3 ms·

Options trading can be lucrative when people use the right tool. But ironically in most cases they don't turning it into a lottery..

srean 5y ago
Hedgemaster, all of your comments have been marked dead. As a result others cannot respond to your comments, most will not see them either, unless they specifically set "show dead comments" to True. I dont think there is anything objectionable in your comments. Do email hn@ycombinator.com if this does not get resolved. Regarding your comment on my query, it really doesnt answer my question, but that does not mean that your comments should be marked dead.
- Hedgemaster 5y ago
  Hi, thanks for the heads up, will resolve that issue. You meant that the stock prices can be predicted from the options patterns right? Please correct me if I'm wrong.
  - srean 5y ago
    That's the general direction, but had a little more than that in mind. In prediction markets people bet on a future outcome and then these bets are traded in a market. Turns out that the price that they trade at converge to the perceived (and often the underlying) probabilities of those outcomes. Options market has a similar structure, people bet on the future price of a stock. What I am interested in if there is any study that shows whether the prices on these outcomes track their probabilities.
    - Hedgemaster 5y ago
      Very good point. Since you made a comparison to prediction markets, let's focus on earnings release dates. Earnings release is an event that's known to happen on a certain date in the future, just like some political election (only few companies don't disclose their future earnings dates in advance, Berkshire Hathaway is amongst them). There are plenty of studies researching option prices and the stock moves post earnings release, this is just one of them: https://www.stern.nyu.edu/sites/default/files/assets/documents/NYU%20conference%20Johannes%20final.pdf https://www.stern.nyu.edu/sites/default/files/assets/documen... The conclusion of that particular study is that option prices prior to the earnings release date are helpful for learning about the future stock price volatility.
      - srean 5y ago
        Thanks for pointing me to the study.

srean 5y ago

Hedgemaster, all of your comments have been marked dead. As a result others cannot respond to your comments, most will not see them either, unless they specifically set "show dead comments" to True. I dont think there is anything objectionable in your comments. Do email hn@ycombinator.com if this does not get resolved. Regarding your comment on my query, it really doesnt answer my question, but that does not mean that your comments should be marked dead.

Hedgemaster 5y ago
Hi, thanks for the heads up, will resolve that issue. You meant that the stock prices can be predicted from the options patterns right? Please correct me if I'm wrong.
- srean 5y ago
  That's the general direction, but had a little more than that in mind. In prediction markets people bet on a future outcome and then these bets are traded in a market. Turns out that the price that they trade at converge to the perceived (and often the underlying) probabilities of those outcomes. Options market has a similar structure, people bet on the future price of a stock. What I am interested in if there is any study that shows whether the prices on these outcomes track their probabilities.
  - Hedgemaster 5y ago
    Very good point. Since you made a comparison to prediction markets, let's focus on earnings release dates. Earnings release is an event that's known to happen on a certain date in the future, just like some political election (only few companies don't disclose their future earnings dates in advance, Berkshire Hathaway is amongst them). There are plenty of studies researching option prices and the stock moves post earnings release, this is just one of them: https://www.stern.nyu.edu/sites/default/files/assets/documents/NYU%20conference%20Johannes%20final.pdf https://www.stern.nyu.edu/sites/default/files/assets/documen... The conclusion of that particular study is that option prices prior to the earnings release date are helpful for learning about the future stock price volatility.
    - srean 5y ago
      Thanks for pointing me to the study.