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Let me rephrase in terminology you like: If your investment thesis based on all the information you have is that the fall of Nvidia will likely be as rapid as i

Let me rephrase in terminology you like: If your investment thesis based on all the information you have is that the fall of Nvidia will likely be as rapid as its rise, options are rarely priced for that possibility, so you may find the price of an option attractive (in my words, the possibility of that is not priced in). The term "priced in" doesn't just apply to information - it applies to any sort of investment thesis. The common investment theses (based on a conventional understanding of public information) are usually priced in. The uncommon investment theses are not, but that doesn't mean that they are necessarily wrong (this one probably is, though). There is certainly no reason to believe that your ideas are better than anyone else's, even if you are a sophisticated hedge fund guy, but the way hedge fund people make money is basically by having contrarian ideas, which aren't priced into securities prices, and being right. Trading that (perceived) mispricing is how a hedge fund generates uncorrelated alpha.

RussianCow 3y ago
That makes sense, but I guess what I'm saying is that a rapid fall is priced in, in the sense that the market doesn't find it to be very likely. So it's only mispriced if you think the odds of that happening are higher than what the market believes as a whole, and again, it's unlikely (but not impossible) that you have good reasons for believing that as a retail investor. With that said, I just want to make clear that I don't believe in the random walk theory, and I believe it's perfectly possible to be contrarian and be correct if you have information and/or insight that most other investors don't. I just don't think that the average person on HN (myself included) fits that bill, and I wouldn't hang your life savings on a whim like this unless you're comfortable treating it as what it is: gambling. :)

RussianCow 3y ago

That makes sense, but I guess what I'm saying is that a rapid fall is priced in, in the sense that the market doesn't find it to be very likely. So it's only mispriced if you think the odds of that happening are higher than what the market believes as a whole, and again, it's unlikely (but not impossible) that you have good reasons for believing that as a retail investor. With that said, I just want to make clear that I don't believe in the random walk theory, and I believe it's perfectly possible to be contrarian and be correct if you have information and/or insight that most other investors don't. I just don't think that the average person on HN (myself included) fits that bill, and I wouldn't hang your life savings on a whim like this unless you're comfortable treating it as what it is: gambling. :)