Karen the Supertrader - TastyTrade Hybrid Experiment

[Maverick74]

It matters when I get paid based on a higher IV as compared to the risk I realize.

This is a terrible way to analyze risk. I hope some of the readers of this thread are learning from this.

 

[Maverick74]

The skew didn't exist prior to '87 right? Or am I getting that confused?

Correct. After half the pit blew out in 1987 the ones that remained "demanded" a higher risk premium to sell the downside.

 

[newwurldmn]

I would agree 100% as I mention risk aversion a few posts up.

So the key in selling vol is understanding what the risk premia is and if it is unreasonable or not and if it is unreasonable your ability to carry that premium vs the general market.

 

[atrp2biz]

This is a terrible way to analyze risk. I hope some of the readers of this thread are learning from this.

I'm selling protection at a price higher than the realized cost of providing that protection over the long-term. This doesn't sound like a terrible risk proposition to me.

 

[i960]

I'm selling protection at a price higher than the realized cost of providing that protection over the long-term. This doesn't sound like a terrible risk proposition to me.

Such wow, amazing! I guess we should all just start doing that because there's no embedded risk whatsoever and the markets love handing out free money to those willing to get aboard such a no brainer bet?

 

[atrp2biz]

Such wow, amazing! I guess we should all just start doing that because there's no embedded risk whatsoever and the markets love handing out free money to those willing to get aboard such a no brainer bet?

I don't recall saying realized risk will be zero.

 

[Maverick74]

I'm selling protection at a price higher than the realized cost of providing that protection over the long-term. This doesn't sound like a terrible risk proposition to me.

That is actually not what you are doing and I suspect you don't understand the math behind your statement.

 

[atrp2biz]

Ok. Scratch price/cost and replace with vol. Just trying to say things in a different way vs repeating over and over that IV > HV. But it doesn't matter. We clearly have different trading personalities and one has to stay within their personality in this business.

 

[atrp2biz]

I guess I should just be happy that people are generally adverse to selling premium.

 

[Maverick74]

Ok. Scratch price/cost and replace with vol. Just trying to say things in a different way vs repeating over and over that IV > HV. But it doesn't matter. We clearly have different trading personalities and one has to stay within their personality in this business.

This is mathematically incorrect. Have you taken any statistics classes? What you are saying and what you mean to say and what you are implying are all categorically false.