don johnson - blackjack millionaire

crayon851 · Nov 3, 2014

If Don johnson can make millions off playing a card game with odds stacked against him, cant we do the same trading options?

Hey uses probabilities and "edge" that he negotiated with the casino to get ahead. since options run on prpbabilities as well, cant we just do the same?

for example, if we take 1:1 payouts with a 60% chance of success, eventually we will.come out ahead no?

marketsurfer · Nov 3, 2014

Yes, if you have the money to last though the brutal drawdowns. You need to remain solvent and most can not.

crayon851 · Nov 3, 2014

marketsurfer said:
Yes, if you have the money to last.

have you considered this before? on credit spreads, reduce your odds of success for a higher payout?

with 40/60 odds you need at least 0.75 -1 payout vs loss.

Martinghoul · Nov 3, 2014

Last I heard, unlike in a casino setting, in the mkt you can't negotiate your "edge" (unless you're a liquidity provider, in which case you run a whole set of different risks)...

crayon851 · Nov 3, 2014

yeah but you can pick your probabilities, thats your edge no?

for example, if you bought a debit spread with a 40% of success with a 1:1 pay out (bj pays 1:1 right?) and your loss is only half of that, then over time youll still be ahead no?

Martinghoul · Nov 3, 2014

Yes, you can pick your probabilities as much as you like. However, whereas normal blackjack is a repeated game with the same odds for every single hand, this is definitely not the case in the mkt. You have to adjust your expectations accordingly.

crayon851 · Nov 3, 2014

Martinghoul said:
Yes, you can pick your probabilities as much as you like. However, whereas normal blackjack is a repeated game with the same odds for every single hand, this is definitely not the case in the mkt. You have to adjust your expectations accordingly.

do you have any suggestions on what i can do to make this work? or what you would do?

when you say expectations are you referring to market direction?

Martinghoul · Nov 3, 2014

You have to start by assuming that you will not be able to find a systematic edge in the market, like Don Johnson managed to find in the casino. That means you have to approach every single opportunity individually.

crayon851 · Nov 3, 2014

Martinghoul said:
You have to start by assuming that you will not be able to find a systematic edge in the market, like Don Johnson managed to find in the casino. That means you have to approach every single opportunity individually.

ok so example

TZA @13.50,
IV=0.53
expiration 7 days,
1std: $1

debit spread
sell 13.0 call - 1.64
buy 12.50 call - 1.99

est probability success apprpx 60%?

this seems like good odds no?

Dolemite · Nov 3, 2014

Maybe don johnson's winnings have more to do with luck than probabilities/edge. In a pool of millions of participants you are bound to have someone who defies the odds and wins. The mistake is to assume it is repeatable by others.