Ultimate Guide to Stock Market Prices - Spread Betting

ELI5: What is Spread Betting within the Stock Exchange?

submitted by Zaoth to explainlikeimfive [link] [comments]

Good platforms for US markets in UK

Can anyone reccomend a platform that I can use in the UK which allows

  1. Fast (within a few minutes) trades on US markets (in particular NASDAQ)
  2. Offers a very wide range of stocks - including small-cap companies.
  3. Depositing in dollars so as to avoid nasty exchange rates (losing >1% twice really sucks).

I use eToro, and the trades are immediate but the range of available stocks is quite small. Most smallers companies aren't available. I've wanted to check out loads of small companies and maybe 1 or 2 out of around 100 I checked were not available. So it fails only number 2.
I have also used Halifax Share Dealing but it fails on all 3 counts - I stopped using it. Trades take 1 day or more, better range than eToro but still poor, and only GBP can be held, so I lose a good 2.5% by exchanging on the platform.
submitted by DavyKer to investing [link] [comments]

Bloomberg: Nikola founder Milton's fall reveals what his backers feared

Back in March, long before a short seller would raise questions about electric-truck company Nikola Corp. and hasten its founder’s exit, early investors in the company were expressing concerns of their own. Those investors, led by mutual-fund giant Fidelity Investments, were worried that Trevor Milton, for all his brash visionary talk and Twitter braggadocio, lacked the ability that Elon Musk possesses to deliver these sorts of newfangled products to market. They lobbied successfully to remove him as CEO before the company’s June IPO and for Milton’s father to leave the board, according to people familiar with the matter. When the deal was done, Milton only held the title of chairman, the post he resigned this month.
The back-room negotiations show that Milton’s past was a concern to investors months before General Motors Co. executives placed a bet on the company in a US$2 billion deal carved out after the IPO. They liked Milton’s vision and his ability to raise cash and felt the venture was safeguarded from his shortcomings in operations by his push upstairs, say people familiar with the matter. Nonetheless, the events that have unfolded since the short-seller report, with Nikola’s stock plunging amid a steady stream of negative headlines, have exposed just how high the risks still were.
Now, it’s up to former GM Vice Chairman Steve Girsky, whose blank-check company VectoIQ took Nikola public via reverse merger in June, and Nikola CEO Mark Russell to stabilize the business and regain investor confidence. The plan with GM was to use Nikola’s hot stock and Milton’s ability to raise money to build a hydrogen-fueled trucking business with GM’s technology.
“There is obviously someone on the diligence side who isn’t going to get a nice bonus this year,” said Reilly Brennan, founder of the venture capital fund Trucks Inc. “The best possible thing if you’re a shareholder is that Milton is no longer running the company and you have Girsky as chairman and GM providing technology.”
The GM deal was originally scheduled to close Sept. 30, and the automaker has said it plans to carry through, but that timing may slip, say people familiar with the matter. BP Plc is still engaged with Nikola in talks to partner on a network of hydrogen fueling stations for fuel-cell trucks the company hopes to sell, but also is slowing the pace for a deal, said the people, who asked not to be identified discussing private information. BP and GM declined to comment.
Milton’s tale reads like a Greek tragedy. The report by short seller Hindenburg Research accused Milton of overhyping Nikola’s technology and has prompted investigations by the Justice Department and U.S. Securities and Exchange Commission. A cousin has accused him of a decades-ago sexual assault, which he denies. The company’s value peaked at US$30 billion and is now worth about US$7 billion.
Girsky and GM Chief Executive Officer Mary Barra have both said publicly that they did plenty of due diligence. People familiar with the matter say that GM found out when scouting the deal that it had better batteries and fuel-cell technology but joined forces because Nikola had a working semi truck and access to capital markets. In addition, GM will get paid to build Nikola’s Badger pickup on existing assembly lines. Milton was so excited to get the Badger pickup program moving that he signed a deal that heavily favored GM, one of the people said.
Nikola’s stock and GM’s US$2 billion stake are worth less than half what they were on Sept. 8, when the deal was announced. Milton’s own stake is worth US$1.7 billion, down from almost US$5 billion at one point.
Milton said in a June interview with Bloomberg News that he grew up in modest surroundings in Layton, Utah. His family moved to Las Vegas when he was very young and he lost his mother to cancer shortly after moving back to Utah in the sixth grade. He wrote on Twitter he didn’t finish high school, earning an equivalency certification instead, and later dropped out of college. His Twitter account has since been deleted.
