[cashewchoo]

I'd argue that options trading is worse than gambling. At least the one-armed bandit only gives the house a slight statistical edge.

Option traders - real ones, mind you - are sophisticated armies of statistics PhD's. I suspect their statistical advantage over Robinhood option warriors is probably a lot more than "slight".

[totalZero]

> Option traders - real ones, mind you - are sophisticated armies of statistics PhD's

Oh? I guess they forgot to ask me for my PhD at the door when I came to work for the first time.

[jawilson2]

My team of traders, quants, and devs is over 50% PhDs, so it isn't that far off. The point is that we have an army of people very good at math working 10+ hours per day analyzing volatility, backtesting decades of data, and shaving microseconds off of execution time. Someone playing with options on Robinhood isn't in a different league, they are playing a different game.

[totalZero]

> My team of traders, quants, and devs is over 50% PhDs, so it isn't that far off.

Depends what segment of the industry you call home, but I can think of several options market-making desks where no trader has a PhD, as well as several hedge fund traders and founders that don't have PhDs and trade options frequently or as their core competency.

"Good at math" doesn't require a PhD; I have some college friends who went on to do engineering PhDs at top research institutions, and they suck at the kind of fluid/heat math and probabilistic analysis that option traders think about. I have worked with PhD mathematicians who were good quants but lacked the stomach and mental clarity to run risk, and one who was so caught up in his math that he needed others to remind him about basic realities like earnings reports for his own positions. That last guy tried to start his own hedge fund and failed.

Outside of a few particular research advisors and fields of study, most of the math that you need to know to trade vol is faster to learn by reading papers and explanations on the internet than by studying for a PhD.

Ultimately what makes someone a good or bad trader is based more upon trade and strategy ideation, backtesting/validation, position sizing, etc, and the P&L is the scoreboard. Take a famous contemporary vol trader like Harsh Padia (or whatever other person you choose) and lock him in a room for a year with Excel, Robinhood, cable internet, a phone line, and a few grand, and he'll still find a way to make money.

> Someone playing with options on Robinhood isn't in a different league, they are playing a different game.

If this is true (I believe it is not) then it's yet another data point suggesting that the market is rigged against certain participants for the enrichment of other participants. Lest you think I'm being hyperbolical, I give you the example of that kid[0] who figured out that HFTs front-run large CME orders and placed his own spoof orders so that he would be able to trade the reversion. On the HFT side, you have many of these "traders, quants, and devs...over 50% PhDs" but their business model may well depend upon front-running new trades right when they posts to the order book, but before the higher-latency public can receive the information. Regulators protect the HFTs by treating the order book as public information, while treating retail practices that defeat their strategies as unlawful.

How much of that depends on a PhD?

[0] https://www.bbc.com/news/explainers-51265169

[fractionalhare]

Yeah, lol. Love reading all these myths about the finance industry regurgitated on HN. Most options traders I know don't have a PhD. Of the subset that do, it's usually more multidisciplinary than just stats because there's a lot more to derivatives pricing than just probability theory. Masters degrees are really common though.

Reading HN, you'd think every quant trading firm had the exact same culture and hiring practices as RenTech.