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Personally, I always prefer a model I can understand than a model I have to trust. BS is a reasonable model, you just have to know how to apply it well and know when it breaks down.

Dude, you have to read The Book.

Dude, that's exactly what I said - "outright have more capacity, but it's harder to find alpha" :) To be honest, people who have a strong call on the outright market beyond really short time frames are very hard to find.

"You know," said Arthur, "it's at times like this, when I'm trapped in a Vogon airlock with a man from Betelgeuse, and about to die of asphyxiation in deep space that I really wish I'd listened to what my mother told me when I was young." "Why, what did she tell you?" "I don't know, I didn't...

That's very little information. Target volatility? Expected capacity? Is it 40% return on AUM, margin or some form of risk adjusted capital? If you have experience running capital in a professional setting, you should be more or less familiar with the structures. 10% can be very reasonable in...

A poor stepchild that get's molested by the stepfather is still family, right?

Why, that's a very valid question. The general idea is that if you are looking at a spread between two highly related securities, it's going to be mean-reverting and it's easy to identify the extremes. When you are looking at outright price, you are trying to actually predict the future, which...

The key advantage is that it's much easier to forecast the spreads and understand their behavior (based on hedging behaviors, supply/demand imbalances etc). If anything, you get better capacity by trading outright, but it's much harder to find alpha in these types of trades.

You are not contradicting him. His main point is that technical indicators and punting is not how the business gets done. You are making an orthogonal statement that most energy bets (I'd actually go as far as to say most non-equity bets) are relative value in nature. Both are definitely true.

What are you talking about? We had a selloff in the front of the curve over the last couple years because of the Fed (you know, they were hiking rates), but certainly not "for years" and not always.

"If the gamma does not get you, then the Vega will" (c) Oh, and vanna/volga and other good stuff. You do know that someone has posted all of the strikes and expiration, we can check where the vol went, right?

Ahem! Cough! Cough!

You guys are mean :P

42. The answer is always 42.

Both of the breeds below are more or less bred for that (as well as snagging an occasional sandwich from the table, as my experience shows):

Yeah, so easy. The reality, of course, is more complicated. First of all, the definition of insider information is not clean cut and changes at the whim of authorities. The whole expect network thing was cleared ad nauseam by outside legal counsels and was done over the table. Yet then the...

Yeah, my hindsight book is doing pretty well too. However, making that call in real time was not as certain. Would you say that being short equities was/is an easy call now too?

Picking bottoms gives you smelly fingers :)