He grew up in a tight-knit Mormon family, according to Aubrey Smith, his first cousin. She went on social media recently and accused him of sexually assaulting her in 1999 when she was 15 and he was 17.
In a public account on Facebook and Twitter, and repeated in a phone interview, Smith said that Milton came onto her at the funeral of their grandfather. He took her shirt off without permission, Smith wrote, and then he touched her inappropriately before someone knocked at the door and she ran out.
Milton denied the allegations through a spokesman.
Smith said Milton raised money from family members to get his start. He founded and ran several businesses, including a home-security company that Milton claims he sold for US$1.5 million. Next, in 2009, he founded an e-commerce platform called Upillar.com, which Milton claims “pioneered the shopping cart online.”
Then he got into clean propulsion but ended up embroiled in litigation with dHybrid Inc., which he founded in 2009. The company retrofitted diesel vehicles with natural-gas-burning turbines, claiming the dual system had greater efficiency.
But a deal with Swift Transportation Co. in 2010 ended in court when Swift alleged dHybrid defaulted on a US$322,000 loan and that it retrofitted only half of the agreed vehicles. The case was dismissed in 2015.
Milton later tried to sell dHybrid to a company called sPower in May 2012 but that, too, got mired in lawsuits after sPower backed out and accused Milton of exaggerating its technological capabilities.
Amid the litigation, Milton started another company with a very similar name, dHybrid Systems, selling it in 2014 to Worthington Industries.
During an interview with Bloomberg in June, Milton said that dHybrid Inc. was a success but conceded that, “we ended up closing that one down because of some litigation.”
His next startup was Nikola, founding it in 2014 in Salt Lake City before moving to Phoenix. Emulating Musk, he took the name from the electricity pioneer Nikola Tesla, and the company was soon billed as the Tesla of Trucks. His plan was seen as potentially disrupting the entire transportation industry by making trucks that ran on batteries or hydrogen-fuel cells. He also planned to build a network of hydrogen filling stations.
Friends and Family
Milton had friends and family members working for Nikola despite resumes that didn’t match the job. His brother, Travis Milton, is director of hydrogen and infrastructure. His LinkedIn profile shows that most of his experience was being “self-employed” in Maui. The short seller, Hindenburg Research, said that Travis Milton poured concrete as a contractor. Milton’s father Bill was originally on the board but stepped down when VectoIQ took the company public.
The company’s stock prospectus said that Nikola had awarded more than 3 million stock options “to recognize the superior performance and contribution of specific employees.” The list included Travis Milton and an uncle, Lance Milton, the document said, acknowledging that they are relatives.
As Milton went public with Nikola’s technology, questions soon arose involving his claims about the company’s fuel-cell system. He bragged in an investor video in 2019 that the company had created “what other manufacturers said was impossible to design.” But while Nikola holds patents in fuel-cell and battery technology, most of its planned hardware was coming from German supplier Robert Bosch Gmbh.
Nikola Demonstrations
It became clear that Milton had gotten ahead of himself. A 2016 demonstration showed a truck that didn’t have a working hydrogen-fuel-cell system and was missing key parts, people familiar with the matter said in June. Milton said at the time that the parts were removed as a safety precaution.
In July of this year, he recorded a video of the semi truck in which he ran alongside the vehicle as it coasted at low speeds in a parking lot. Aping Musk’s combative social-media persona, Milton took a shot at his detractors saying, “these damned trolls, I wonder if they are going to apologize to everyone for the lies they spread the tens of thousands of comments about how fake we are.”
Girsky said in the webcast “Autoline This Week,” in which Bloomberg participated, that he has been in Nikola’s fuel-cell trucks and that they work.
Still, when the GM deal was done, GM will be supplying all of the technology for every global market except Europe. Nikola’s pickup truck, called Badger, will use GM’s Ultium battery, and the semis will run on a fuel cell developed by GM and Honda Motor Co.
Since Milton’s departure, Nikola has billed itself more as an integrator of other technologies into its Badger pickup and semi trucks.
For GM’s part, the automaker is protected from any financial downside. GM got 11 per cent of the stock for no cash investment and gets paid for its technology. If Nikola fails, GM won’t lose a dime.
Milton has remained silent and is out of the company. He unknowingly presaged his own downfall in the June interview with Bloomberg: “Part of becoming a better person in life is losing everything you have got and having nothing left.”
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5 Strategies in Quant Trading Algorithms

