GAMBLING ON THE INEFFICIENCY OF THE OPTION FORMULA

I'm not sure it's even his consciousness, it's more like a random meme generator fed by random passages from Malcolm Gladwell books.

 

Indeed... OP's frequent references to the Dunning-Kruger Effect in this context are, how to put it, meta-ironic, maybe?

 

Yes.

I dont think you can apply it for profitable trading , I don't believe most traders can time the markets , based on their information beliefs systems .

If you were to read option volatility skews based on supply /demand of puts calls , it is not a good guide to know the market or future price behaviour.
The volatility skew are caused by directional bets or standard systematic orders or just random ?How can you tell?

Technical anylysis on the higher time frame can give you a better idea , if backed by fundamentals .The instrument volatility , support , resistance and trend can give qualitative relevant information.Only a very small proportion of trades are based on options , there is no study to prove volatility skew can give an edge.At least I am prepared to learn , if there is

Common sense tells me , it would be irrelevant.

"Trading and investing are very simple processes and we human beings try to make it into something much more complex.Unfortunately, we have a lot of biases that enter into trading decisions.These can be volatility skews.

https://www.elitetrader.com/et/thre...al-and-possible-for-succesful-trading.304404/

K I S S

 

Many of his posts make no sense to me but some do so I just filter them out.

 

Sure, that's fine... This here thread just made me chuckle, is all.

 

The point flew well over your head I think. Take a look at when skew first showed up and why.

 

Oh ok t/u

 

These posts remind me of a movie about a cretin illiterate gardner who somehow gets to be in the entourage of the vicepresident of the United States and noone is aware of his 'qualifications'. But he's one of the entourage so surely there must be something with him. So during conversations he's mostly quiet and when he speaks, he puts out some gibberish with botanical references. And everyone is blown away at the deep wisdom which obviously noone is able to comprehend.

 

To have an edge, do an abscission of volatility's callose while taking into consideration the market inefficiency of accounting for the zygomorphic skew on the tails.

I got more such tips if you want.

 

There are inefficiency in the options pricing.

You will not able to capture this, too many big firms are targeting this free money. With your 5K retail trader account (or even worst the spread betting account), there is no way you can compete with them to capture this free money.

Also, the market maker/specialist are getting smarter this day and have a way to mitigate the risk for options pricing inefficiency. Go and figure this out yourself