marius

[Brett Harrison @BrettHarrison]

Trading asset-based prediction markets vs short-term options

In my career I’ve seen the rise of short-dated options from both the market making and exchange sides. Thoughts on trading binary-style financial prediction markets versus vanilla options, focusing on greeks.

Prediction markets that settle to 1 or 0 based on underlying strike price are simply binary options, a construct that long pre-dates event contracts. In liquid underlyings a binary option can be replicated to a good approximation with a tight call spread. The reverse replication exists too: a vanilla option is a strip of binaries across the strike latter. The comparison ultimately breaks down due to discrete strikes, a truncated strike ladder, and two-sided transaction costs, but it provides a useful framework for deriving binary option properties. Here are a few of those properties, specifically options greeks, that are useful for modeling and trading binary option-style prediction markets:

• The greeks for a binary option are shifted one derivative to the left of vanilla options. Binary option delta looks like vanilla option gamma. It peaks ATM, decays both directions, and spikes toward a delta function at expiry.
• Binary option gamma changes sign at the strike. A long binary option holder is long gamma below the strike and short gamma above the strike. There is no position that can express “buying gamma into an event.”
• Binary option vega also changes sign: OTM holders are long vol, ITM holders short vol, and ATM vega is near 0. All prediction market traders are inherently running a vol book.
• Theta is non-monotone and can flip sign. Unlike a vanilla option, an ITM binary option gains from time passing.
• Fully-collateralized binary options have an embedded interest rate. At current front-end rates, a 6-month contract's "probability" is biased low by ~2.5 points versus the true risk-neutral probability.

The asymmetry between binary options and vanilla options reflect their ideal use cases. Binary options are a better instrument for a pure event view, while vanilla options remain the better instrument for exposure to the whole distribution of underlying prices.

[alexei @alexeixbt]

back in the 70s, game theory was hyped the exact same way AI is today. every genius was obsessed with one thing: how to win.

then one guy watched his kids play with legos and realized everybody was completely missing the point.

in short: if you're constantly trying to "beat the competition," you're playing the wrong game entirely.

hands down one of the clearest explanations of strategic game theory applied to real life by @simonsinek

I mapped out the key rules and action points below.

[DoctorDueDiligence @DueDoctor]

Top 10 Account Reccs
1. @blondesnmoney
2. @Maximus_Holla
3. @A_May_MD
4. @anthonystaj
5. @lcbnuoH
6. @davidmiedz
7. @PreciseSVJ
8. @Banana_Oncology
9. @PersimmonTI
10. @buysidebio

[Muhammad Nasir @AiWithNasir]

🚨 BREAKING: Claude can now BUILD a YouTube channel from scratch—and hit monetization in just 90 days.

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Here are 8 prompts to make it happen:

[Ted Cruz @TedCruz1072676]

If I were in my 30s or 40s right now and wanted to leverage AI to retire within 10 years, here's what I'd do:

1. Immediately form an LLC company. Not next month. Not once you're 'ready.' This week.

[marius @vazalis_]

@TommiPedruzzi Yes

[Sarvesh Shrivastava @bloggersarvesh]

https://t.co/cMic1qa56G

[marius @vazalis_]

@Pray4Equity what about now at $5?

[Paradis Labs @ParadisLabs]

I've worked in IB & PE. Now I run a hedge fund.

So I'm pretty qualified in knowing what good analysis looks like.

One key thing I've learnt in my career is that you *have* to enjoy reading equity research so you don't get burnt out.

But naturally, only a few firms/people are talented enough to put out truly enjoyable, digestable research.

Some of them are hiding in plain sight, right here on @X

-----

So with that, here's a non-exhaustive list of people on @X I look forward to reading on a daily basis, in the hopes that some of you will too (if you're not already!)

In no particular order:

> @illyquid - mainly Asian related AI semis/hardware research & live analysis

> @damnang2 - in-depth, technical semiconductor research/theses

> @aleabitoreddit - deep thematic research/theses & company/sector analysis

> @PhotonCap - technical photonics & semiconductor research/theses

> @pepemoonboy - mix of macro/company specific comms

> @crux_capital_ - technical photonics deep dives & crucial updates on key players

> @Frenchie_ broad macro commentary & analysis

> @Blinklebloop - data centers / AI value chain analysis

> @KawzInvests - deep AI/tech/space analysis

> @degentradingLSD - broad macro/AI aligned commentary & analysis

> @michaelsikand - photonics/AI aligned research & commentary

> @Kaizen_Investor AI supply chain analysis & other sector specific trades

> @Yeah_Dave - broad macro comms & space/AI specific

> @TheValueist - AI-aligned research & company specific analysis

[marius @vazalis_]

@rapid7 Most valuable share award. have seen your share performance?

[marius @vazalis_]

@rapid7 yooooo guys. have you checked your share performance lately?

[Felix Prehn 🐶 @felixprehn]

https://t.co/zOifPrfddS

[marius @vazalis_]

$rpd it's opex, but 11.5m volume? Jana is that you?

[marius @vazalis_]

@rapid7 Guys @rapid7 , have you seen your share performance recently? or for the last 5 years?

[marius @vazalis_]

$RPD Jana trimmed their Mercury position. let's hope they are raising cash for RPD

[marius @vazalis_]

where will $zim open on Tuesday?

[marius @vazalis_]

where will $ZIM open on Monday? any guesses?

[marius @vazalis_]

@GarpandChill any particular names in your portfolio or watchlist?

[marius @vazalis_]

@ygbl2080 more like 50 - 100%

[marius @vazalis_]

where will $ZIM open on Monday? any guesses?

[Julian Klymochko @JulianKlymochko]

Dear FinTwit community,

I have open sourced a CVR database, with the goal of gaining more accurate CVR value estimates in M&A transactions.

This data can be difficult to gather. Please DM any CVR payouts you receive, and I'm happy to share the model as it is further refined.