Just merely a century ago almost 80% of the world population was totally or very much illiterate. Not until the idea of universal education was introduced just several decades ago then the general masses was given the chance of receiving education. Before that, studying was the privilege for certain social classes like the priests, members of royal families, nobles or the riches in the ancient time. Almost all common folks were not capable to write or read a single word at all, let alone studying with books. All their knowledge at that time was either the experiences passed down by their ancestors or learning by doing.
Over the centuries books are the condensation and carriers of knowledge from generation to generation. Due to illiteracy the general masses was deprived for centuries from this valuable heritage which was the drive of the technological and cultural progress. Also because of the lack of education, the mind of the general masses was muddled. They were not capable to comprehend the phenomenons happened around them because of their very weak reasoning ability. Therefore the general masses appeared to be foolish and stupid or even uncivilized. On the contrary those privileged were benefited by the nutrient from books so they were knowledgeable and intelligent. That made a huge difference between the knows and the don't knows thus fostered and strengthened the relationship between the ruling and the be ruled.
Things started to change only when universal eduction was promoted to the public as the result of the industrialization which demanded a lot of skilled workers whom needed at least basic education to be skillful. Driven by the democracy thinking sprung decades ago education is considered as a human right nowadays so illiteracy basically became history of the past in most parts of the world now except those suffered from poverty, civil wars or because of religious reason.
Since the universalization of eduction to the general public, the gap between the knows and the don't knows is shrinking. Knowledge is even seen as a turn around for the poors because education allows the kids from the poor families to climb up along the social ladder to improve living. This thinking holds true with the emergence of more and more middle class throughout the world nowadays. They were largely attributed by the higher education received comparing to their parents.
While literacy and education improved people's living since decades ago, there seems a new class of illiteracy is emerging especially in the past few years. I am not talking about those less fortunate people whom are deprived from education as I mentioned earlier. After all they are not new. What I am saying is technology illiterate. Science is advancing in an unprecedented rate day after day. New theories and new technologies are discovered everyday in all different science fields particularly in supercomputing, bio/genetics, neuroscience and artificial intelligence/robotic...etc. The pace is so fast that not only the experts in the related fields have to struggle to keep up with the latest development in order not to be left behind. To the general public the hot topics in the science world nowadays is really something happening in another planet. How many of the common folks understand what quantum physics, dwarf galaxy, superconductor, CRISPR are all about? Let alone to understand their principles and how these science are working. The general public is literally technological illiterate when facing these cutting edge sciences.
The polarization between the knows and don't knows on the fast developing science gave rise of this new class of illiteracy. People who are engaged in these cutting edge scientific researches are the smartest brains in the world. They are at the foremost positions in the front line of researches and the rest of the world is just chasing after them. Among these majorities, some can barely keep up with these smartest brains but most of the majority is not only left behind but just literally are not able to understand at all even just the principle of these advanced researches. A huge gap is emerging.
The gap in the past was attributed by the social ranking system but this new gap is the result of IQ differences. The old gap can be reduced by the provision of education to the general public but this new gap is about the inherent intellectual quality in each and every person and it is difficult, if not unable at all, to change. The old gap brought up the relationship of ruling and be ruled. What is this new gap going to create when the smartest brains keep leaping forward while the general masses not even has a chance to follow the bandwagon?
Homo sapiens is the systematic name to describe modern human being. The key difference between Homo sapiens and its ancestor Apes is the degree of intelligence owned by these two species so as the things they are able to do under their respective intelligence. Those smartest scientists engaging in the most advanced scientific researches have much higher IQ than do the common folks in the first place. Due to their high IQ their learning curve is steeper and requires much less time to pick up new knowledge than the common folks. The result is that these smartest brains not only keep excel than common folks but in an much faster progress rate than the counterpart. Will there be one day these smartest brains evolute into the super Homo sapiens which dwarfs the existing human being in similar way in which we, as homo sapiens, to look at apes?
2018年8月23日 星期四
2018年8月16日 星期四
Index option trading with statistic (4)
In my third post regarding the same topic, I mentioned that the settlement point for this August should rest between 306 and 266 according to the 0.95 probability shown by my database. This probability comes from the statistic of the past 215 months. Despite these 215 months have seen up and down trends over the 18 years but after all there is no consideration is associated with the market trend at the prevailing moment so the settlement point indicated by the database is only for a preliminary idea on where the settlement point will probably be like at the beginning of each month.
After the first phase of August has lapsed, according to the pattern of the first phase, my database reveals that there are 0.6 probability of 1L3H or 0.2 probability of 1H3L for this month. Again these indications are from the past statistic with the same pattern in phase one of a month disregard the current market sentiment. Although past statistic indicated a higher probability of ascending pattern for this month but judging from the reality I tend to neglect this forecast but prefer the 0.2 probability of descending pattern. Of course apart from 1H3L there could be another possibility of 1H2L as well which my database did not show any probability according to the past statistic. I said so because I assume the highest point of the month has already existed on August 1 at 28773 and with the day low of today at 26871 so the chance of the index will go further than the current month high is very slim in the remaining days. As such the possibility of 2L3H is ruled out. Therefore literally there are only 2 possibilities in this month, ie., 1H3L or 1H2L.
