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#1
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Re: World Economy v. Poker??? Zero-Sum????
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#2
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Re: World Economy v. Poker??? Zero-Sum????
What does that link have to do with zero sum.
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#3
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Re: World Economy v. Poker??? Zero-Sum????
It explains why options and other derivatives earn the risk free rate in theory... which you called some guy drunk for stating.
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#4
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Re: World Economy v. Poker??? Zero-Sum????
[ QUOTE ]
It explains why options and other derivatives earn the risk free rate in theory... which you called some guy drunk for stating. [/ QUOTE ] I very humbly suggest you read the article in the link, again!!! |
#5
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Re: World Economy v. Poker??? Zero-Sum????
the link does not do a good job of explaining the expected theoretical return of options. probably should have read it before linking it [img]/images/graemlins/wink.gif[/img] I'll post a reply tomorrow if I remember to bring my hull book home from work [img]/images/graemlins/wink.gif[/img] Too lazy to derive the answer.
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#6
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Re: World Economy v. Poker??? Zero-Sum????
Ah, you are correct. Must lower caffein consumption and stop misreading thing. A perfectly delta-hedged option contract has an expected return of risk free rate - an option contract does not.
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#7
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Re: World Economy v. Poker??? Zero-Sum????
Correct me if 'm wrong, but I think an option has an expected return that equals to the risk free interest rate in the Black-Scholes world, becasue everything has to be discounted. But even if it's true I have no idea if this applies in the real world.
PS: I haven't been drinking when I made the original post, but I've been drinking now. The restaurants have some good wine selection here in Montreal. [img]/images/graemlins/smile.gif[/img] |
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