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A guide to pricing and hedging (2003) [pdf]

ieor.columbia.edu

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Re: A guide to pricing and hedging (2003) [pdf]

#71

Post by o_nate »

0003 wrote: post #62
ahvetm wrote: post #20

The mus and sigmas in this paper on risk modelling would not make Nicholas Taleb very happy

I think he would be more offended on the general idea of risk model. His conclusion: we can't do it. Don't model risk. Set yourself up to benefit from our inability to do it.

If you are a large bank, I don't think that the regulator will take kindly to the statement that you don't model your risk since Taleb says it's not possible. Perhaps a more moderate position would be not to put too much faith in models. Or as Derman writes: "Models are only models, toy-like descriptions of idealised worlds... If you listen to the models’ siren song for too long, you may end up on the rocks or in the whirlpool."

Re: A guide to pricing and hedging (2003) [pdf]

#72

Post by inflatableDodo »

trepanne wrote: post #22
CarolineW wrote: post #2

I hate to be "that person" ... but what is it in this paper that makes it appropriate to label it "The boy's guide ..." Answer: nothing. Nothing at all. Words matter, role-models matter, names matter, and this is just completely tone-deaf in today's world. Men (and boys) may scoff, but seeing the title is seriously off-putting. Unnecessary, inappropriate, and the problem is that the author probably has no clue. I've…

It is a form of dry pedantic humor. In early 20th century USA, there were a lot of instructional books marketed at children with titles like this... "A Boy's Guide to Fishing", and so on. The author, who wishes finance students to remain focused on the fundamentals rather than getting lost in esoterica, chose a title that harkens back to these plain-spoken primers. I suppose he didn't stop to think that most of his a…

To be fair, people on here would lose their shit if it had been called 'The girls's guide to pricing and hedging'. Interestingly it would be largely a different set of people.

Re: A guide to pricing and hedging (2003) [pdf]

#73

Post by trepanne »

Luc wrote: post #56
trepanne wrote: post #32

Earlier quoted context omitted.

It would have been nice if the author had included Boy Scouts style line illustrations... I'm picturing a scoutmaster in knee socks and a kerchief on one knee in front of an easel with an options payout diagram.

I actually bought a French version of one of these books for one of my daughters, focusing on science. But after reading through it a bit it was clear that girls were just not part of the intended public, so it didn't go under the Christmas tree. The book was nominally about science, but it had a clear second message that I didn't want my 9 year-old girl to receive, with dad's stamp of approval.

I hear you. One of my friends (female) is a physicist whose career has succeeded in the face of many of her peers telling her - repeatedly, for decades - that women can't be as good as men at hard sciences because their brains are just wired differently at a biological level (a traditional attitude in the field). It's pretty draining.

I just can't get too exercised about "Boy's Guide" level insensitivity. If my daughter wants to go to Wall St., she's gonna need waaayyyy thicker skin than that. The biz attracts assholes and predators; it's not exactly snowflake-friendly.

I mean, at least i-banks are no longer openly allowing charges at whorehouses and strip clubs on company cards, but stuff like this does go on:

https://seagullreference.blogspot.com/2009/12/gross-details-...

Re: A guide to pricing and hedging (2003) [pdf]

#74

Post by rpiguy »

dmos62 wrote: post #65
rpiguy wrote: post #45

Earlier quoted context omitted.

I am so glad several other commenters here have pointed out that boy's guides were fairly common and this is a cute reference to that genre of book. There were girl's guides too. It is not the least bit offensive nor meant to cause offense.

Were the girl's guides about the same things as boy's guides? By cute, you probably meant harmless. You probably didn't mean to say that gender roles are cute. I guess its harmlessness is up for debate. My position on the matter is that there's no place for socially constructed gender roles in this society, and it's not cute.

Girls guides were about the activities most girls were engaged in at the time, cooking, sewing, etc. You never would have seen a "Girls Guide to Shortwave Radio," for example, fifty years ago because practically no women were doing it. I am sure it would have delighted a small handful of girls, but that is not how markets work. You don't print a book if it is not going to sell.

I generally disagree with your position on gender roles, which I think evolve naturally and are not necessarily bad.

Re: A guide to pricing and hedging (2003) [pdf]

#75

Post by michael-ax »

vfc1 wrote: post #48
dtwest wrote: post #41

Earlier quoted context omitted.

The women in finance I know have much thicker skin than you think. They also put up with bullshit that is not on the same scale as this benign title. Complaining about the little things can hurt the bigger cause if you piss people off in the process.

It's about the impact of 1000 little things.

The thousand little things seem to be experienced on your end. That this makes you condemn an author for his choice of headlines - when you've said nothing about the substance of an article - makes it seem like you have no guy-group to hang with. Get one! It'll clear up the perspective the guy's coming from.

