The Saturday Spread: Using Inductive Reasoning to Identify Options Trading Opportunities

While it’s tempting to search for narrative insights that the market may have missed, chances are, whatever major drivers that can materially impact a publicly traded company’s valuation has probably already been priced in. As such, the more effective means of assessing the forward dynamics of a security may be to frame the market behaviors using the Markov property. Under Markov, the future state of a system depends solely on the current state. Colloquially, this simply means that probabilities are infl ...