RichardGibbons

I've never taken an options pricing class. Nevertheless, I think you're either misremembering or perhaps misunderstanding what put/call parity actually means. It doesn't mean that puts and calls trade for the same price. It just means that a long call has to be priced to deliver an expected return equivalent to long shares and long put. Here's a quote from McMillan's Options as a Strategic Investment 3rd Ed. in the chapter about puts (McMillan's italics, not mine): Both the put and the call have their maximum time value premium when the stock is exactly at the striking price. However, the call will generally sell for more than the put when the stock is at the strike. However, the call will generally sell for more than the put when the stock is at the strike. Notice in Table 15-1 that, with XYZ at 50, the call is worth 5 points while the put is worth only 4 points. This is true, in general, except in the case of a stock that pays a large dividend. This phenomenon has to do with the cost of carrying stock. More will be said about that effect later. Table 15-1 also describes an effect of put options that normally holds true--an in-the-money put (stock is below strike) loses time value premium more quickly than an in the money call does. Notice that with XYZ at 43 in Table 15-1, the put is 7 points in-the-money and has lost all its time value premium. But when the call is 7 points in-the-money--XYZ at 57--the call still has 2 points of time value premium. Again, this is a phenomenon that could be affected by the dividend payout of the underlying stock, but is true in general.

I think it's just much harder to make money from puts than from calls. The advantage of puts is that the market seems to go down faster than it goes up. But three things related to the mechanics of puts makes them harder. First, as the put moves into the money, the premium gets crushed much faster than it does with calls. Second, the premium on a put that is X% out of the money is higher than the premium on a call that is X% out of the money. Third (and this is probably a cause for the first and second) when shares go down, an X percentage move becomes smaller and vice versa. So if the stock falls from $100 to $50, and your plan is to sell your puts when it falls to 25, then you need another 50% drop to hit that level. In calls, if your stock goes from 100 to 150, and your plan is to sell your calls when it goes to $175, you only need another 17% gain. In a sense, it becomes "easier" for the stock to reach a target profit level with call than puts. These factors make me much less likely to buy puts than calls.

I think you can equally use this argument against gun control. Guns have been around for even longer than a year. And in 2015, about 13,286 died as a result of being shot, so certainly not more than 13,286 people died of being shot in the head. And there are about 330M people in the USA. Therefore, if you're shot in the head, you have less than a 0.004% chance of dying. There's basically almost no chance of dying if you're shot in the head.

We're in the top 10 by assets and we don't really use debt leverage. We're set up that way because the goal isn't to maximize net worth, but rather to have the sort of life that we want. Sure, if we had twice as much money, our lives might be marginally better, but not that much better. And it goes back to Buffett's point (or was it Munger?): don't risk what you need in order to get things you want. There's no need to take on the risk when it will likely result in marginally higher returns, but a much bumpier path.

I get what you're saying for the rest of it, but I'm not quite sure how this applies. Wouldn't it have a much slower processing time than almost any other database structure in existence? Like, if you can't really consider a record committed until 51% agree on the record, doesn't that in effect make it a very slow database? Or am I missing something?

For sure--certainly more appropriate there than here.

Bought some UAN Aug $30 calls. Because why wouldn't one want to make a leveraged bet on a company whose business strategy is basically "take on huge operational leverage and then wait for fertilizer prices to increase"? Double the leverage, double the fun! (This describes why UAN is an interesting speculation. Note that the price of UAN32 fertilizer futures have almost doubled YoY, with almost all that increase coming in the past two months. If today's prices hold for six months, I think the options will work out well. If not, they will likely be worthless.)

I owned Fiserv from mid-2010 until January 2020, and that reliable high-ROIC growth was what I liked about the business. The reason I sold it was that organic top line growth seemed like it was approaching GDP growth levels. It seemed to me as though the merger with First Data was two wide-moat but low-growth companies trying to distract from the fact that neither business had a plausible growth strategy. Am I wrong in that assessment? Do you have a theory about why Fiserv will have solid organic top line growth for the next few years (or the next decade, ideally)?

