Money Math

Prices Are More Than Expectations

Prices Are More Than Expectations This week I came across this tweet by @NewRiverInvest: Breakevens are not inflation expectations (thread) It explains how…

5 years ago

Notes on Trading Volatility: Correlation, Term Structure, and Skew

Trading Volatility: Correlation, Term Structure, and SkewColin Bennett http://trading-volatility.com/Trading-Volatility.pdf The book is a broad reference on basic option theory, dispersion,…

6 years ago

Vol Premium [Partial] Justification

I'm about halfway through Colin Bennet's terrific book Trading Volatility, Correlation, Term Structure and Skew (pdf). Bennet is (or was) the…

6 years ago

The ‘Volatility Is A Risk’ Strawman

In my short post Is Volatility A Risk?, I urged that any definition of risk: should be evaluated by its usefulness. Any…

6 years ago

40% Of Your Assets In…OTM Options?

The treasury issues EE Bonds that yield 3.5% guaranteed if held for 20 years. In the interim, they are totally illiquid.…

6 years ago

How Much Extra Return Should You Demand For Illiquidity?

In some corners of asset management, marketers are offering to lock up your money to "save you from yourself". These…

6 years ago

Path: How Compounding Alters Return Distributions

Compounded returns experience "variance drain". This idea captures the fact that typical result of compounded returns is lower than if…

6 years ago

Making Property Taxes Apples to Apples

You will be working from home more often. Not all of you but many of you. That means browser tabs…

6 years ago

Straddles, Volatility, and Win Rates

One of my favorite follows on #voltwit is @SqueezeMetrics. The account more colloquially known as "the Lemon" has a personal…

6 years ago

Binary Straddle Example Based On The 2016 Election

This is a dramatization loosely based on the 2016 election. It may be hard to remember, but leading up to…

6 years ago