Home Economics

Even when it comes to a house, active investors don’t have to be passive Sitting down? Good. At home? Even better. Because beneath you lies your biggest single investment. Or should I say so-called investment? That would be your house. That’s where most people place most of the money they’ve earned. For others—those with significant … Continued

When Models Fail

Models aren’t just for pricing options—they can (sometimes) predict the spread and mortality of a pandemic. Just keep expectations in check. Models, by definition, are not precise and, inevitably, the people who rely on them seem less than perfect. Here’s a fact: The people who attack the models predicting the number of infections and deaths … Continued

Your Thinking Must be Skewed

 It’s said with good authority that volatility “skew” was born Oct. 19, 1987, when the magnitude of the market drop on Black Monday indicated all those previously out-of-the-money (OTM) puts that were now in-the-money had been much too inexpensive. Before volatility skew entered the world, the theoretical value of options was determined by a single … Continued

Testing Vaccines and Trading Strategies

Yes, active investment strategy has a lot in common with testing vaccines As though real-life were imitating a medical drama, COVID-19 is providing a glimpse into vaccine development. Testing a vaccine is perhaps the most important step in the process of making it available to the public. First, researchers don’t want to make someone sick … Continued

Forget the Darknet

The markets can provide the excitement active investors want—without risk of prison time Ah, the so-called darknet. The Wild West of the internet. Where anonymity—or as close as anyone outside DARPA (Defense Advanced Research Projects Agency) is going to get—provides a warm blanket while users surf unhindered by the blue-nosed algorithms of Google, Facebook, Apple, … Continued

Day Trading in China

Even in a communist country, people like to make money The Chinese began gambling at least 4,000 years ago, and they’ve made it a tradition ever since. It’s the reason that Macau has some of the busiest casinos in the world. Some might find a penchant for games of chance incongruous with a planned economy … Continued

Options Trading: An Antidote for Division

Smart options traders know that life—and markets—aren’t zero-sum games Trading can bring the country back together. That’s right. Trading. Anyone can see all the anger out there. Over politics, culture, religion. Most “leaders” seem powerless to overcome it, and some even seem to revel in it. But to understand how trading can ease this nation’s—and … Continued

The Future of Futures

As futures trading evolves, contracts are shrinking; now, a new exchange promises to get even smaller Becoming a modern investor requires buying shares of stock as the first, fundamental step. That could mean buying 100 shares of Apple (AAPL) or investing $1,000 in a mutual fund. But that simplicity belies the enormous legal and regulatory … Continued

Volatility: Trading’s Best Crystal Ball

Volatility provides a clue about what the future may hold for a stock Long-term stock trader?  Short-term options trader? Medium-term money machine? No matter how an investor plans to extract profits from the markets, it pays to know how high or low a stock, index or exchange-traded fund (ETF) might go in the future. Heck, … Continued

Auto Industry Autopsy

If the average age of a car on the road increases 15% every 10 years, half a century from now the average car would be 23 years old and might have more than 300,000 miles on the odometer—if any cars are still left. In the ’60s and ’70s, motorists could only dream of a car … Continued