Yeah, one of my odd options things this year was the GME play. At $320, I was bearish on the stock, but despite that, I sold Nov $5 puts for $1.03, just because the implied volatility was so high. That's pretty odd, making a bet that's bullish despite being extremely bearish on the stock, just because the details of options pricing made it seem like it made sense. I closed it out about a week later for $0.59 after the stock fell to $100. Even today, with the stock at $40, the same puts are going for $0.60. The stock's down over 85%, only a few weeks have passed, but the puts have almost lost have their value (because implied volatility has been crushed.) Options seem intuitive, but I find that my intuition about them is often wrong. I think, in particular, it's harder to make money being long puts than my intuition says.

It brings down the price of the stock, but not artificially. Someone shorting shares is selling them, effectively adding supply to the market. Just like if you sell long shares, you are effectively adding supply to the market. If you increase supply relative to demand, the price goes down. If you increase demand relative to supply, the price goes up. So you are helping to push the price down, since you're adding supply, but there's nothing artificial about it.

That's the key line of your post. Sanjeev isn't a policeman ticketing the stripper inside RICK's for public nudity. He's ticketing the streaker who repeatedly runs across the field at the high school football game, and saying, "Hey, if you put on some clothes, you're welcome to return to watch the game."

FWIW, historically, about 86% or 87% of the time, the market's up over a 5 year period. (I'm also inclined to agree with you that the odds today are likely lower.)

Hopefully not another Hydroxychloroquine. A double blind study with 4000 patients, but presumably not yet published or peer-reviewed. https://montreal.ctvnews.ca/quebec-researchers-say-they-have-found-an-effective-drug-to-fight-covid-19-1.5279310

This is new to me, and bad. https://www.yahoo.com/news/covid-wards-full-children-first-145710680.html

Congrats on your accomplishments! Between the two of us, we have a math degree, 3 computer science degrees, 1 electrical engineering degree, and a physics degree. I teach AI/ML at a university (historically, non-online 8)) and worked for an insurance company. So now that we pointlessly settled that (and really credentialed our mutual "technobabble") do we really need to go through the false equivalence that is the next 3 lines you wrote? The only reason I wrote it was because you were trying obfuscate the issue by saying a lot of technobabble. I viewed it as attempt to obfuscate the issue, and intimidate anyone who was scared of buzzwords into shutting up. Also, I don't think those things are false equivalences. It's just that they're more more clearly ridiculous because they aren't cloaked in technobabble. That said, I'm fine with not arguing about whether statistics and AI are basically the same thing. And for all of Cardboard's hypocrisy, he's right. It's way off topic for this board. FWIW, I suspect that you're right about Lemonade. I do buy SAAS companies that are breaking traditional business models, and Lemonade is a "don't buy" for me because at a P/S of 53, it's too expensive considering its growth rate and questionable moat. (Keep in mind for all my comments that I've literally spent a total of 5 minutes in my entire life looking at the company. It's easy to know that I don't want to buy it, and then I don't spend more time.) On 1 and 2, I think there's a reasonable chance you're right. Insurance is a pretty commodified business, and it's unclear to me what they could be doing differently that would provide a big boost over what other people are doing with statistics. Maybe they have found something, but the odds are against it, I think. And if they have found something, how big of an of advantage is that "something" likely to be? I'd bet that whatever it is wouldn't be transformational, like improving margins by ten percentage points for an extended period of time. On the other side of the analysis is that they likely haven't squeezed out most of the economies of scale yet. As they grow, they'll get a boost from that. On the other hand, at this scale, they can also be more picky about their business, so maybe that all balances out. On 4, In terms of why at traditional insurance company might have problems with a tech startup--which is what I was talking about originally--it's not the tech. It's the culture. (Here I'm generalizing my experiences over the whole industry, which might not be fair. But it happens again and again, where old school companies can't adapt to new tech models despite all reason seeming to indicate that they should be able to do so. And that's why I view my experience as more of a case study than an anecdote.) So, I worked in an non-tech insurance-related business that did well enough to become the gorilla. A young tech company came in with about one hundredth of our resources, and started attacking us. We were able to describe the threat in detail early on, but were ignored ("Don't worry about them. They're nothing, and will go bankrupt soon because they're doing unprofitable underwriting. Focus on the ball."). Then they captured one of our customers ("It's just an aberration. This will prove that their business model doesn't actually work. They'll go bankrupt faster.") We came up with technologies to counter them, technologies that we could've built in a few months with a few decent developers. But of course, those technologies needed to be put through the planning committee, and their value compared against all the other technical projects. How long does that take? Well, maybe a year to through the process, just to get get developers on it, and then the developers suck. So years to get something useful, and by then everything's moved on. And, over the course of about 15 years, the tech company has been eating most of the customers. The big problem is a culture built on conservative math and squeezing pennies out of operations fails against a rapid iteration, testing and failure tech model. Pretty well every company says technology is a competitive advantage, but in the insurance companies I've see, technology is a cost center--it's there because it's necessary to compete. The company isn't run from a perspective of "tech is all we have, let's quickly cycle, failing 60 times in order to find that one solution that works and crushes everyone else." If, as an individual, you have a project that fails in a tech company, it's something to learn (because it's set up so the failures aren't super-costly). If you fail in the insurance company, you've seriously impacted your career, and might never get that promotion. Why take that risk, when analyzing every decision to death, getting written buy-in from everyone, and proceeding at a slow, measured pace is much more likely to lead to successful personal outcomes? Then if you fail, everyone else fails too, and everyone's knows that there's nothing different you could have done. The culture really matters. (All that said, I still wouldn't bet on Lemonade.)

