And FWIW, I am not trying to be shitty to new ppl by speaking jargon. I do so to be as brief as possible; not to obfuscate.
Modelling skew dependent on vol of vol
- Thread starter MrMuppet
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And FWIW, I am not trying to be shitty to new ppl by speaking jargon. I do so to be as brief as possible; not to obfuscate.
This is what got me interested in options and make this a life long pursuit.
I had to google the word "obfuscate" too
which helped me with my English vocabulary too, in addition to Greek. Not ashamed to admit it. I don't pretend to be something I am not.
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This is what I assumed right from the start, and haven't seen anything to even hint otherwise since then. Unpacking that brevity and all its implications has been one hell of an education (one in which "googling" is rarely of much help)... and I don't know that it could be done any other way, unless you wanted to write long treatises on the whys and wherefores every time. With options, there's a relatively high bar that has to be cleared before you can get to what really matters... at a certain point, you just have to assume that your readers have all done so, because what you're talking about is complex enough on its own - and you can't preface every discussion with a recap of the entire high school curriculum.
(That being said - I really appreciate your help when I was just starting out and had simple questions. Often, even those answers were so cryptic that I had to struggle to figure them out for days, but it was all helpful.
)The "fixed" or "technical" aspects of options trading can indeed often be found by searching the web. Occasionally, they'll even be right... good luck figuring out which is which unless you already know the answer, or at least have enough general knowledge of this domain. But learning the rest, the really meaningful part, is like trying to teach someone to play the piano, or perform a complex jiujitsu move by using only words. At a certain point, you have to show how to do it - and support it with a few words that presume all the basics.
True enough - if you have any degree of success in predicting which way the frog is going to jump, no complexity is needed. But for those of us who don't have that magic touch, well... vol does offer a fair degree of mean reversion, but it takes a lot more than a binary guess to trade it well.
TBH, I'd love to be able to trade directionally with more than 50/50 probability; making money is rarely a bad thing.
But trading vol fascinates me for reasons that go far beyond just that.
That's the easiest thing in the world to predict. From the frying pan into the fire.
*drops mic*
"Trading is easy. It’s like riding a bike – except the bike is on fire, you’re on fire, everything is on fire, and you’re in hell."
-- Localized version of popular meme
An example of knowing the terminology first by googling. In one of the Destriero's post, I came across the line "The risk modality is flipped". Not knowing anything about it, I googled "risk modality" which took me to a page with lot of information on unimodal, bimodal and trimodal risks. Armed with this knowledge, I was able to come back and read the rest of the post and at that point actual learning happened. So, unless Destriero or other experts are willing to spoon feed you basic terminology, you have little choice but to google it and rightly so. Without knowing the basic terminology, you can't possibly be an options trader. So, that's my suggestion to newbies. This stuff is fascinating and complex but not rocket science. Keep learning the terminology and one day, you will be able to read and understand the posts of expert vol traders here. Also, model what you learn and gain practical knowledge and you will achieve success in options trading. I am by no means there but I am making money(not by flipping a coin and guessing direction) and improving my knowledge day by day and feel good about myself. Some guys will tell you otherwise, put you down etc like in every profession or endeavor. Some will help you but only if you put in your hard work and maybe will help you with the last mile but definitely don't spoon feed you or give you their secret sauce no matter how much you suck up. You don't need that. Just know your terminology. This journey is worth pursuing. Good luck and God bless!
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Hrmmm, I had a fun analogy similar to what you just posted, somewhere in my journal. Let me try to find it...
https://www.elitetrader.com/et/threads/and-they-have-a-plan-live.306838/page-4#post-4512459
Marmots, man.
This is the sort of thing I mean when I say "basic knowledge"; the kind of thing that can be looked up, because it's not specific to the practice of trading. Don't get me wrong - it's good, I'm glad that you got to learn something new as a result of seeing it - but... you should at least go inhale an "intro to statistics" class as a prerequisite. The real learning will start after that point.
I used to be a rocket scientist (at least that's how all of us at the Hughes Aircraft Millimeter-Wave lab used to snarkily refer to ourselves; the systems we built got installed in a number of space vehicles.) The complexity of vol trading... well, just hang around for a bit. You opinion may yet change.
Years ago there was a fantastic article in the Wall Street Journal about a small convent whose sisters took their finances into their own hands and became expert investors.
The convent used to survive by selling milk and candles, and collecting interest from deposits, but when interest rates started going down, Sister Lioba realized they needed a new strategy to keep them from going under.
She built up a portfolio of $2.1 million, from her convent office. The amazing thing is, she learned how to do it all by herself.
"I started by googling what a swap is," Sister Lioba says, referring to a derivative that allows an investor to exchange the income stream of one asset with that of another.
The 54-year-old then began studying the financial pages of German newspapers and her bank's research notes.
"I now understand every third sentence instead of every 10th when I started," she says.
Sister Lioba doesn't have a background in finance. She started her journey into paper assets by purchasing a share in one stock and teaching herself to understand the financial jargon.
https://www.wsj.com/articles/get-thee-to-a-brokerage-low-rates-turn-nuns-into-traders-1480431892
The convent used to survive by selling milk and candles, and collecting interest from deposits, but when interest rates started going down, Sister Lioba realized they needed a new strategy to keep them from going under.
She built up a portfolio of $2.1 million, from her convent office. The amazing thing is, she learned how to do it all by herself.
"I started by googling what a swap is," Sister Lioba says, referring to a derivative that allows an investor to exchange the income stream of one asset with that of another.
The 54-year-old then began studying the financial pages of German newspapers and her bank's research notes.
"I now understand every third sentence instead of every 10th when I started," she says.
Sister Lioba doesn't have a background in finance. She started her journey into paper assets by purchasing a share in one stock and teaching herself to understand the financial jargon.
https://www.wsj.com/articles/get-thee-to-a-brokerage-low-rates-turn-nuns-into-traders-1480431892