Hey everyone, I am a former Wall Street trader and quant researcher. When I was preparing for my own interviews, I have noticed the lack of accurate information and so I will be providing my own perspectives. One common pattern I see is people building their own algorithm by blindly fitting statistical methods such as moving averages onto data.
I have published this elsewhere, but have copy pasted it entirely below for you to read to keep it in the spirit of the sub rules. Edit: Removed link.

What it was like trading on Wall Street

Right out of college, I began my trading career at an electronic hedge fund on Wall Street. Several friends pitched trading to me as being a more disciplined version of wallstreetbets that actually made money. After flopping several initial interviews, I was fortunate to land a job at a top-tier firm of the likes of Jane Street, SIG, Optiver and IMC.
On my first day, I was instantly hooked.
My primary role there was to be a market maker. To explain this, imagine that you are a merchant. Suppose you wanted to purchase a commodity such as an apple. You would need to locate an apple seller and agree on a fair price. Market makers are the middle-men that cuts out this interaction by being always willing to buy or sell at a given price.
In finance lingo, this is called providing liquidity to financial exchanges. At any given moment, you should be confident to liquidate your position for cash. To give a sense of scale, tens of trillions in dollars are processed through these firms every year.
My time trading has been one of the most transformative periods of my life. It not only taught me a lot of technical knowledge, but it also moulded me to be a self-starter, independent thinker, and hard worker. I strongly recommend anyone that loves problem solving to give trading a shot. You do not need a mathematics or finance background to get in.
The trading culture is analogous to professional sports. It is a zero sum game where there is a clear defined winner and loser — you either make or lose money. This means that both your compensation and job security is highly dependent on your performance. For those that are curious, the rough distribution of a trader’s compensation based on performance is a tenth of the annual NBA salary.
There is a mystique about trading in popular media due to the abstraction of complicated quantitative models. I will shed light on some of the fundamental principles rooted in all trading strategies, and how they might apply to you.


One way traders make money is through an arbitrage or a risk free trade. Suppose you could buy an apple from Sam for $1, and then sell an apple to Megan at $3. A rational person would orchestrate both legs of these trades to gain $2 risk free.
Arbitrages are not only found in financial markets. The popular e-commerce strategy of drop-shipping is a form of arbitrage. Suppose you find a tripod selling on AliExpress at $10. You could list the same tripod on Amazon for $20. If someone buys from you, then you could simply purchase the tripod off AliExpress and take home a neat $10 profit.
The same could be applied to garage sales. If you find a baseball card for $2 that has a last sold price on EBay for $100, you have the potential to make $98. Of course this is not a perfect arbitrage as you face the risk of finding a buyer, but the upside makes this worthwhile.

Positive expected value bets

Another way traders make money is similar to the way a casino stacks the odds in their favour. Imagine you flip a fair coin. If it lands on heads you win $3, and if it lands on tails you lose $1. If you flip the coin only once, you may be unlucky and lose the dollar. However in the long run, you are expected to make a positive profit of $1 per coin flip. This is referred to as a positive expected value bet. Over the span of millions of transactions, you are almost guaranteed to make a profit.
This exact principle is why you should never gamble in casino games such as roulette. These games are all negative expected value bets, which guarantees you to lose money over the long run. Of course there are exceptions to this, such as poker or card counting in black jack.
The next time you walk into a casino, make a mental note to observe the ways it is designed to keep you there for as long as possible. Note the lack of windows and the maze like configurations. Even the free drinks and the cheap accommodation are all a farce to keep you there.

