Friends, I’ve been saving this one for the start of the school year. For those who start after Labor Day like it should be (my kids have been in school for nearly a month already). I took my boys to Alpha School in Austin during Spring Break this year. School during Spring Break, dad?! Yea, … Continue reading you need motivation to learn the value of pain →| Party at the Moontower
I got long IBIT (BTC etf) when my April calls expired ITM. IBIT continued rallying, I was happy to stay long. However, the vol screened cheap. I decided to “replace” — I sold my long shares and bought calls. Deciding which calls to buy was tricky. So tricky it inspired this post. The heart of … Continue reading calendar spreads through the eyes of a vol trader→ The post calendar spreads through the eyes of a vol trader appeared first on Party at the Moontower.| Party at the Moontower
Last week in Adam Smith’s Backdoor, I wrote: The promise of capitalism is its swarm intelligence that maximizes benefit under the curve for the plurality of its members, as opposed to the narrow interests of a corruptible centralized authority. If the “plurality of its members” see the gains as gilded with appeals to capitalism feeling like they are in service … Continue reading capitalism is a temporary condition →| Party at the Moontower
Appreciation thread I wrote late Thursday nite when I noticed sub count crossed 20k: You people are sick. And I appreciate you for it. Some history on this letter and joining Twitter… I started lurking on Twitter in mid 2010s bc I was trying to learn about investing. Despite being a trader investing was foreign to … Continue reading how the moontower letter started→ The post how the moontower letter started appeared first on Party at the Moontower.| Party at the Moontower
Friends, A few links before finance stuff today: 📖RTFM I never heard this acronynm before — “read the f’ing manual”. I came across it in a link embedded in Byrne Hobart letter referencing engineering video game Shenzen I/O. Wikipedia says: RTFM is an initialism and internet slang for the expression “read the fucking manual”, typically used to reply … Continue reading Moontower #281→ The post Moontower #281 appeared first on Party at the Moontower.| Party at the Moontower
Notable short seller Andrew Left’s firm Citron Research gave his “all roads lead to $40” pronouncement on X this week regarding PLTR 2.90%↑ : Created with TradingView Give Palantir the same $100 billion valuation that Databricks just earned. Where does that put the stock? $40. The exact same math we saw when comparing Palantir to OpenAI. Tyler pinged me before the stock dove … Continue reading Betting on PLTR to $40 →| Party at the Moontower
This summer we started a family tradition — Friday night pizza and movies. Each week we rotate who picks the movie and the pizza place. A few weeks ago, we did a Matthew Broderick double feature. We started with Ferris Bueller’s Day Off. Turns out I don’t remember seeing this movie before. I just thought I … Continue reading Adam Smith’s Backdoor →| Party at the Moontower
In the discord, I was asked a good question that’s lingered for me. I’ll share the fuller response here but first the question: When you are talking about the ‘mantra’ to reset discipline – “I am buying/selling A for $X because B is $Y bid/offered” – are you thinking in terms of actually putting on … Continue reading timing the market→ The post timing the market appeared first on Party at the Moontower.| Party at the Moontower
We had company over a few days ago. How’s that for a throwback term to when your cable remote had a wire — “company” as a term for guests. So we’ve got some friends and family hanging out and the topic of jealousy comes up. Not in the adulterous context so much as the general … Continue reading hey jealousy→ The post hey jealousy appeared first on Party at the Moontower.| Party at the Moontower
Friends, We had company over a few days ago. How’s that for a throwback term to when your cable remote had a wire — “company” as a term for guests. So we’ve got some friends and family hanging out and the topic of jealousy comes up. Not in the adulterous context so much as the … Continue reading Moontower #280→ The post Moontower #280 appeared first on Party at the Moontower.| Party at the Moontower
A conversation with Claude Opus 4 KA: What is the compact formula for daily option pl that relates realized variance – implied variance? The compact formula for daily option P&L that relates realized variance to implied variance is: Daily P&L ≈ ½ × Vega × (σ²_realized – σ²_implied) × Δt Where: Vega = option’s vega … Continue reading Sparring with AI: Theoretical options p/l vs discrete hedging →| Party at the Moontower
In the discord, I was asked a good question that’s lingered for me. I’ll share the fuller response here but first the question:| Party at the Moontower
