Afraid to Trade Options

I had interacted today with many option traders who apparently know nothing about the concept of Volatility. I shiver at the description of their trading strategy confined to directional option bets. Disregard or lack of understanding for Time Decay or Implied Volatility.

1. Interesting post on Options


2. What are the parameters to look for in deciding whether option is attractively priced ?


3. Are we aware that Option is a non linear convex instrument unlike stocks or Futures ?

Simplifying Your Trading Framework

Active Traders internalize market lessons through exposure to patterns, pain of market losses, learning forced by the market.

1. There are many stages in the development and evolution of a trader.


2. I believe it is always difficult to predict the market as it appears mostly random. But a trader with clarity of his approach and trading framework is not surprised by the market moves . This progressive elimination of being surprised by the market makes him resistant to being fooled by randomness.


3. The trader should be able to explain his approach on the back of a visiting card in three steps.


4. The trader can reduce most of the trades to three approaches . Thus the concepts of trading are superior and of lasting edge than a single trade idea.


5. I would admit most of the trading experience and knowledge can be distilled in this excellent article by Brett Steenbarger.


6. When the market movement cannot induce surprise in the trader most of the negative power of the market is reduced. As the greats in trading say " In the expert's mind there are only few possibilities where as an amateur sees many possibilities".

Trading and Econometrics

I have been reading a bit on Econometrics recently sparked by my registration at NISM workshop.

1. My friend Newton Linchen has interesting comments on Trading and Econometrics
2. Econometrics of Tape reading where Newton Linchen discusses Strategies and Models. As pointed out trading is more about skill than knowledge.
3. Good posts by SohamDas relating to Quant and Econometrics, Basics, Concepts
4. As Newton Linchen rightly pointed out , Insightful analysis by Victor in DailySpec, here
5. Thoughts on Trading Price levels

Econometrics for Finance at NISM

It's has been almost three weeks since I posted . My aplogies to the readers and my friends.

1. I am eagerly looking forward to attending Econometrics program at NISM, a prestigious institute by SEBI.
2. Presently I find Chris Brooks book on econometrics interesting.
I look forward to post some interesting notes on the econometrics workshop in the coming days.