Small research team for trading an exotic option product

This topic reminds me of all those amateur quantum physicists on reddit who claim to have equations that will revolutionize humanity.

Oh the naivety of youth.
 
Aquarians said:
Small research team for trading an exotic option product

Could make some billions per year, btw.

So I'm freaking all by my self now trying to solve some excruciatingly complicated equations which means there's noone by myself to ask wtf is wrong when something is wrong, and it's definitely wrong.

The path I take is:
- Derive the f**in equation. Write a test for it fingers crossed but obviously it fails.
- Try another 2 versions of deriving the same f**in equation withing the same day. Tests obviously still fail AND now I got 3 completely different results.
- Overcome my ADHD till next day when I'll derive another 5 versions of the equations and now end with 5 results. If you think this is futile, you don't recognize progress.
- Do whatever it takes and wait up to a week. Compare the results after a week with the ADHD ones and be astonished on how much you can accomplish by essentially doing nothing but waiting for the neuronal excitement to settle down.
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Never go full retard.
 
never2old said:
I'm a product of time, not exotic, I just know what the f**k I'm doing in the least most complicated way that I know how.



kindly explain what are "derivatives of derivatives"?
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Examples would include swaptions, options on futures, CDOs, CDSs, etc. Since he claims it isn't a new product he's probably attempting to develop a new model around one of these.

If the exotics he plans on trading are traded OTC he will probably need an ISDA to describe the transaction. No one will even look at him without being significantly capitalized so I hope he's been diligently saving his dollars.
 
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gaussian said:
Examples would include swaptions, options on futures, CDOs, CDSs, etc. Since he claims it isn't a new product he's probably attempting to develop a new model around one of these.

If the exotics he plans on trading are traded OTC he will probably need an ISDA to describe the transaction. No one will even look at him without being significantly capitalized so I hope he's been diligently saving his dollars.
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I don't know of any exotic options that don't trade exclusively OTC except the Cantor Exchange and Nadex binaries and the two CBOE binaries that may or may not have ever really existed? Am I missing something or are VIX FOPs considered "exotic"?
 
Sig said:
I don't know of any exotic options that don't trade exclusively OTC except the Cantor Exchange and Nadex binaries and the two CBOE binaries that may or may not have ever really existed? Am I missing something or are VIX FOPs considered "exotic"?
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I'm not aware either. I just left some wiggle room in case some nerd comes in and tells me XYZ broker offers barriers or something. I mentioned FOPs because they are derivatives of derivatives not because they are exotic.

Kind of an aside but I don't know why brokers don't offer more "simple" exotics like a barrier or asian since they can be priced easily using a monte carlo algorithm. Maybe there just isn't enough liquidity.
 
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There are no listed exotics. No touches, no digitals, no lookbacks, no up/down and outs, no compound options. Again, he's retarded.
 
gaussian said:
I'm not aware either. I just left some wiggle room in case some nerd comes in and tells me XYZ broker offers barriers or something. I mentioned FOPs because they are derivatives of derivatives not because they are exotic.

Kind of an aside but I don't know why brokers don't offer more "simple" exotics like a barrier or asian since they can be priced easily using a monte carlo algorithm. Maybe there just isn't enough liquidity.
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I'll be the nerd because I seem to remember now that ICE has a couple Asian options on I think electricity or oil, maybe both. Can't imagine there would be much volume there though per the OP.
I'm not sure why no-one tries it either, seems like any easy way to differentiate yourself. IMHO the whole exchange model is broken in that they just randomly throw products out without doing any work to ensure they can be widely traded or that they'll have any MMs. Given that, any other exotics would probably fail because they're "exotic". But if an exchange emerged that did the work to ensure a successful launch it might work. I've got hopes for the Small Exchange in that regard.
 
Sig said:
Given that, any other exotics would probably fail because they're "exotic". But if an exchange emerged that did the work to ensure a successful launch it might work. I've got hopes for the Small Exchange in that regard.
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Well, to be fair, put options were considered exotic in the 70s and 80s. From the famous book Dynamic Hedging exotic really is in the eye of the beholder.
 
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