Because remember that you were pretending to care about evidence that Trump had contributed to the pandemic? That's why. But, as I said, you don't actually care about the thing you were pretending to care about. So, from the perspective of someone who doesn't care at all about the original question, it doesn't make any sense at all.

Cool! The most hypocritical comment of the day!

As I said, you don't care about the answer to the extent that you didn't respond to a single one of the, what, 50 data points? You made me waste 3 minutes of my life by pretending that you did care.

No, they didn't, and I'm not quite sure why you'd pretend these are the same thing. On a practical level, ML uses historic data (usually entire dataset, let's ignore train-test-split for a second) to make generalizable predictions. Statistics draw inferences from a sample. To make statistics ML, just up your sample size to make it population size ;). I can walk you through the same path to show you how AI is basically the same thing (starting with perception). I'd love for you to explain what is it that makes you think I'm pretending? Generally, AI/ML fields borrow heavily from statistics. Sure they are different if you take the purist approach (e.g., ML predicts based on passive observations and AI implies agent interaction with the environment to maximize chances of goal achievement). Sure, other fields are contributing (EE, CS, etc.) and some of the latest algorithms don't come from the field of statistics but at the core, these are all statistical methods (see the assumption with any algorithm that is available today). The reality of things is that what changed the field are three things: 1) availability for computing power (AWS, GCP, etc.) and 2) data, lots of it 3) fusion of different methods (e.g., TensorFlow). Feel free to let me know what insurance-specific algorithm(s) Lemonade has that is not rooted in statistics that are not available to Progressive, Geico, etc. I say insurance-specific because I'm sure Lemonade, by virtue of being new (i.e., no cultural or digital transformations necessary), can rapidly deploy a bag of algorithms to help with processing (robotics process automation), translation (nlp/nlg), etc. So is the premise that they are an efficient back office? I have a math degree, two computer science degrees, and like, 10 AI courses under my belt, so I'm not really someone who you can throw technobabble at to try to obfuscate the issue. Your argument is basically, "hey, these two techniques can both can be used to analyze data, therefore they are the same." Hey, a human and a lump of coal floating in a bucket of water are made of roughly the same stuff, so to anyone but a purist, they're the same. A pie chart and the algorithm for a self-driving car are both just derived from data, so those are the same thing. So, anyone who can make a pie chart should be confident they can create a self-driving car! Basic addition and partial differential equations are just about number manipulation--these are all just mathematical methods--so anyone who can add 2+3 ought to be able solve PDEs. And I'm not sure why you'd expect me to know about Lemonade's proprietary algorithms, or why you think me being unable to share such algorithms so would provide any evidence of anything. Like, it's obvious you know that you said something silly. Why would you double down on the silliness? It's OK to say, "yeah, they're not really the same thing. I really just meant that they're both ways of manipulating data."

