stocks vs options
- Thread starter dealmaker
- Start date
what do you mean convexity? How would it benefit trader?
Imagine a return graph where X is the stock price and Y is the profits. Trading the outrights will have a graph that is a linear function. Long options (long volatility) strategies will have a graph that is an exponential function.
We see that slope of that linear function is a constant multiple.
However, the variable rate of change of that exponential function shows convexity.
Last edited:
Fluctuations in options pricing, not always directly related (or not linearly related) to the stock price.
I like making a 1000% return in a week. I don't like making a 10% return in a year.
but also...
I don't like losing 100% in a week. I do like having all my money at the end of the year.
Stocks are boring. Options are amazing.
The secret is out.
So wayne is complaining ?
He is extolling the use of options.