Blog Posts

Vanna (Option Greek)

Vanna is a second-order Greek used in options trading and risk management.  It measures:  the rate of change in an option’s vega with respect to changes in the underlying asset’s price, or the sensitivity of the option delta with respect to change in volatility In other words, Vanna quantifies how an option’s sensitivity to volatility […]

Theta (Option Greek)

Theta, often referred to as time decay, is one of the most popular “Greeks” in options trading. It measures the rate at which an option’s value decreases as time passes – assuming all other factors remain constant. Understanding Theta is important for options traders, as it directly impacts the profit/loss of their positions.   Key […]

Vega (Option Greek)

Vega is one of the “Greeks” used in options trading and risk management. It measures the sensitivity of an option’s price to changes in the underlying asset’s implied volatility. Vega is an important concept for options traders and investors to understand, as it provides insights into how volatility affects option prices.   Key Takeaways – […]

Synthetic Data in Trading

In finance, stress testing is an important practice for assessing the resilience of portfolios and trading strategies under various adverse scenarios.  Historical data can provide insights, but it’s limited by the fact that we only have one run through history.  This is where synthetic data comes into play. It offers a complement to traditional backtesting […]

How to Trade Water Rights

Water rights trading is an increasingly important aspect of resource management in many parts of the world – particularly in areas facing water scarcity. As populations grow and climate change impacts water availability, the ability to buy, sell, and trade water rights has become an important mechanism for allocating this vital resource efficiently. Water rights […]

Objective Functions in Trading

In quantitative trading and algorithmic finance, objective functions are used in defining and optimizing trading strategies. An objective function is a mathematical expression that represents the goal or desired outcome of a trading system. It provides a measurable target that the algorithm looks to maximize, minimize, or hold within a certain range, among many other […]

How to Measure Risk in Financial Markets (VaR, Standard Deviation, and More)

Measuring risk is a critical aspect of finance as it helps traders/investors, financial institutions, and companies make informed decisions about their trades, investments, and their overall financing activities. The importance of measuring risk in finance can be summarized as follows: Risk and return are intertwined: By and large, every investment involves a trade-off between risk […]

How to Design a Portfolio

Designing a portfolio is a complex and multifaceted process that requires careful consideration of numerous factors. At least it can be. For long-term passive investors, it might involve regularly contributing to some index funds, with the main driver of success being their savings rate. For an amateur trader, it might first be experimenting, trading off […]

Do You Need a Degree to Be a Trader?

A degree is not always necessary to become a trader. While some firms may require formal education for credibility and foundational knowledge, many prioritize hands-on experience and skills such as analytical thinking and synthesis of ideas. Moreover, the accessibility of online resources and platforms allows individuals to learn and practice trading independently. Additionally, certifications and […]

Collateral Requirement Management in Trading

Collateral requirement management is a critical aspect of trading and risk management in financial markets. It involves the process of calculating, monitoring, and adjusting the collateral needed to secure various trading positions and financial transactions. Effective collateral management helps reduce counterparty risk, ensures compliance with regulatory requirements, and optimizes the use of available assets.   […]

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