Karen the Supertrader - TastyTrade Hybrid Experiment

atrp2biz · Aug 25, 2016

That's where appropriate position sizing comes into play.

Are you saying you are constantly short delta and long gamma.

Maverick74 · Aug 25, 2016

atrp2biz said:
That's where appropriate position sizing comes into play.

Are you saying you are constantly short delta and long gamma.

No, I trade where there is an edge. I don't blindly sell premium for the positive neurological feedback loop it provides.

Maverick74 · Aug 25, 2016

lawrence-lugar said:
Most of the people on Wall Street are not actual traders -- but rather Salesmen -- selling and convincing random people to buy their products and offerings.

I'm not referring to "Wall Street".

atrp2biz · Aug 25, 2016

Maverick74 said:
No, I trade where there is an edge. I don't blindly sell premium for the positive neurological feedback loop it provides.

I'm not particularly good at timing, but over the long-term, IV > HV.

Maverick74 · Aug 25, 2016

atrp2biz said:
I'm not particularly good at timing, but over the long-term, IV > HV.

You have the formula wrong. IV should NOT equal HV. IV = HV + risk premium. IV HAS to be higher to offset the risk premia.

atrp2biz · Aug 25, 2016

Not instantaneously.

HV contains realized risk. IV contains implied future risk. What other risk premium is there? Please educate me (not meant to be sarcastic).

Maverick74 · Aug 25, 2016

Yes, IV contains the implied "forecast" for risk in the future. And that forecast adds an "extra" risk premium to compensate for the uncertainty. It's not just "higher" for the kiddies to splash around with in the pool. You act like that premium is there for the taking. It's there because it HAS to be there. Hence why there is a steep put skew in the SPX vs a negative call skew.

atrp2biz · Aug 25, 2016

Skew is there because of the implied differences in velocities of gamma between the two directions--not because of general uncertainty. I'm not sold on the notion that the extra risk premium has to be there.

i960 · Aug 25, 2016

I think the point is that "extra" risk premium is there because there is actually real risk present. Always remember, no free money, ever.

Maverick74 · Aug 25, 2016

atrp2biz said:
Skew is there because of the implied differences in velocities of gamma between the two directions--not because of general uncertainty. I'm not sold on the notion that the extra risk premium has to be there.

I don't need to sell it to you. It's widely disseminated information in every micro-economics textbook in the country. Or you can believe it's just there for you to take and spend how you please. At the end of the day, people believe what they want to believe to fulfill whatever truth they want to manufacture.