With the assumption that the month's high has already existed so this can be used as an anchor for sorting. Meanwhile with the possibilities of 1H3L or 1H2L in mind I did sorting in my database to find the statistic on the deviation between settlement point and month's high. It revealed a 0.9 probability at 1716 points for 1H2L and at 3072 points for 1H3L. It means if it turns out to be 1H2L then the possible settlement point with 0.9 probability will not be lower than the 270 level while for the another possibility of 1H3L then it will not be lower the 257 level. These two settlement point estimations has taken into account the current market situation. Up to this moment the choice of the strike largely depends on how one assesses whether this month will end up into 1H3L or 1H2L. On the other hand so far this month's volatility is only 1902 points which seems too small considering the market tension resulting from quite a number of negative issues in this month. It seems more downward movement is yet to come so it is more likely to be 1H3L in this month.
This is the example on the elaboration of how Probability Trading could be helpful on the strike picking.
After the first phase of August has lapsed, according to the pattern of the first phase, my database reveals that there are 0.6 probability of 1L3H or 0.2 probability of 1H3L for this month. Again these indications are from the past statistic with the same pattern in phase one of a month disregard the current market sentiment. Although past statistic indicated a higher probability of ascending pattern for this month but judging from the reality I tend to neglect this forecast but prefer the 0.2 probability of descending pattern. Of course apart from 1H3L there could be another possibility of 1H2L as well which my database did not show any probability according to the past statistic. I said so because I assume the highest point of the month has already existed on August 1 at 28773 and with the day low of today at 26871 so the chance of the index will go further than the current month high is very slim in the remaining days. As such the possibility of 2L3H is ruled out. Therefore literally there are only 2 possibilities in this month, ie., 1H3L or 1H2L.
With the assumption that the month's high has already existed so this can be used as an anchor for sorting. Meanwhile with the possibilities of 1H3L or 1H2L in mind I did sorting in my database to find the statistic on the deviation between settlement point and month's high. It revealed a 0.9 probability at 1716 points for 1H2L and at 3072 points for 1H3L. It means if it turns out to be 1H2L then the possible settlement point with 0.9 probability will not be lower than the 270 level while for the another possibility of 1H3L then it will not be lower the 257 level. These two settlement point estimations has taken into account the current market situation. Up to this moment the choice of the strike largely depends on how one assesses whether this month will end up into 1H3L or 1H2L. On the other hand so far this month's volatility is only 1902 points which seems too small considering the market tension resulting from quite a number of negative issues in this month. It seems more downward movement is yet to come so it is more likely to be 1H3L in this month.
This is the example on the elaboration of how Probability Trading could be helpful on the strike picking.
2018年8月3日 星期五
Index option trading with statistic (3)
In my previous post with the same heading I mentioned an idea of trading index option based on the probability as a result of a database. I called it Probability Trading because trading decisions refer to the probability of relevant event regarding a particular sorting result.
In the last post I said one could reasonably expect the July HSI option settlement point to rest between304 and 264. The exact settlement point was 28644, just 44 points above the rollover point. This is a very small deviation from the rollover point. With the same principle, the expected settlement point should lie between 306 and 266 for this month August. August should see a bigger volatility because the trade war tension intensifies.
In the first post of this topic I mentioned that a database is good for strike picking as well as the timing of position building. Every option traders know that apart from picking a suitable strike timing also plays a crucial element in option trading. Indeed it could be the key factor of profitability or even between the make or break due to the time value decay property of option.
When we talk about timing in option trading, there are mainly two key aspects, ie., which type of position, ie., long or short, is more appropriate for the different phases in a particular month if we break it into three phases namely the beginning, middle and the end of a month. The other aspect of the timing is about exactly when the position should be built. All seasoned option traders know that generally speaking long position is better built in the beginning of a month then to close it before the middle of the month when time value starts to shrink rapidly in an accelerated rate day after day while the short side position contrarily can be benefited from this phenomenon. We do not need a database to know this.
For the second aspect, ie., the exact timing to build a position, is mainly for the short side because short position, once built, is always exposed to the index movement that goes against the position which leads the position subjected to a heavy increase on the margin requirement. So the effort in the attempt to build the short position after the intra month's peak or bottom is highly desirable. This is when a database could provide some insight over the past records.
