How prevalent is quant knowledge among the option traders here?
- Thread starter Aquarians
- Start date
Quant relies on price and volume which doesn't necessarily relate to options. Options tend to rely on volatility which determines option future prices. Trading the SPY on an intraday basis is much like trading any stock except you can straddle it. I don't see where quant could be used much on options , increased volume on a stock would move the price but not on an option.
Except you know that pesky Black-Scholes formula which is basically the founding formula of modern quantitative finance.
Good lord, 99% of quants couldn't trade their way out of a paper bag. Most would shit their pants trading, and the ones that wouldn't are the ones you really need to be horrified of. The model doesn't make you money, it's a tool, and with options the best you get is Black+Decker. I used to joke about how much time we spent defining things to the 4th decimal when we have no clue to where other variables should be by large integers. I'm freakishly quantitative for a trader, but I'd attribute about $0 of my net worth to that knowledge.
I'll always take a good experienced risk focused trader, over the best of quants. The later are a dime a dozen anyway. Want one with 2 PhD's out of the Ivies... always had a stack of resumes for those. My favorite was when Russia fell and all these guys could explain how to build a nuclear missile guidance system that could pinpoint a flies ass from 3,000 miles away but none could build a damn basic futures model correctly because they learned everything about options reading equity options and f'd up the interest rate function 100% of the time!
...and of course options are a zero sum game. With that said, they are not.
and @jacobson example raised my eyebrow at first with the buy the put comment. Then I assumed he was just expressing a position where the market maker was seeking full (99.9% risk neutrality). Yes it's not realistic instantaneously and you would just take in your delta and work your way out of the other risks.
@carrer - Dividends themselves are a zero sum event, 99.99999999% of the population just thinks otherwise. The average person who thinks themselves financially astute has no idea how far they are away from being so... the worst of them all are economists!!
I'll always take a good experienced risk focused trader, over the best of quants. The later are a dime a dozen anyway. Want one with 2 PhD's out of the Ivies... always had a stack of resumes for those. My favorite was when Russia fell and all these guys could explain how to build a nuclear missile guidance system that could pinpoint a flies ass from 3,000 miles away but none could build a damn basic futures model correctly because they learned everything about options reading equity options and f'd up the interest rate function 100% of the time!
...and of course options are a zero sum game. With that said, they are not.
and @jacobson example raised my eyebrow at first with the buy the put comment. Then I assumed he was just expressing a position where the market maker was seeking full (99.9% risk neutrality). Yes it's not realistic instantaneously and you would just take in your delta and work your way out of the other risks.
@carrer - Dividends themselves are a zero sum event, 99.99999999% of the population just thinks otherwise. The average person who thinks themselves financially astute has no idea how far they are away from being so... the worst of them all are economists!!
Dividends are zero sum over an ex-date. But there is ample evidence that show that dividend paying stock perform well over time. The dividend discount model would have every company’s stock going to zero as it pays dividends, but that isn’t the case.
"Dividends are zero sum over an ex-date."
That was the only part of your response that was relevant. 99%+ believe they come with 0 consequence.
"But there is ample evidence that show that dividend paying stock perform well over time. The dividend discount model would have every company’s stock going to zero as it pays dividends, but that isn’t the case."
Sure, the same ample evidence that non-dividend paying stocks perform well over time. And only a fucking idiot would run/write a model with inputs that assumes dividends continue to be issued to a point it takes a stocks value to zero.
My sincerest apologies if I appear testy today. I'm still recovering from my damn Jets. It's going to be another very long season.
That was the only part of your response that was relevant. 99%+ believe they come with 0 consequence.
"But there is ample evidence that show that dividend paying stock perform well over time. The dividend discount model would have every company’s stock going to zero as it pays dividends, but that isn’t the case."
Sure, the same ample evidence that non-dividend paying stocks perform well over time. And only a fucking idiot would run/write a model with inputs that assumes dividends continue to be issued to a point it takes a stocks value to zero.
My sincerest apologies if I appear testy today. I'm still recovering from my damn Jets. It's going to be another very long season.
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One think I noticed is that finance companies when hiring guys (quants) to look for alpha, overwhelmingly hire from the pool of recent grads. Even my contact with the world of $100M+ used to work in such a research position along others in his early 20sh years old, obviously they found nada and were all fired. Now that he's balancing towards late 30s, albeit having a ton more finance and trading experience and actually making money out of it, his chances of getting hired in the industry are less than the chances of those guys this industry hires to find alpha of finding alpha.
Me, I actively gave up any thought of "working for the man" in the industry, which is not to say I'm not actively working for myself as I always did and more. And I'm not prodding "them" from time to time in order to find out whatever info they're stupid enough to disclose to me during the interviews I have with them.
On the other hand, the freedom of making my own research schedule. I pay for it with 8 hours of my retarded job but so would I while working for "them" and I wouldn't have an option to work for myself afterwards. So just as a thumb rule, if you're a developer in FINANCE and you're not getting paid 3x-5x the salary of your retarded peers (the guys who work in REGULAR industries) then YOU'RE retarded. Developer is the guy who cleans up their (these "quants" / traders / cabala who "knows") shit and still isn't employed as one of them while the employer owns the IP of anything he might do after going home and taking a shower to wash all that crap. You can do it "later", as long as you get 3x-5x a regular salary. Then I clean their crap for a year, I get 5 of mine and they can go fuck themselves.
Me, I actively gave up any thought of "working for the man" in the industry, which is not to say I'm not actively working for myself as I always did and more. And I'm not prodding "them" from time to time in order to find out whatever info they're stupid enough to disclose to me during the interviews I have with them.
On the other hand, the freedom of making my own research schedule. I pay for it with 8 hours of my retarded job but so would I while working for "them" and I wouldn't have an option to work for myself afterwards. So just as a thumb rule, if you're a developer in FINANCE and you're not getting paid 3x-5x the salary of your retarded peers (the guys who work in REGULAR industries) then YOU'RE retarded. Developer is the guy who cleans up their (these "quants" / traders / cabala who "knows") shit and still isn't employed as one of them while the employer owns the IP of anything he might do after going home and taking a shower to wash all that crap. You can do it "later", as long as you get 3x-5x a regular salary. Then I clean their crap for a year, I get 5 of mine and they can go fuck themselves.
Overall the thing I realized is that this world is made up of very, very, extremely imbecile and retarded beings. Just the mass of "alien" lifeforms on this Earth (archaebacteria), so different from even the bacteria in your yoghurt as coming from other planets is conservatively estimated at 300x the mass of all HUMANS living today. And of the humans living today, you and your thoughts are an exception. That matters as much to your bosses, employer, family, country and species as much your species matters in the general context of how things are.
Bottom (or top line, depending on your reading habits) is never base your judgements and options upon the approval of the statistics.
Bottom (or top line, depending on your reading habits) is never base your judgements and options upon the approval of the statistics.
I hear you, and, the environment one lives in will obviously slant that opinion.
However there are also very fine, extremely uplifting people who set good examples of human dignity, they being the minority though it seems.