Richard what evidence is there regarding this statement? You and I both know that you don't care at all about the answer to this question, because the answer's obvious to everyone who's followed American pandemic news even the tiniest bit for the past 9 months. One doesn't need to provide supporting evidence to say that the sky is blue, ice is cold, and the sun rises in the east. So, I'm just going to save us both time, and not bother with an answer. I do care about the answer. Ok, fine. I don't believe you but here's 3.5 months. (Source) Jan 8 - First CDC warning on Novel Coronavirus (COVID-19) Jan 9 - Trump campaign rally Jan 14 - Trump campaign rally Jan 16 - House sends impeachment articles to Senate Jan 18 - Trump golfs Jan 19 - Trump golfs Jan 20 - first case of COVID-19 in the US, Washington State. Jan 22 - “We have it totally under control. It’s one person coming in from China. It’s going to be just fine.” Jan 28 - Trump campaign rally Jan 30 - Trump campaign rally Jan 30 - WHO declares Public Health Emergency of International Concern (PHEIC). https://www.medscape.com/viewarticle/924596 Jan 31 - Trump announces China travel restrictions. Feb 1 - Trump golfs Feb 2 - Starts China travel restrictions Feb 2 - “We pretty much shut it down coming in from China." Feb 5 - Senate votes to acquit. Then takes a five-day weekend. Feb 5 - HHS Secretary Azar requested $2 billion to buy respirator masks & other supplies for the national stockpile. Trump cut request by 75% Feb 10 - Trump campaign rally Feb 11 - At a rally, Trump says the virus will 'miraculously go away' with warmer weather. Meanwhile, the white house releases fiscal budget plan which proposes large budget cuts to the CDC and NIH https://www.medscape.com/viewarticle/925130 Feb 12 - Dow Jones closes at an all time high of 29,551.42 Feb 15 - Trump golfs Feb 19 - Trump campaign rally Feb 20 - Trump campaign rally Feb 21 - Trump campaign rally Feb 24 - “The Coronavirus is very much under control in the USA… Stock Market starting to look very good to me!” Feb 25 - “CDC and my Administration are doing a GREAT job of handling Coronavirus.” Feb 25 - “I think that's a problem that’s going to go away… They have studied it. They know very much. In fact, we’re very close to a vaccine.” Feb 26 - “The 15 (cases in the US) within a couple of days is going to be down to close to zero.” Feb 26 - “We're going very substantially down, not up.” Feb 26 - "This is a flu. This is like a flu"; "Now, you treat this like a flu"; "It's a little like the regular flu that we have flu shots for. And we'll essentially have a flu shot for this in a fairly quick manner." Feb 27 - “One day it’s like a miracle, it will disappear.” Feb 28 - “We're ordering a lot of supplies. We're ordering a lot of, uh, elements that frankly we wouldn't be ordering unless it was something like this. But we're ordering a lot of different elements of medical.” Feb 28 - "The press is in Hysteria mode!" Over covid19 Feb 28 - Trump campaign rally Feb 29 - First COVID-19 death in US Mar 2 - “You take a solid flu vaccine, you don't think that could have an impact, or much of an impact, on corona?” Mar 2 - “A lot of things are happening, a lot of very exciting things are happening and they’re happening very rapidly.” Mar 4 - “If we have thousands or hundreds of thousands of people that get better just by, you know, sitting around and even going to work — some of them go to work, but they get better.” Mar 5 - “I NEVER said people that are feeling sick should go to work.” Mar 5 - “The United States… has, as of now, only 129 cases… and 11 deaths. We are working very hard to keep these numbers as low as possible!” Mar 6 - “I think we’re doing a really good job in this country at keeping it down… a tremendous job at keeping it down.” Mar 6 - “Anybody right now, and yesterday, anybody that needs a test gets a test. They’re there. And the tests are beautiful…. the tests are all perfect like the letter was perfect. The transcription was perfect. Right? This was not as perfect as that but pretty good.” Mar 6 - “I like this stuff. I really get it. People are surprised that I understand it… Every one of these doctors said, ‘How do you know so much about this?’ Maybe I have a natural ability. Maybe I should have done that instead of running for president.” Mar 6 - “I don't need to have the numbers double because of one ship that wasn't our fault.” Mar 6 -"It came out of China... we closed it down, we stopped it." Mar 7 - Trump golfs Mar 8 - Trump golfs Mar 8 - “We have a perfectly coordinated and fine tuned plan at the White House for our attack on CoronaVirus.” Mar 9 - "The Fake News Media and their partner, the Democrat Party, is doing everything within its semi-considerable power (it used to be greater!) to inflame the CoronaVirus situation, far beyond what the facts would warrant.” Mar 9 - “This blindsided the world.” Mar 9 - "The Fake News Media and their partner, the Democrat Party, is doing everything within its semi-considerable power (it used to be greater!) to inflame the CoronaVirus situation, far beyond what the facts would warrant. https://thehill.com/homenews/administration/486559-trump-fake-news-media-democrats-working-to-inflame-the-coronavirus Apr 13 - "The media minimized the risk from the start." Mar 10 - "It will go away. Just stay calm. It will go away." Mar10 - Trump Addresses the Nation - closes travel to 26 countries in Europe, exempting those that contain Trump Resorts. Mar 11 - Trump corrects multiple major misstatements in his national address. https://www.salon.com/2020/03/12/officials-walk-back-numerous-inaccurate-claims-made-by-trump-during-bungled-coronavirus-address/ Mar 12 - Finally ordered N95masks Mar 13 - [Declared state of emergency] Mar 13 - " I dont take responsibility at all." Mar 14 - Young Asian-American family of 4 stabbed in TX Sam's Club by man who thinks they're responsible for COVID. Mar 15 - "It's a very contagious virus. It's incredible. But it's something we have tremendous control of." Mar 15 - 3,613 COVID-19 cases, 69 deaths Mar 17 - “This is a pandemic,” Mr. Trump told reporters. “I felt it was a pandemic long before it was called a pandemic.” Mar 18 - "It’s not racist at all. No. Not at all. It comes from China. That’s why. It comes from China. I want to be accurate." Mar 19 - "And we’re going to be able to make that drug available almost immediately, and that’s where the FDA has been so great. They — they’ve gone through the approval process. It’s been approved." Mar 19 - FDA "Chrloroquine has not been approved for use against COVID-19." Mar 20 - Trump says he is going to enact the Defense Production Act Mar 23 - Dow Jones closes at 18,591.93 Mar 23 - "You look at automobile accidents, which are far greater than any numbers we're talking about. That doesn't mean we're going to tell everybody no more driving of cars. So we have to do things to get our country open." Mar 25 - 3.3 million Americans file for unemployment. Mar 26 - “You call it a germ, you can call it a flu, you can call it a virus. You know, you can call it many different names. I'm not sure anybody even knows what it is...” Mar 27 - Activates Defense Production Act Mar 30 - Dow Jones closes at 21,917.16 Apr 1 - "Did you know I was number one on Facebook?" Apr 2 - 6.6 million Americans file for unemployment. Apr 3 - 270,062 COVID-19 cases, 6,927 deaths. Apr 4 - “Maybe we could allow special, for churches, maybe we could talk about it. Maybe we could allow them, with great separation outside, on Easter Sunday. I don’t know, it's something we should talk about,” he said. “We have to get this country open. This country was not designed to be closed...we're paying people to stay home...and they want to go to work.” Apr 5 - More then 9000 deaths in US from Covid-19. More than active service members killed in Iraq and Afghanistan combined. Apr 6 - "I answered this 15 times. You don't have to answer." -- Trump prevents Dr Fauci from answering a question about hydroxychloroquine Apr 7 - Trump threatens to pull funding from WHO The whole Hannity interview. Just a couple snippets. https://www.cnn.com/2020/04/08/politics/donald-trump-sean-hannity-coronavirus/index.html Apr 10 - Trump administration announces employers dont have to report corona virus cases unless you are in the health care industry. https://www.commondreams.org/news/2020/04/12/former-osha-officials-voice-alarm-trump-tells-corporations-they-dont-have-record “This is a very brilliant enemy. You know, it’s a brilliant enemy. They develop drugs like the antibiotics. You see it. Antibiotics used to solve every problem. Now one of the biggest problems the world has is the germ has gotten so brilliant that the antibiotic can’t keep up with it." He added: “We’re fighting – not only is it hidden, but it’s very smart. Okay? It’s invisible and it’s hidden, but it’s – it’s very smart.” Apr 11 - Trump asked White House coronavirus task force member Dr. Anthony Fauci, “Why don’t we let this wash over the country?” Apr 13 - Trump claims absolute authority over states governors Apr 13 - "The media minimized the risk from the start." Apr 14 - Trump announces USA will stop funding WHO Tests still not available for most people. And see? You don't care about any of this. That's what I mean by it being as obvious as the sky is blue. And it's equally as obvious that you don't actually care to have an accurate view of how the actions of the President of the United States may have contributed to the explosion of cases during the worse pandemic in the USA in 100 years. That's why it's a waste of both our time.

