Hacker News new | ask | show | jobs
by neoflex 2585 days ago
So... what term put option would be best?
4 comments

As the saying goes, the markets can stay irrational longer than you can stay solvent. Even if someone can correctly predict a market crash, correctly timing it to make money is extremely difficult. You could go all in on far out of the money January 2020 puts only for the market to continue climbing and then crash hard in February 2020.
One could keep rolling the puts forward, though it would be a drag on returns if the market stays above the strike and the options stay out of the money.
I tried to play this game before 2000 and it's amazing how often market can have an even steeper upturn before it finally crashes.
Susquehanna made a killing during the dotcom crash by selling near-dated options and buying longer-dated options. Essentially, the majority of the market was pricing the dotcom crash to be very similar to the 1987 crash. Instead, it was closer to a slow bleed.
The flip side of "The markets can stay irrational..." is "Someone will probably get lucky anyway. But just because they did, doesn't mean you can learn anything useful from them."
"The market can stay irrational longer than you can remain solvent"
nobody knows and anyone that says they do is speculating.
probably around the next presidential election.