The Evolution of Optionality

[Philo Judeaus]

From warrants, to OTC options, to vanillas, to exotics and beyond. As time goes on the markets grow and expand.

Second-generation vol products like vol-swaps, variance-swaps, gamma swaps. One has to think, what is in store for the future of the vol markets? The 3rd generation products.

Power options, Log contracts, fade-in option, ratchet options, reset-strike options, barriers, double-barrier options, time-switch options, mirror options, binary options, Asian options, any many many more... I'm curious how this trend moves forward.

 

[Metamega]

Blockchain options. Where options are randomly mined and created lol.

Interesting to see what financial enigeneers come up with next.

 

[Philo Judeaus]

Will our children manage their portfolios using 7th-order Greeks? Lol.

 

[BlueWaterSailor]

From warrants, to OTC options, to vanillas, to exotics and beyond. As time goes on the markets grow and expand.

Second-generation vol products like vol-swaps, variance-swaps, gamma swaps. One has to think, what is in store for the future of the vol markets? The 3rd generation products.

Power options, Log contracts, fade-in option, ratchet options, reset-strike options, barriers, double-barrier options, time-switch options, mirror options, binary options, Asian options, any many many more... I'm curious how this trend moves forward.

You're using "trend" in a very odd way.

The fact that the Space Shuttle exists hasn't decreased the use of bicycles. Neither has the use of hammers and nails gone down significantly since the invention of dental cement.

The things you're talking about are specialist tools, used almost exclusively by a tiny fraction of all investors. They don't affect what "the man in the street" uses in the least - because the latter is both completely uninterested in learning anything that complex and because he would have no useful way to apply it if he did.

Our children will use whatever tools exist at that time, at an intersection of maximum utility and personal interest in finance. If n-th order greeks provide an effective return on their investments and can be leveraged via instruments that don't require a disproportionate investment in time and effort, then that's what will get used. And the really smart folks - the ones who combine the necessary analytical, financial, and business skills to put those instruments together - will make the real money behind the scenes. As it always has been, so it shall always remain.