But convertible bond trading isn't that complex.
There's a bond issuance at a mathematical discount. You buy the credit at fair value (so you hedge that); you buy the option part at a discount and hedge that to lock in a profit. Eazy Peezy.
I was told earlier in my career that I should work in converts as well.
I felt it was a dying business and I think they really focused on the equity option part rather than the credit.
I remember that. Dealers have a lot of power over their manufacturers. Essentially the dealers have unionized so all the Chevy dealers negotiate with GM together. It will make it hard for GM to capture that margin.
The vix will overstate the vol systematically because of the skew
the big issue is the event vol.
20 vol in the one month could be 20 vol for 4 weeks or 30 vol for 1 week and 16 vol for 3. The market would have been smart and price the events properly. Your extrapolation will be dumb and you...
My personal experience is that it’s hard to trade both sides of the market. You have to be good at one type of market regime. The anti of that regime will be a challenge.
It’s much easier to make money in an inflating market where new money is coming in.
It’s a lot harder to make money when you are fighting to divvy up a set pot.