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You should read some Nassim Taleb to understand why not hedging those 800 options is a sure way to eventually go bankrupt. Just imagine this discussion one mon
by hfjtktkf 6y ago
You should read some Nassim Taleb to understand why not hedging those 800 options is a sure way to eventually go bankrupt.
Just imagine this discussion one month ago - ha ha, there is no way in hell GameStop will trade in 4 days at 500 when now it's 20.
Of course, if you only care about this years bonuses, ....
- legitster 6y agoHe quotes Taleb in the footnotes here: > To be clear, market makers are not required to do what the model tells them, and the “common sense” answer is perhaps ambiguous. Arguably the fact that someone bought thousands of these options means that the probability of them paying off is a bit higher than the model suggests. If you are selling way-way-way-out-of-the-money options, you probably should not be blindly following your model. Here is a story [https://twitter.com/matt_levine/status/555913245589250048 https://twitter.com/matt_levine/status/555913245589250048] I like from Nassim Nicholas Taleb.