Moontower #98


A very popular non-fiction book of the last few years was David Epstein’s Range: Why Generalists Triumph in a Specialized World. I didn’t read the book. I’m lucky if I read 3 books a year and I have 75 books on my nightstand. And the nightstand stack has a growth rate too. It’s called life. Don’t feel bad. Anyway, I did the next best thing. I listened to Epstein’s interview on Invest Like The Best. It was outstanding so I took notes.

I’m generally skeptical of Gladwellian, Gritty, Mindsetty airport non-fiction. It’s not that there aren’t seeds of insight in them. It’s that they are oversold with a glossy “science” wrapper. They’re skim milk. You want protein without the work of trimming the fat that the real stuff puts on you. But with Epstein there’s a real commitment to scholarly integrity. He hired statisticians and academics to help him decipher the primary research. I’ve cited his newsletter in my writing. I’m a fan.

Now the twist.

One of my favorite bloggers, Cedric Chin, shares my respect for Epstein but is deeply critical of Range. He deconstructs the book and by following along you get to be in the passenger seat of someone who doesn’t stop at “that sounds like it makes sense”.

Let’s hop into select sections of Cedric’s summary of Range (Link)


  • First of all, “Epstein gets it.”

    If you read his newsletter (aptly titled The Range Report) Epstein regularly cites primary research, throws up graphs and charts with aplomb, and displays a grasp of the underlying science that’s second to none. It just doesn’t seem to come through in Range. I don’t know why. 

    At any rate, my recommendation, made at the top of this summary, makes more sense now: read this essay, skip the book, and subscribe to Epstein’s newsletter. The Range Report is great. It’s just a pity that Range is not.

  • Range is less than the sum of its parts.

    Good non-fiction books develop an argument systematically over the course of the book. Range does no such a thing. It is a collection of anecdotes that are strung together with the thinnest of connective tissue, and the arguments it develops has you no more convinced of its original thesis than when you began. It is simply not a good book.

  • So what is valuable about Range?

    I think that several individual ideas that Epstein covers in the book are interesting, and worth investigating further. These are, in no particular order:

    • The idea that ‘slow’ learning is what is valuable when it comes to developing foundational skills.
    • The whole notion of ‘match quality’ as a counterpoint to ‘grit’.
    • The idea that analogical thinking is powerful, and that it depends on a large-enough set of experiences and ideas to perform well. (This one is so interesting that I’m fairly certain I’ll write about it down the line).

My favorite sections of the review

  • The Trouble With Too Much Grit

    In Chapter 6, Epstein introduces what might be my favourite idea of the book: ‘match quality’. This chapter also happens to contain one of the most emotionally moving descriptions of Vincent Van Gogh’s life and career that I’ve ever read. If I could take one chapter from Range with me, this one would be it.

    Continue the rest of the grit section…(Link)

    I have a short post on grit if you want more (On Grit)

  • Flirting With Your Possible Selves

    From grit, Epstein moves on to the idea that it is ok to meander in your life. Chapter 7 is essentially his take on the whole “you’re not too late in your life to succeed” meme — which one may occasionally see on Facebook or Twitter with the heads of famous, successful people juxtaposed next to inspirational quotes, all of whom started in their 40s or 50s.


Wrapping up

Cedric’s review of chapter 11 captures much of how he felt about much of the book:

I think this was this chapter was where I set the book aside and sighed.

If you’re reading for entertainment, the stories in Chapter 11 are nice. But this is non-fiction, and I think most of us read non-fiction for education. We want arguments that challenge us, arguments that illuminate things we’d thought about but not had the right words to say; arguments that change our minds. I remember setting down The Better Angels of Our Nature by Steven Pinker and feeling deeply exhausted — not because it was a bad book; but because it was a good one. Better Angels was a first rate argument executed over 800 pages of precisely tuned prose, written in a sure hand by a first-rate intelligence. I still do not want to agree with the conclusions, but I couldn’t find a single flaw in Pinker’s argument. It has challenged me to my core.

By comparison, I agree with Range’s core thesis. I believe generalists have advantages that specialists do not, and that these advantages have compounded in the age of the Internet. But Range’s argument is sloppy, even as it is wrapped up in pitch-perfect narrative. I wanted it to be better, but I was consistently disappointed.

I don’t have a strong stance myself on either Range, which I haven’t read, or Ced’s criticisms. I’ve read a lot of Ced’s work and have familiarized myself to his thinking and standards. Seeing it applied to an esteemed book offers a chance to get even more insight than the original author intended.

The Money Angle

Many beginners to options ask me and other professionals what they should read to learn options. I’ve seen this question asked enough times that I built a wiki that I can reference instead of needing to come up with an answer every time.

Voila…The Options Starter Pack (Link)

In the process of curating that I figured why not go the extra step…Introducing the Moontower Volatility Resources wiki (Link)

In addition to Moontower trading content, you will find select options content from the rest of the online vol community.

