Karen the Supertrader - TastyTrade Hybrid Experiment

Discussion in 'Journals' started by Sweet Bobby, May 18, 2016.

  1. atrp2biz

    atrp2biz

    That's where appropriate position sizing comes into play.

    Are you saying you are constantly short delta and long gamma.
     
    #531     Aug 25, 2016
  2. Maverick74

    Maverick74

    No, I trade where there is an edge. I don't blindly sell premium for the positive neurological feedback loop it provides.
     
    #532     Aug 25, 2016
    i960 likes this.
  3. Maverick74

    Maverick74

    I'm not referring to "Wall Street".
     
    #533     Aug 25, 2016
  4. atrp2biz

    atrp2biz

    I'm not particularly good at timing, but over the long-term, IV > HV.
     
    #534     Aug 25, 2016
  5. Maverick74

    Maverick74

    You have the formula wrong. IV should NOT equal HV. IV = HV + risk premium. IV HAS to be higher to offset the risk premia.
     
    #535     Aug 25, 2016
  6. atrp2biz

    atrp2biz

    Not instantaneously.

    HV contains realized risk. IV contains implied future risk. What other risk premium is there? Please educate me (not meant to be sarcastic).
     
    #536     Aug 25, 2016
  7. Maverick74

    Maverick74

    Yes, IV contains the implied "forecast" for risk in the future. And that forecast adds an "extra" risk premium to compensate for the uncertainty. It's not just "higher" for the kiddies to splash around with in the pool. You act like that premium is there for the taking. It's there because it HAS to be there. Hence why there is a steep put skew in the SPX vs a negative call skew.
     
    #537     Aug 25, 2016
    JackRab likes this.
  8. atrp2biz

    atrp2biz

    Skew is there because of the implied differences in velocities of gamma between the two directions--not because of general uncertainty. I'm not sold on the notion that the extra risk premium has to be there.
     
    #538     Aug 25, 2016
  9. i960

    i960

    I think the point is that "extra" risk premium is there because there is actually real risk present. Always remember, no free money, ever.
     
    #539     Aug 25, 2016
  10. Maverick74

    Maverick74

    I don't need to sell it to you. It's widely disseminated information in every micro-economics textbook in the country. Or you can believe it's just there for you to take and spend how you please. At the end of the day, people believe what they want to believe to fulfill whatever truth they want to manufacture.
     
    #540     Aug 25, 2016