Link: http://investorfieldguide.com/livermore/ About Jesse: Jesse Livermore is a pseudonym for the financial blogger behind philosophicaleconomics.com. 3 Methods for Drawing Meaningful Inference Intuition Benefit: Low cost and readily accessible Costs Downside is noisy especially in ‘wicked’ learning environments Not transparent Traders are high in ‘cognitive reflection’ and stronger intuition Careful deliberation is a hallmark. Studies have … Continue reading Notes from Invest Like...| Party at the Moontower
The setup You invest in 2 coins every week for the next 1000 weeks (19.2 yrs) These coins pay a return each week Every 4 weeks, you rebalance wealth equally between the 2 coins Coins have an expected edge of 10% Simulation is run 10,000x Assume no transaction costs Individual Coin Payouts Coin Win Payout … Continue reading Lesson from coin flip investing →| Party at the Moontower
Options are derivatives. They derive their value from how the underlying actually moves as well as the market’s perception of how much they will move. So there’s a realized and implied component to the value of an option. When people start using options they are usually attracted to them as an inherently levered way to … Continue reading Why Option Traders Focus on Vega →| Party at the Moontower
Unless you are a bond or derivatives trader, the term “convexity” usually just makes you want to say “beat it, nerd”. As if to frustrate us further it has many aliases: “curvature”, “non-linearity”, “gamma”. It turns out, for such a fancy word “convexity” is quite approachable. In this post, we will learn: what it looks … Continue reading Where Does Convexity Come From? →| Party at the Moontower
I was chatting with a quant friend who was bouncing an options idea off me. In the course of the conversation, he was surprised I did not assume the .50 delta option was the ATM (at-the-money) option. My friend is much smarter than me on finance stuff but options aren’t his native professional language. So … Continue reading Lessons From The .50 Delta Option →| Party at the Moontower
Friends, A grab bag of practical finance nerd stuff today. Behind the paywall, subs get an exclusive complimentary pass to the 3-hour commodity trading seminar I did for QuantInsider. It’s especially useful for equity folks looking over the fence (especially relevant these days with oil in the news.) 🧵A thread on COIN vol since the … Continue reading Netting risk, “The Hopeless”, John Arnold and more →| Party at the Moontower
A reminder in the spirit of being attuned to seemingly far-fetched risks: If short selling were restricted in any way, the value of puts relative to calls on the same strike increases in a put-call parity framework. Another way to say this is being long stock is more valuable since only long sellers can sell. … Continue reading If they ban short-selling derivatives become the underlying →| Party at the Moontower
This is an old post by Visakan (one of the best follows on the internet imho) that I come back to when I need a spine alignment. In my view it’s about risk, reward, and staying intact. it’s just math (7 min read) In my version of reading it to you, I will emphasize what lands for me: … Continue reading the “math” of success →| Party at the Moontower
I threw a $500,000 purchase price and a 7% 30-year fixed rate into a mortgage calculator. That’s a payment of $3,327. Earlier this year, if you secured a mortgage at 3%, you could have bought a home for $790,000 and had the same payment. Since housing hasn’t dropped 36% this year homes have gotten much … Continue reading Staring Out The Window →| Party at the Moontower
Just based on my local observations, it still feels like the bid-ask on residential real estate is wide. I wrote Staring Out The Window in October 2022: Musing #1: Bid-Ask Widening A year ago the people that paid ridiculous prices for RE were market orders. “Fill me at any price”. Many of them were immediately in the … Continue reading why home prices could fall with mortgage rates →| Party at the Moontower
In this post, we will learn what it means for a position to be convex with respect to volatility. In preparation for this post, you may want a refresher. Vega is the sensitivity of a P/L to changes in volatility. This is the exposure volatility traders are taking active views on. It requires tremendous attention … Continue reading Finding Vol Convexity →| Party at the Moontower
Humans are not good bettors. It takes effort both in study and practice to become more proficient. But like anything hard, most people won’t persevere. Devoting some cycles to improve will arm you with a rare arrow in your quiver as you go through life. Skilled betting demands 2 pivotal actions: Identifying attractive propositions This can … Continue reading Bet Sizing Is Not Intuitive →| Party at the Moontower
I’ll start this week with an abstract idea I’ve been sitting on in my notes for years. And then I’ll take you through the concrete idea that gave it life (and a reason to publish it). The Abstraction Sitting In My Notes Communism doesn’t scale but it can work in small settings where the bonds and … Continue reading I Swear It’s Not Old School →| Party at the Moontower
