I told you BS was BS!

[wxytrader]

Wow. I actually love you and you posts. But this is just clueless. Do you hang with any scientists? That's exactly what they do.

I'm using scientist as a term of smart people lol. Now if you are a financial scientist or mathematician at a high high level like the Renaissance fund, and put a team together yeah, that's a different story. Although I'm fairly certain they used fractals, EW and pattern recognition combined with high frequency trading and low fees.

 

[smacdtrader]

Most people I know who switched from academia to finance stayed their entire lives. That includes yours truly too. It's not just the money, the game itself is actually pretty fun.

Ok. fair enough. not my life experience. but i also don't "work" for anyone or that much at all really. lol.

It's a platitude. The number of people working in finance is actually relatively small. For example, the number of people employed in finance in the New York City (arguably the largest financial center in the world) is just 250k.

yeah, i mean totally my point. You point is also a platitude by the same logic and thus not really germane here.

How do I know that you don't know? I simply read what you wrote and it shows that you don't really understand how OMMs function. For example, @taowave has never ran an electronic OMM (or have you), but he understands the process. Just like him, I understand the process because I used to run a market making book on the sell side and now run a book on the buy side.

Market making in options is less about "quoting" things right and more about managing risk. Unlike an HFT market maker in delta-1 products, an options market maker does not have the luxury of going home with an empty book. Instead, an OMM would be trying to flatten specific risks and those risks are described by (drum roll) his models. So the main purpose of using the model is the ability to aggregate positions in different options via their risk factors. It's a very nuanced process, but unless you're trading something exotic, Black Scholes with some tweaks is good enough for it.

Yeah I get all this. The model is trash. Nothing you've said refutes that or anything I've said. I think. Unless I'm misunderstanding what you're saying. I haven't run one myself, that is true. But I have put tons of hours into getting it, with the thought of maybe running one and I found better opportunity elsewhere for my resources.

 

[2rosy]

one thing for sure in this industry is the raw brain power is tier one. very smart, very collaborative, very nice from my small world view. as for diversity, you're from mit or uofc (maybe a sprinkling elsewhere), russian or chinese

 

[Slow Learning Elf]

one thing for sure in this industry is the raw brain power is tier one. very smart, very collaborative, very nice from my small world view. as for diversity, you're from mit or uofc (maybe a sprinkling elsewhere), russian or chinese

Indians, don't forget the Indians

 

[Slow Learning Elf]

The model is trash. Nothing you've said refutes that or anything I've said. I think. Unless I'm misunderstanding what you're saying.

You are misunderstanding indeed. It's not trash, in fact, it's completely genius despite it's limitations. Like the old saying goes, "all models are wrong, but some are useful". If you are trading vanilla European options (e.g. options on S&P 500, arguably the biggest option market by volume and by other metrics), Black Scholes is the most useful model. It's assumptions are wrong, but it's easy to grasp the impact of these assumptions and thus it's easy to tweak so it reflects the real world. Try doing that with a stochastic local vol model LOL.

I haven't run one myself, that is true. But I have put tons of hours into getting it, with the thought of maybe running one and I found better opportunity elsewhere for my resources.

There is a big difference between dabbling and doing something full time. I've driven many miles though my life, but I am under no illusion that I am fit to be a race car driver.

 

[smacdtrader]

one thing for sure in this industry is the raw brain power is tier one. very smart, very collaborative, very nice from my small world view.

I love you all so much.. Favorite group of people to talk sh-t with, but I just can't disagree more. I wonder why my life experience is so different from yall's? That's actually an interesting question.

 

[smacdtrader]

You are misunderstanding indeed. It's not trash, in fact, it's completely genius despite it's limitations. Like the old saying goes, "all models are wrong, but some are useful". If you are trading vanilla European options (e.g. options on S&P 500, arguably the biggest option market by volume and by other metrics), Black Scholes is the most useful model. It's assumptions are wrong, but it's easy to grasp the impact of these assumptions and thus it's easy to tweak so it reflects the real world. Try doing that with a stochastic local vol model LOL.


There is a big difference between dabbling and doing something full time. I've driven many miles though my life, but I am under no illusion that I am fit to be a race car driver.

that's condescending dude. did you investigate being a racecar driver and build out a NASCAR and drive a track for a few years and decide it was too dangerous and that your time is better spent doing other stuff?

 

[smacdtrader]

You are misunderstanding indeed. It's not trash, in fact, it's completely genius despite it's limitations. Like the old saying goes, "all models are wrong, but some are useful". If you are trading vanilla European options (e.g. options on S&P 500, arguably the biggest option market by volume and by other metrics), Black Scholes is the most useful model. It's assumptions are wrong, but it's easy to grasp the impact of these assumptions and thus it's easy to tweak so it reflects the real world. Try doing that with a stochastic local vol model LOL.

I propose a challenge for real. Let's come up with some guidelines and see who can win over 30 days. You using B-S, me whatever I want. I have no clue if I have edge on you, but this would be very valuable for both us and the community.

 

[Slow Learning Elf]

I propose a challenge for real. Let's come up with some guidelines and see who can win over 30 days. You using B-S, me whatever I want. I have no clue if I have edge on you, but this would be very valuable for both us and the community.

Huh, what? BS is a pricing and hedging model. I am not exactly sure what the metric for "winning" would be.

 

[smacdtrader]

You are misunderstanding indeed. It's not trash, in fact, it's completely genius despite it's limitations. Like the old saying goes, "all models are wrong, but some are useful". If you are trading vanilla European options (e.g. options on S&P 500, arguably the biggest option market by volume and by other metrics), Black Scholes is the most useful model. It's assumptions are wrong, but it's easy to grasp the impact of these assumptions and thus it's easy to tweak so it reflects the real world. Try doing that with a stochastic local vol model LOL.


There is a big difference between dabbling and doing something full time. I've driven many miles though my life, but I am under no illusion that I am fit to be a race car driver.

I blame you for this... if you hadn't been trolling me all morning i would have seen my bot forgot to set a take profit.. lol.

don't worry, just a demo trade. working on a new strategy.