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//Good News on the Data Front //

Don FishbackOptions, Stock MarketLeave a Comment

Long gone are the days when the exchanges made the bulk of their money from trading. These days, the exchanges make the bulk of their profits from data. And my guess is that many of you have no idea how expensive data is. Yes, you get data from your broker. But it’s probably price information, maybe volume, and some publicly available … Read More

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//Crowding is Back //

Don FishbackGeneral Investing, Stock Market, Uncategorized, VolatilityLeave a Comment

I recently recorded a video about market fragility and how Dispersion Trading can be an elixir to markets that experience explosive volatility out of nowhere. But what causes that explosive volatility in the first place? The answer is low liquidity. Rising rates have a lot to do with it. But another factor is “crowding”. And there are two developments that … Read More

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//Something Missing? //

Don FishbackOptions, Probability, Uncategorized, VolatilityLeave a Comment

If you’re into probability — that would be anyone who has ODDS in their name like I do — this is a thought-provoking chart from a Bloomberg article this morning. I’ve created charts similar to this in the past using my trusty spreadsheets. What they’ve done that is different from the normal bell curve is that instead of using the … Read More

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//Outcome Bias //

Don FishbackGeneral Investing, ProbabilityLeave a Comment

I want everyone to read this article by Joe Wiggins. As an investing instructor for over 20 years, I’ve been uniquely positioned to witness the effect of outcome bias. In the middle of the dot-com bubble, I saw my Dad second mortgage his house to get money to trade. He was always asking me to tell him which stock is … Read More

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//Volatility of Volatility //

Don FishbackOptions, VolatilityLeave a Comment

Here’s an interesting post about volatility of volatility. Volatility of Volatility as an Edge I’ve done some research myself on the subject and can confirm the results, which appear to be isolated to the performance of calls. That is, call options on stocks where the historical volatility of the one-month at-the-money implied volatility is low (1 in the chart) perform … Read More

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//Underdogs Win //

Don FishbackProbability, Stock MarketLeave a Comment

With the Super Bowl being the largest betting event in the US, this seems appropriate. You’ll love having these hated stocks in your portfolio Trading is like betting against the spread. When you bet on the favorite, they don’t need to just win, they need to cover the spread. If they don’t, then the bet on the underdog pays. Doesn’t … Read More

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//A Panoply of Articles About New Options Trader Finding Out What “American Style” Means //

Don FishbackOptionsLeave a Comment

I’m old enough to remember the TV show “Love American Style“. But that’s not the American style I’m talking about. I’m referencing the exercise characteristics of options. American style options can be exercised at any time. European style options, on the other hand, can only be exercised at expiration. In most instances, it’s not an issue. But when options go … Read More