This morning time I've been upwards for a piece as well as having quite a few online conversations. One of the major topics has been the recent ascent inwards VIX, put/call ratios, as well as options skew inwards the index selection market. Does that hateful that bearishness is overdone? Does that hateful that smart coin is pricing inwards a surprise election outcome? In the human face upwards of such sentiment, how tin i best seat one's risk-taking earlier as well as later election results?
Out of these questions, I chop-chop updated a model of options skew that looked non alone at the absolute grade of skew, but equally good rates of alter as well as skew volatility. Some really interesting patterns emerged, suggesting that a high grade of downside hedging has been associated alongside subnormal near-term returns, but superior intermediate-to-longer term returns. In other words, nosotros run into hedging when the surroundings actually is dicey, but it is those dicey environments that ultimately depict inwards value participants as well as atomic number 82 to favorable longer piece of work returns.
Good questions don't simply atomic number 82 to proficient answers. As whatever scientist knows, proficient questions atomic number 82 to proficient inquiry as well as investigation. Research tells us that creative, productive people are slap-up at employment finding. They enquire *meaningful* questions. If nosotros precisely avoid or piece of work from problems, nosotros never enquire the tough questions that yield of import insights.
Further Reading: What We Learn From Options Skew
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