Expensive put options

[filthy]

i think the crucial thing is to not evaluate your risk within the same mental framework as you used to find the trade.



so you use the generalized black scholes paradigm to estimate the value of the puts. This leads you to say something like "the implied vol curve is pricing skewness at -6.5 but realized skewness has never traded over -2.0 so i'm going to buy a ratioed put spread because it also looks like the atm vol is fairly priced".



then for risk management you step outside this to a meta level and say "no phucking way am i going to lose more than 200k on this trade even if this pos goes to zero so i'm going to buy some teenies."



if you can't find a option position that can accomplish all this you move on to the next stock.

[kr]

was hoping to hear your opinion on this one f - many thanks



without saying anything more, I have come up with a strategy I am very much satisfied with. it is interesting to see what people think of it.



as for Niederhoffer, I get tired of the writing style and can't manage more than 10pp at a time. somehow I get through soros b/c it is dry but there is more content. still, soros doesn't have much to say on this problem.



i was so excited i was sort of sorry it was a three day weekend. it is funny, i also read taleb and noticed that he is inconsistent about this.



anyhow sorry i can't say more, thanks for the feedback.