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you'd be surprised how inefficient the markets actually are in practice. for example, while i was trading indian options, implied vols were consistently higher

by _nceb 4mo ago

you'd be surprised how inefficient the markets actually are in practice. for example, while i was trading indian options, implied vols were consistently higher than realised vol for the very simple fact that retail loved to buy options and there wasn't enough capital among the risk-tolerant market makers to absorb all that flow. so a sufficiently informed retail trader could profit by simply selling options in those overpriced names. it really is similar to the argument for why startups exist at all -- if the opportunity was real, why hasn't big tech already absorbed it? in practice, seems like it's either because the market is just so large that everyone can have a slice of the pie, or the pie is so small that the titans just cbs (e.g. cross-exchange arbitrage in crypto was a lucrative opportunity for a while -- an obvious and easily engineerable strategy).

z2 4mo ago
Will the coming wave of AI-assisted amateur traders make markets more efficient especially as they are more motivated to seek value in less liquid places, or will it be like sending children with candy into the playground that the bullies can easily steal? Or is it both? Asking for a friend.
- epsteingpt 4mo ago
  Your data input into ChatGPT and Claude aren't private by default, definitely not in aggregate. Who do you think the buyer of retail sentiment and ChatGPT queries are?
epsteingpt 4mo ago
bit of a dodge and lol - the Indian options debacle. not saying you can't find inefficient markets globally. my guess is Pokemon cards probably have some price inefficiencies somewhere too. they're just harder to exploit. My understanding was the main users of your bots will focus on U.S. equity and futures markets. Either way - obtaining the kind and quality of data to find edge (even the Indian Markets one) is likely beyond the infrastructure of most people. do you agree? selling options in overpriced names, for example, requires careful risk and sizing calibration or you could get wiped out before your edge shows up. Or the regime could change, etc. etc. Either way my guess is most people using this service will be looking to trade things they can like US equities (how many HN people can legit trade Indian Options?).

by _nceb 4mo ago

z2 4mo ago

Will the coming wave of AI-assisted amateur traders make markets more efficient especially as they are more motivated to seek value in less liquid places, or will it be like sending children with candy into the playground that the bullies can easily steal? Or is it both? Asking for a friend.

epsteingpt 4mo ago
Your data input into ChatGPT and Claude aren't private by default, definitely not in aggregate. Who do you think the buyer of retail sentiment and ChatGPT queries are?

epsteingpt 4mo ago

bit of a dodge and lol - the Indian options debacle. not saying you can't find inefficient markets globally. my guess is Pokemon cards probably have some price inefficiencies somewhere too. they're just harder to exploit. My understanding was the main users of your bots will focus on U.S. equity and futures markets. Either way - obtaining the kind and quality of data to find edge (even the Indian Markets one) is likely beyond the infrastructure of most people. do you agree? selling options in overpriced names, for example, requires careful risk and sizing calibration or you could get wiped out before your edge shows up. Or the regime could change, etc. etc. Either way my guess is most people using this service will be looking to trade things they can like US equities (how many HN people can legit trade Indian Options?).