If we break down a month into three phases, the first 10 days as phase 1, 11th-20th day as phase 2 and the remaining days as phase 3. Depending on the sequence of the month's high and low, there are 1H3L, 1H2L, 2H3L which are mainly a descending pattern and 1L3H, 1L2H, 2L3H which are in ascending pattern. What a short side trader does not want to see is at any time after building the position but then finds out the peak or bottom is yet to come but will fall into the phase 3, especially when the index will rise above his short call position or will drop below his short put position.
Apparently an early identification of whether a particular month is in descending or ascending pattern is helpful to avoid this situation. On the other hand, a high success rate of guess on which phases the month's H and L will land in could further minimize the chance to fall into the above situation. For example, if a particular month is identified with pattern of 2L3H, short put position is safe to be built only in phase 2 when the month's L has already existed while short call position is always not suitable in that month. Knowing the HL pattern in a month in advance helps a lot on the timing of the short side position building.
However, one will know when the month's H & L happen only when the month finishes so how to identify the pattern before the month ends is vital. This is the time a database can help. By sorting with some parameters, past record reveals the probability of different patterns in a month. Sorted with the parameter of the pattern of the 1st phase, my database can reveal the probability as high as 0.6 for the pattern of 1L3H. That means when one sees that particular signal appears in a particular month, there will be 60% of chance that that particular month could be 1L3H. In such case, the trader has a relatively higher confidence to build his short put position in an earlier stage to enjoy the more time value given. The probability info helps on trading decision so that's why I called this trading method as Probability Trading.
Having said so, the success of probability trading lies on how one builds his own database. The key point is whether or not the database is incorporated with the meaningful parameters that can lead to the reveal of the pattern of a month when sorting. My post on this topic is merely an inspiration on the method but how probability trading is beneficial to any trader largely depends on how one designs his own database which can give the greatest benefit out of it.
In the last post I said one could reasonably expect the July HSI option settlement point to rest between304 and 264. The exact settlement point was 28644, just 44 points above the rollover point. This is a very small deviation from the rollover point. With the same principle, the expected settlement point should lie between 306 and 266 for this month August. August should see a bigger volatility because the trade war tension intensifies.
In the first post of this topic I mentioned that a database is good for strike picking as well as the timing of position building. Every option traders know that apart from picking a suitable strike timing also plays a crucial element in option trading. Indeed it could be the key factor of profitability or even between the make or break due to the time value decay property of option.
When we talk about timing in option trading, there are mainly two key aspects, ie., which type of position, ie., long or short, is more appropriate for the different phases in a particular month if we break it into three phases namely the beginning, middle and the end of a month. The other aspect of the timing is about exactly when the position should be built. All seasoned option traders know that generally speaking long position is better built in the beginning of a month then to close it before the middle of the month when time value starts to shrink rapidly in an accelerated rate day after day while the short side position contrarily can be benefited from this phenomenon. We do not need a database to know this.
For the second aspect, ie., the exact timing to build a position, is mainly for the short side because short position, once built, is always exposed to the index movement that goes against the position which leads the position subjected to a heavy increase on the margin requirement. So the effort in the attempt to build the short position after the intra month's peak or bottom is highly desirable. This is when a database could provide some insight over the past records.
If we break down a month into three phases, the first 10 days as phase 1, 11th-20th day as phase 2 and the remaining days as phase 3. Depending on the sequence of the month's high and low, there are 1H3L, 1H2L, 2H3L which are mainly a descending pattern and 1L3H, 1L2H, 2L3H which are in ascending pattern. What a short side trader does not want to see is at any time after building the position but then finds out the peak or bottom is yet to come but will fall into the phase 3, especially when the index will rise above his short call position or will drop below his short put position.
Apparently an early identification of whether a particular month is in descending or ascending pattern is helpful to avoid this situation. On the other hand, a high success rate of guess on which phases the month's H and L will land in could further minimize the chance to fall into the above situation. For example, if a particular month is identified with pattern of 2L3H, short put position is safe to be built only in phase 2 when the month's L has already existed while short call position is always not suitable in that month. Knowing the HL pattern in a month in advance helps a lot on the timing of the short side position building.
However, one will know when the month's H & L happen only when the month finishes so how to identify the pattern before the month ends is vital. This is the time a database can help. By sorting with some parameters, past record reveals the probability of different patterns in a month. Sorted with the parameter of the pattern of the 1st phase, my database can reveal the probability as high as 0.6 for the pattern of 1L3H. That means when one sees that particular signal appears in a particular month, there will be 60% of chance that that particular month could be 1L3H. In such case, the trader has a relatively higher confidence to build his short put position in an earlier stage to enjoy the more time value given. The probability info helps on trading decision so that's why I called this trading method as Probability Trading.
Having said so, the success of probability trading lies on how one builds his own database. The key point is whether or not the database is incorporated with the meaningful parameters that can lead to the reveal of the pattern of a month when sorting. My post on this topic is merely an inspiration on the method but how probability trading is beneficial to any trader largely depends on how one designs his own database which can give the greatest benefit out of it.
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