Re: A guide to pricing and hedging (2003) [pdf]

#76

Post by michael-ax »

vfc1 wrote: post #44
eli wrote: post #37

Earlier quoted context omitted.

I think it's intended to be a reference to "The boy's guide to usefulness" and similar 19th century books for boys. But I agree with your underlying point. At best the title is careless and lends itself to misinterpretation. (Worth noting, perhaps, that the linked paper was published in 2002. I wonder if the author would have thought twice in 2019?)

I doubt the author would use the title today, but still, if we don't call this kind of stuff out for what it is, it just keeps happening.

vcf, it is what it is ... the interpretations, judgments and your subsequent reactions however are, as you are keen to explain intended to get others to censor value creators (the pdf, not the industry). its probably you that should be happy for free speech more than he.

Re: A guide to pricing and hedging (2003) [pdf]

#77

Post by ColinWright »

michael-ax wrote: post #75
vfc1 wrote: post #48

Earlier quoted context omitted.

It's about the impact of 1000 little things.

The thousand little things seem to be experienced on your end. That this makes you condemn an author for his choice of headlines - when you've said nothing about the substance of an article - makes it seem like you have no guy-group to hang with. Get one! It'll clear up the perspective the guy's coming from.

There are fields that are currently over-whelmingly dominated by men. If you are a man, and you are in these fields, it seems like women just don't want to get involved.

But if you start looking with fresh eyes you start to see again and again and again small things, apparently insignificant things, that all combine to say "Women aren't welcome here." This is a single, simple, tiny, apparently insignificant example, but it's utterly ubiquitous.

Your dismissal just makes it clear that you either haven't noticed, or don't care. It's a sobering thing to realise that there is just so much subliminal repelling of women from fields such as finance, programming, physics, mathematics, engineering, and more. If you start to listen to women instead of just saying "it's all in your head" then you'll learn something.

And it's horrifying. I always feel guilty that when I get tired of the fight I can give up for a while. But that's because I'm a cis-het white male, and the system is biased in my favour. Others can't choose to give up - and it's relentless.

Re: A guide to pricing and hedging (2003) [pdf]

#78

Post by ColinWright »

michael-ax wrote: post #76
vfc1 wrote: post #44

Earlier quoted context omitted.

I doubt the author would use the title today, but still, if we don't call this kind of stuff out for what it is, it just keeps happening.

vcf, it is what it is ... the interpretations, judgments and your subsequent reactions however are, as you are keen to explain intended to get others to censor value creators (the pdf, not the industry). its probably you that should be happy for free speech more than he.

See my reply here:

https://news.ycombinator.com/item?id=19984423

Re: A guide to pricing and hedging (2003) [pdf]

#79

Post by dmos62 »

rpiguy wrote: post #74
dmos62 wrote: post #65

Earlier quoted context omitted.

Were the girl's guides about the same things as boy's guides? By cute, you probably meant harmless. You probably didn't mean to say that gender roles are cute. I guess its harmlessness is up for debate. My position on the matter is that there's no place for socially constructed gender roles in this society, and it's not cute.

Girls guides were about the activities most girls were engaged in at the time, cooking, sewing, etc. You never would have seen a "Girls Guide to Shortwave Radio," for example, fifty years ago because practically no women were doing it. I am sure it would have delighted a small handful of girls, but that is not how markets work. You don't print a book if it is not going to sell. I generally disagree with your position…

We disagree on multiple points, but I appreciate your cool-headed and open approach to conversation.

Re: A guide to pricing and hedging (2003) [pdf]

#80

Post by jasode »

zdw wrote: post #11

What's the benefit of these fancy financial instruments other than for someone who wants to enjoy a slower, higher stakes version of the roulette wheel at a casino (assuming the Boglehead wisdom that individual stock picking is about as reliable as that)?

>, higher stakes version of the roulette wheel at a casino

As an example, Mark Cuban used put&call options to lower the stakes of the roulette wheel.[0]

He sold his startup to Yahoo for ~$1.4 billion of stock (1999 stock price was ~$95) -- but he couldn't sell it immediately because it was locked up for 3 years. That's a long time for Yahoo stock to potentially double... or go all the way down to $0.

To protect his wealth and get around the lockup, he bought put options to limit his downside. He also sold a matching set of call options to offset the out-of-pocket costs of buying the expensive puts. Therefore, deliberately limiting his upside was the proverbial "price to pay" to protect his downside. His financial engineering reduced the vagaries of the volatile stock roulette wheel.

It turned out that not getting too greedy with a potential gains and worrying more about the potential losses was a smart move because as we now know, the 2000 Dot Com Crash happened and the 2002 Yahoo stock price plunged to just $8: https://www.theatlas.com/charts/B1RjK9Q_

[0] https://www.acceleratedfi.com/real-world-options-example-how...

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