Shubham51ngh's Categories
Shubham51ngh's Authors
Latest Saves
This friend had trouble making money in options though he was directionally right. Let us see how a basic understanding of greeks would have helped him, This thread will be about two attributes of option pricing, extrinsic value and theta
An option has two parts, intrinsic and extrinsic value. Think of a pack of Lay's potato chips. When you buy and open the pack, what you find is some chips and a lot of air. Intrinsic value is the chips, extrinsic value is air
https://t.co/8ZPv4ZnCiL
https://t.co/icWmqSLENW
https://t.co/vHA6azEmbQ
Sir, today #niftybank was continue making new high, but 31700 CE was struggling to go up. I bought at 140, some how managed to sell it at 200. I m ok, in identifying directional edge but options behave differently.
— Vikash Shrivastava\U0001f1ee\U0001f1f3 (@VikashS28) May 27, 2019
An option has two parts, intrinsic and extrinsic value. Think of a pack of Lay's potato chips. When you buy and open the pack, what you find is some chips and a lot of air. Intrinsic value is the chips, extrinsic value is air
https://t.co/8ZPv4ZnCiL
https://t.co/icWmqSLENW
https://t.co/vHA6azEmbQ
Have you ever had 4-5 profitable trades in a row, and you bet all your profits on your next trade feeling "in the zone" only to lose it all?
That's called as "hot-hand fallacy" bias.
I ran a poll recently to outline two classic biases we have as humans.
Thread below ๐๐
1/ *Hot-Hand Fallacy* first had its origin in the game of basketball.
If a player shoots few baskets in a row, people generally predict that the next shot will also be a basket.
This is ignoring the fact that each shot is independent of the ones that came prior.
2/ In this poll, 41.1% people voted that the batsman who hit 4 sixes in a row, will hit a sixer in the 5th ball also.
This is classic hot-hand fallacy.
Each ball's outcome is independent.
The probability is not 50% FYI (number of outcomes is not 2).
These 148 people who voted that the next ball will also be a sixer, did so because they believe that the batsman is on a hot streak, and that his streak would continue.
This is an emotional bias and is usually attached to human performance related events only.
3/ 45.3% (162) people voted that the 5th ball would be a dot ball, meaning the batsman wouldn't score anything.
These people displayed the classic "negative-recency" bias, which is also called the "Gambler's Fallacy".
That's called as "hot-hand fallacy" bias.
I ran a poll recently to outline two classic biases we have as humans.
Thread below ๐๐
Let's say you see a cricketer hit four 6's in a row.
— Shravan Venkataraman \U0001f525\U0001f680\U0001f4b0 (@theBuoyantMan) December 30, 2020
If you have to bet on the next ball's outcome, what would you bet on?
1/ *Hot-Hand Fallacy* first had its origin in the game of basketball.
If a player shoots few baskets in a row, people generally predict that the next shot will also be a basket.
This is ignoring the fact that each shot is independent of the ones that came prior.
2/ In this poll, 41.1% people voted that the batsman who hit 4 sixes in a row, will hit a sixer in the 5th ball also.
This is classic hot-hand fallacy.
Each ball's outcome is independent.
The probability is not 50% FYI (number of outcomes is not 2).
These 148 people who voted that the next ball will also be a sixer, did so because they believe that the batsman is on a hot streak, and that his streak would continue.
This is an emotional bias and is usually attached to human performance related events only.
3/ 45.3% (162) people voted that the 5th ball would be a dot ball, meaning the batsman wouldn't score anything.
These people displayed the classic "negative-recency" bias, which is also called the "Gambler's Fallacy".
