The Money Angle

How would you trade if you knew the future but not the path?

I saw a tweet:

Let’s set aside the obvious “just short bonds” response to a crystal ball that tells you mortgage rates are going to roof. While I’m not sure how volatile the 10-year note/MBS basis is, just shorting bonds would seem like the most direct and reliable trade.

The rest of the crystal ball portfolio underwhelms expectations. Ahh, a recurring parable in the “trading is hard” bible. Like if you knew what a stock’s earnings were going to be would you be able to make money? How do you know what the “whisper” number is or if the market is focused on guidance more than income for this quarter?

It also reminded me of 2 adjacent reads that cut to the heart of “how would you trade if you knew the future but not the path?”

  1. In Financial Hacking, a puzzle is presented:Assuming you could not trade options, how much would you pay to know the closing price of SP500 in one month?

    🧩Excerpts from the discussion

  2. Even God Would Get Fired As An Active Investor (AlphaArchitect)

If you use options to hedge or invest, check out the moontower.ai option trading analytics platform

editor

Share
Published by
editor

Recent Posts

Kelly Criterion — Cheatsheet Derivation

Kelly Criterion — Cheatsheet Derivation Step 1 One Period Expectancy E = pB − q…

4 days ago

“end behavior”

Alex is an options trader you should follow in case he ever tweets a lot.…

5 days ago

blindsided

My cousin Nicole just had her first child in the past year and is now…

5 days ago

Moontower #328

In this issue: blindsided “end behavior” Friends, Blindsided My cousin Nicole just had her first…

5 days ago

Variance & Covariance Cheat Sheet

Variance & Covariance Cheat Sheet Starting points (where every derivation begins) Everything below is derived…

1 week ago

why i’m not more bearish equities compared to 6 months ago

Programming Note: I normally publish Munchies on Wednesday and the paid post on Thursday, but…

1 week ago