>> "By the way, anyone calling themselves a quant should know this." It's not an acusation, it's an observation. Most option traders here haven't studied the theory to the level, like ajensen put it, of Shreve's "Stochastic Calculus for Finance". And if they make money regardless, perhaps it's not necessary. But quants need to go over Shreve and beyond and if they do, they should have an intuitive grasp over things such as gambling ("physical measure"), arbitrage ("risk neutral measure") or how HFT applies to options. But then again, traders were making money with options long before quant theory was developed. Question is, can they still do today, now that quants and big finance have taken over?
Man, I've done (and published) custom option pricing models by applying Ito, I wouldn't have mentioned it if I wouldn't have a good grasp of it.
I once worked with this guy on a software team who had a PhD is some technical field who had great knowledge about all things computer science but could not complete a task to save his life. It was one of those situations where we gave him tasks where he could cause the least amount of damage. He was eventually fired because he accidentally deleted a bunch of production data. The point being is you have to be able to close. If you can't close (make money), trading knowledge is of little value unless you want to go the educator/vendor route. I will close with this very motivational speech.
Link says content is prohibited in my country due to copyright reasons. But searching on google for Glenary Glenn Ross, got this youtube link that works fine and is likely what you posted: Interesting scene, seems like a classic but I missed it somehow. However, a correlation was made when I watched the scene... I've seen it somewere previously, but where? Eventually I remembered: I watch random SNL shows on youtube out of boredom and one I saw recently and goes with the season coze it features Chrismas and elves, I thought it was mildly funny. Had no idea it's the scene from this movie but turns out it's exactly that:
Most of the "quant" talks goes down in the PM's. ET bridges the gap between NP and stock twits or dare I say wallstreetbets. This site has/had a ton of NP people on it. If you want to ask a quant question go to NP or message them here personally(that being said most of my quant questions here have been answered).I think @destriero persona sums up ET perfectly, entertaining and educational .
Just a quick question on the zero sum game. Futures and options are definitely a zero sum game, excluding commissions. But the stock market, is it really a zero sum game when it pays dividends? From my understanding, with dividends, it would be a positive sum game (excluding commissions).
Stocks aren't zero sum, a seller can sell at profit, that buyer too can make a profit after selling and so on.
Being zero-sum has nothing to do with whether a trade is of an option, a stock, a future contract, or a box of CrackerJacks. It has nothing to do with a single trade versus a series of trades per se, or with dividends or coupons or anything over a time outside the immediate trade, or whether any sort of statistical edge is present. As an event, "zero-sum" has only to do with whether the game ("trade") itself was additive to the (summed) players, or not: if one players gets precisely what another player loses, the SUM is zero. If one player gets $1.00, but the other player only *loses* 80¢, then that *game* (or whatever it is) sums to +20¢. Similarly, if one player gets $1.00, and the other player loses $1.20 ("Ouch!"), that is a *negative*-sum game. And what of a negative-summed game where *both* players lose value? UGH. That's it. That's the only calculus at work. But from this simple set-up we get terms like Win-Lose, Win-Win, Lose-Lose..... and if you wish to look over a *series* of such games to a broader, *meta*-game, you can pose a financial market where the succession of trades bids the next instance's prices up, raising all the holders' long positions (whether stocks or options or bonds or....cows), or eviscerating the short positions, to Win-Win or Lose-Lose tales to tell, the next time someone asks. So, for an individual cake, where you can only eat what I don't -- that's zero-sum. If the cake *gets*bigger* by the very act of dividing it, that's positive-sum. And if the cake is *diminished* by the very act of cutting it (like, selling slices of the Mona Lisa), that's a negative-sum 'game.'