Interest Rates With Different Compounding Intervals

Simple Interest If you pay someone $90 today and they promise to give you $100 in 12 months, you are…

3 years ago

An Example Of Using Probability To Build An Intuition For Correlation

The power of negative correlations is powerful when you see how rebalancing increases your expected compounded return. This isn't intuitive…

4 years ago

Bet Sizing Is Not Intuitive

Humans are not good bettors. It takes effort both in study and practice to become more proficient. But like anything…

4 years ago

Another Kind Of Mean

Let’s use this section to learn a math concept. We begin with a question: You drive to the store and…

4 years ago