It is worth revisiting

[Actuarial_Fun]

I didn't watch the video. If a stock has equal chance of going up 100% as it does to fall 50%, then this would easily be exploitable in the options market. Clearly, the market disagrees. If you feel otherwise, you can exploit the options market if you are right. If you understand BS, then you understand a stock can be looked at as a risk free rate plus a risk premium (measured with volatility). An ATM call and put do not cost the same. Maybe I should have watched the video but Max warned not to .

 

[wxytrader]

I didn't watch the video. If a stock has equal chance of going up 100% as it does to fall 50%, then this would easily be exploitable in the options market. Clearly, the market disagrees. If you feel otherwise, you can exploit the options market if you are right. If you understand BS, then you understand a stock can be looked at as a risk free rate plus a risk premium (measured with volatility). An ATM call and put do not cost the same. Maybe I should have watched the video but Max warned not to .

omg you guys. This has NOTHING to do with probabilities of the stock recovering from a decline. The video is applying math that is completely irrelevant to the movement of price. Price moves in standard deviations and average true ranges. If a stock is in a trading range between $5 - $10 then it can bounce between those prices countless times. It's not like it hits the bottom of the range and then says, "oh oh, we have to increase by 100% to get back to the top of the trading range..." lol. If this were the case then trading ranges, triangles, mean reversion, virtually every single chart pattern wouldn't exist!

 

[Wide Tailz]

price will be somehow hindered by basic arithmetic.

Going to snip you again to expound on the correlation vs. causation fallacy you keep making. Price is only hindered by resting limit orders. I traded penny stocks. I KNOW........

 

[wxytrader]

Going to snip you again to expound on the correlation vs. causation fallacy you keep making. Price is only hindered by resting limit orders. I traded penny stocks. I KNOW........

This has nothing to do with correlation or causation, but to use your example, if you had 1M orders to bring the price down from $10 to $5, then the same 1M orders to bring the price back up (theoretically) from $5 to $10. The video says it is actually going up 100% when it only came down 50% and therefore is somehow impeded by the arithmetic.