To maximize how useful this wiki there are a 2 important points.

  1. I will be keeping this wiki updated, but it is not open source. At this time, I think readers are best served knowing I’ve pre-screened submissions.
  2.  If you find a blog, book, video, interview, etc that you feel deserves to be here please submit it. I won’t guarantee I’ll include it but the benefit is we can keep this resource high quality and free of spam.

So there’s a tension involved…one side is that in order for this to be useful it can’t be a free-for-all. If you want a free-for-all there’s Reddit and Twitter and upvoting and ‘like’ buttons. This is not that. This is intended to be a reference with evergreen content subject to my standards. Like any manner of gatekeeping, I will miss things and I might let subpar stuff slide in. Sorry in advance. I’m always open to hearing suggestions/complaints. You’ll need to trust that I’m competent and care.

The other half of this tension is it requires engagement even though it’s not open-source. If you come across a source, a tool, a course or anything that fits neatly with this wiki then please share it.

Finally, here’s the excerpt from About This Wiki:
Option strategies range from directional hedging/speculation to the complexity of index dispersion portfolios and exotic structured product books. You cannot learn to trade options from reading. It is a craft and your understanding of it comes much faster when you have a position. When the feedback of the position comes in the form of mark-to-market p/l you learn what the position is sensitive to. Greeks like delta, gamma, and vega are immediately less abstract.

The good news is I believe any numerate, motivated person can learn options.

The bad news is two-fold:

  1. Experience is expensive.
  2. It is a craft best learned as an apprentice.

#1 is unavoidable. Straight talk — you will lose money learning. Guaranteed. Act accordingly. Don’t sell naked options and make sure worst-case scenarios are tolerable. Bid/asks are expensive. Sure, they might only be a few pennies, but 1 cent on a $1 option is 1% slippage. That’s 10-100x the slippage you pay to trade stock. Vast fortunes have been built on that 1% slippage. It will grind you as surely as a blackjack dealer if you play long enough without an edge.

#2 has better news. The internet in the form of blogs, podcasts, electronic brokerage and social media (esp Twitter) has never made it easier for a voracious learner to educate themselves, find mentors, and have meaningful discussions that would have been impossible even as recently as 2000 when I got into options trading.

I was fortunate to discover options trading right as I graduated college. I joined Susquehanna (SIG) and learned how to think about options, risk, and trading from Jedis. Their curriculum and methods for teaching were so comprehensive, tested, and systematized that it was a massive source of competitive advantage. The cared deeply about cultivating talent. They did not care if you knew what an option or interest rate was when they hired you. They looked for drive and aptitude only since they were secure in their ability to teach everything you needed to start managing a portfolio in as few as 18 months out of college.

I am not a math whiz. I was one of the <5% of hires who got a higher score on verbal than math SAT. Options intimidate many people simply because of the Greek letters and the math behind the models. I get it. I’m intimidated by math whizzes too. I have no more than HS Calc BC math education and a single stats course in undergrad. But the truth is, you don’t need to be able to derive Black-Scholes any more than billiards champ needs to know physics. Don’t get me wrong — the intuition behind the models is critical but the bar to acquire that is much lower than a math degree.

Much of my writing is an attempt to bring the reader to an intuition of the math in the same way that I was taught. I hope it’s even more accessible since my own weakness in math makes it easy to imagine being in the average reader’s shoes.

This wiki sits in that sparse space in-between the basics you might learn from the Series 7 and the nerdom that is derivatives structuring at a French bank. This is that mushy practical area in-between sophisticated retail and professional vanilla options user. It is an area, that will become more popular thanks to the boom in retail option activity and r/WSB. The vig and risk of options is going to weed out many of the new tourists but the few who persevere and have a deeper thirst to learn should find this wiki helpful.

And for the finance professionals who use options directionally but do not “trade volatility”, the resources found here might be just the bridge you need to understand volatility surfaces a bit better. This can improve your trade expressions, risk management, timing and ultimately executions.

If you have feedback, my door is always open.


Last Call

Just one link today because it’s so much fun. Mark Rober throws the most epic 13th birthday party for a child who survives an extremely rare brain tumor (the child was only the sixth person ever diagnosed with that form of cancer).

It is a dazzling video. Incredibly uplifting. And I can’t believe I haven’t boosted Mark Rober here before. Next time you are looking for something to watch with your kids, tune into his amazing YouTube Channel. The series of inventions he uses to thwart porch pirates was our introduction to Mark. He is an absolute gift to the internet.

Please enjoy:

World’s Largest Devil’s Toothpaste Explosion

This is 23 minutes well spent. You will get educated. You will be inspired by a beautiful sense of humor and joy.

There’s no better way to learn the square-cube law.

From my actual life 

I recently learned my 4-year-old Maxen is an earth-centric pessimist. These quotes are from the same car ride.

“How does the shine get to the sun?”

“There are clouds so the sky is not too blue”

We got our work cut out for us.

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