No, they didn't, and I'm not quite sure why you'd pretend these are the same thing.

I don't know the company well, but, having worked as a tech person in an insurance-related company, insurers often don't seem to have the culture to adopt market-changing technological solutions. I agree that something like this that seems to be the obvious strategy for tradition insurers. But it isn't necessarily something that those traditional insurers can actually execute.

Richard what evidence is there regarding this statement? You and I both know that you don't care at all about the answer to this question, because the answer's obvious to everyone who's followed American pandemic news even the tiniest bit for the past 9 months. One doesn't need to provide supporting evidence to say that the sky is blue, ice is cold, and the sun rises in the east. So, I'm just going to save us both time, and not bother with an answer.

Lol wut. That’s the most ridiculous thing I’ve heard in a long time. Trump should be praised because his policy allowed more people to be infected and die so more studies could be done? Seriously? If ten times more people died would that be ten times better? Don’t you think we could have come to the same conclusion had only half or a quarter of the people got infected and died? By your logic, Mao should be praised for reducing the population in China so there’s be enough food to eat after the cultural revolution and famines? Have a famine, millions die. Now the little food we have is enough for the smaller population. Thanks Mao! /s Please tell me you’re being sarcastic? or I simply don’t know enough about vaccine development... Yep, it was tongue in cheek. It's atrocious that so many people have become infected and dead in the USA as a result of this pandemic. But I do get a kick out of the perverseness of the situation because it is actually true. The more people get infected, the faster you can do the Phase 3 trial, so to the extent that Trump has helped this contagion spread, he's also helped speed up the testing of a vaccine as an unintended side-effect. (I know nothing about vaccine development, by my impression is that, to test efficiency, you need to split people up into 2 groups, A) those who will receive the vaccine and B) those who won't. If nobody gets infected in either group, you can't say anything about whether the vaccine is effective. If a bunch of people get infected in group B, but none in A, you can have some confidence that the vaccine is effective. So you basically need a certain number of people infected in group B to have confidence about the efficiency of the virus. So if the virus is raging, you're going to have people infected in group B faster than you would if it weren't and therefore can complete Phase 3 trials faster.)

Strangely, the outcome with this virus has made me more optimistic. The fact that we've been able to create a vaccine in 10 months is impressive, and gives me confidence that we could deal with an equally contagious disease with higher fatality levels. That's a pretty great realization. And, I've got to say, Trump deserves some credit for the fast vaccine. By minimizing the impact of the disease, discouraging people from wearing masks and other preventative measures, and generally helping the virus along, he's helped the number of cases to explode. Without that massive number of new infections, Phase 3 trials would've taken far longer-- to determine whether a vaccine is working, you need people to catch the disease, and he did his part to achieve that. So, credit where credit is due.