The yield curve is a graphical representation of the relationship between the yields of bonds with different maturities. The yield curve has been inverted before every recession in the United States since 1971, so it is often used as a predictor of recessions. Indeed, the spread between the long-term and …

What does the mean reversion of asset price have to do with options pricing? We have explored this topic previously for financial options. However, the mean-reverting property of an asset affects not only the values of financial options but also real options. A real option is the right – but …

A trading system is a set of rules that a trader uses to make buy and sell decisions. It’s commonly believed that a profitable trading system should be simple, with few parameters, so that it can be easily understood and followed. It is also important for the system to be …

The term mergers and acquisitions (M&A) refers to the consolidation of companies through financial transactions. This process involves one company acquiring another company’s shares. Several terms and conditions may apply to these transactions. However, these terms may differ from one market to another. The valuation adjustment mechanism is unique to …

Ed Thorp is a pioneer in the world of quantitative trading. He was one of the first people to use mathematics and statistics to develop trading systems and strategies. His work has been instrumental in developing the field of quantitative finance, and he is widely regarded as one of the …

In a previous post, we discussed how the dynamics of assets are priced in the options prices. We recently came across a newly published article that explored the same topic but from a different perspective that does not involve options. The conclusion of the new article is consistent with …

A collateralized debt obligation (CDO) is a security backed by a pool of assets, such as mortgages, credit card debt, or other types of loans. The issuer of a CDO assembles different types of debt instruments and sells ownership stakes in the CDO to investors. Because the underlying assets are …

DeFi, which stands for Decentralized Finance, is a growing sector in the world of finance. It refers to financial applications that are built on top of blockchain technology, and it offers a number of advantages over traditional finance. DeFi is still in its early days, but it is quickly gaining …

Human psychological bias affects us in many different ways. We have recently discussed how recency bias influences our trading. In this post, we’re going to talk about selection bias. Selection bias occurs when a statistical sample is not representative of the entire population. This situation arises, for example, when a …

Could There Be a #Bitcoin Crash Next Year?#BTC #SPYhttps://t.co/tU4VpwLJKV — Harbourfront Technologies (@DerivValuation) December 28, 2021 2021 was a meteoric year for crypto, with bitcoin looking to end the year almost 70% up from its January starting value, the first big crypto company (Coinbase) going public in April, and the …