Relative Pricing

Relative pricing is a great strategy to use when there are two products that have clear causal relationships. Let us consider an apple and a carton of apple juice. Suppose there have a causal relationship where the carton is always $9 more expensive than the apple. The apple and the carton is currently trading at $1 and $10 respectively.
If the price of the apple goes up to $2, the price is not immediately reflected on the carton. There will always be a time lag. It is also important to note that there is no way we can determine if the apple is trading at fair value or if its overpriced. So how do we take advantage of this situation?
If we buy the carton for $10 and sell the apple for $2, we have essentially bought the ‘spread’ for $8. The spread is fairly valued at $9 due to the causal relationship, meaning we have made $1. The reason high frequency trading firms focus so much on latency in the nanoseconds is to be the first to scoop up these relative mispricing.
This is the backbone for delta one strategies. Common pairs that are traded against each other includes ETFs and their inverse counterpart, a particular stock against an ETF that contains the stock, or synthetic option structures.


Correlations are mutual connections between two things. When they trend in the same direction they are said to have a positive correlation, and the vice versa is true for negative correlations. A popular example of positive correlation is the number of shark attacks with the number of ice-cream sales. It is important to note that shark attacks do not cause ice-cream sales.
Often times there are no intuitive reason for certain correlations, but they still work. The legendary Renaissance Technologies sifted through petabytes of historical data to find profitable signals. For instance, good morning weather in a city tended to predict an upward movement in its stock exchange. One could theoretically buy stock on the opening and sell at noon to make a profit.
One important piece of advice is to disregard any retail trader selling a course to you, claiming that they have a system. These are all scams. At best, these are bottom of the mill signals that are hardly profitable after transaction costs. It is also unlikely that you have the system latency, trading experience or research capabilities to do this on your own. It is possible, but very difficult.

Mean reversions

Another common strategy traders rely on is mean reversion trends. In the options world the primary focus is purchasing volatility when it is cheap compared to historical values, and vice versa. Buying options is essentially synonymous with buying volatility. Of course, it is not as simple as this so don’t go punting your savings on Robinhood using this strategy.
For most people, the most applicable mean reversion trend is interest rates. These tend to fluctuate up and down depending on if the central banks want to stimulate saving or spending. As global interest rates are next to zero or negative, it may be a good idea to lock in this low rate for your mortgages. Again, consult with a financial advisor before you do anything.
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PSA: Why the BI is the better and more valuable event vehicle

A complete analysis of the Bereznyak-Isayev BI-1

Why it is a very unique vehicle that was overlooked, but will soon be rare and highly valued
The BI is an interesting plane, and due to its in-game characteristics, the setup of the event, and the overall attitude of players, I have realized that it is very likely that this will be an extremely expensive plane soon, and that there is a way to get it discounted right now, but it is only viable until the 12th of October. This post is quite long, but I hope you find it as interesting as I did, and if at all possible, helpful as well.
READ ME: There are four sections to this analysis, each which details why this plane is likely to be sought after; read only the part/s which interest you most, as it is quite long (even by TEC standards). View conclusion for TL;DR.

The most unique gameplay and flight characteristics in War Thunder
From tier I-V there are two basic strategies. Having more energy than the opponent by climbing or staying at high speeds, and turnfighting. Most planes specialize in a certain area while lacking in another another, such as the Fw 190 Ds or P-47s which have great guns, engine power, and energy retention, but sacrifices turnfighting capability and speed. On the other hand we have the A6M1 "Zero" or Spitfire, which can climb well and turn very well, but sacrifice speed, energy retention, and have bad guns. The BI has the capability to do everything that these planes do but better, except it has horrible guns.
Apart from this plane, there are almost none which have good everything, and while the BI has some detriments, it out-preforms every single plane at its tier in every non-weaponry department, especially considering it is at 6.7. The fact that its the only useable rocket plane in the game (RIP Me 163) and it faces propeller planes and early jets means that it has gameplay that is not replicated with any other plane in the game.
In terms of performance, its only detriments come from the fact that it preforms unlike any other plane in the game. You see pilots fly at 100% throttle and dive at 700km/h in this thing then crash because they cant pull up. Compare this to a player who just unlocked their first jet, and starts climbing at 250km/h then tries to dogfight propeller planes. Until then their doctrine was good for propeller planes, but they must learn to adapt to the completely new fighting style. The same goes for the BI. At low speeds it can outturn a Spitfire and Ho 229, especially with flaps. At mid speeds (just under 600km/h) it can pull a sustained 14g, which is nearly impossible save for the Ho 229 and a some Mach capable jets.
At high speeds (600+) The BI is a flying brick, but consider two things. First; it can sustain 750km/h with only 35% throttle, second, it can sustain 500km/h in a climb at 45% throttle and reach 5000m after 2.5 minutes with 60 seconds of fuel left. Compare this to the British 7,000 GE Premium, the Spitfire FR Mk XIVc, which according to the WT climb chart, takes 4 minutes and 45 seconds to reach the same altitude at 100% throttle, so the BI already out climbs it by a considerable margin at 35% throttle, while at 100% it can reach that altitude in 1 minute and 10 seconds, over four times faster. Practically Nothing around these BRs can outclimb this plane, or outrun it either.
It is notable that at low altitudes you get "REDUCE SPEED" warnings around 730 km/h, but it your plane will not rip. Instead, you can go up to 900km/h at which you simply stops accelerating (its your top speed). You dont rip anything at this speed, but your controls are quite sluggish.
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At over 600km/h other planes have a maneuverability advantage, but this plane can pull up and cut throttle to stay above them, and now as the enemy has been maneuvering, they are slow, and you can swoop down on them or turn in with them, as at slow speeds you excel. If they try to run away, at 35% throttle you can easily outrun them, so if they turn you catch them, and if they run, you catch them. The enemies best bet is trying to make you overshoot, as the BI's incredible energy retention can be a curse at times, as even at 0% throttle you can convert 800km/h into 2500m of altitude, but it also means slowing down to stay on an evasive enemies tail is hard. You can always pull up and out though, and dive back on them as mentioned before.
With such a powerful engine, it is limited with a 1 minute and 57 second fuel load. This is deceiving, as I have tested the longevity of the fuel at different throttle settings, and it is as many have noted, non linear. For the exact data on how long fuel lasts, check out this post. If the fuel consumption and throttle percentage were directly correlated, you would expect that for 60 seconds of fuel; 100% throttle would last 60 seconds, 10% would last 600 seconds, and 1% would last 6000 seconds, while in reality as it is non-linear, 100% lasts 60 seconds, 10% lasts 6,600 seconds (1h 50m), and 1% lasts for 660,000 seconds (183 hours). At 35% throttle you have about 8 mins of fuel, a respectable amount, and as mentioned above, you can sustain 750km/h. This engine is even more powerful than the other rocket plane, the 163, but the 163 is at 8.0-8.7 where it faces MiGs and Sabres, while this plane is at 6.7 where it faces P-51s and Me 262s, and it can completely dominate them.
The % of throttle used exponentially increases the fuel used. But this is deceiving, the airframe of this plane creates almost no drag, so cutting throttle doesn't really limit top speed, only makes it take longer accelerate to such speeds. At most throttles the BI can sustain a very high top speed, as it only needs a bit of thrust to counteract what air resistance it does experience, so it can stay at high speeds. You almost never want to use throttles above 50%. The situations in which high throttles can be useful is in a stallfight when you need more thrust to hang in the air a bit longer, if you are at low speeds and need to get the energy advantage quickly, be it getting to a top speed then throttling down, or climbing up to escape low enemies. When hunting bombers do not use full throttle, as at high altitudes your rip speed and controllability decreases significantly, and you will never reach high enough altitudes if you waste your fuel in a 100% throttle and 60 degree climb, you wont have fuel left over, but at 35% you climb slower, but still much faster than anything else, and by the time bombers start reaching your bases, you can easily be at 6000-7000 meters with a good amount of fuel left.
As fuel efficiency is quite important, it would be very useful if someone who is good with data and aeronautical concepts could find the most efficient throttle + angle of climb combination for this aircraft. From what I have seen, 35% throttle at 400km/h is quite efficient and can get you to altitude fast.
Now about its guns. In protection analysis you can compare the damage of AP-I and FI-T, but not HE, and although there is info about the 20mm ShVAK in-game and on the wiki page, no where could I find the muzzle velocities of each round, and much info is from years ago, so finding accurate reliable information was hard. I, along with many players would be grateful if u/gszabi99 could extract the data for the damage and velocity of different types rounds, or if Gaijin would allow us to do protection analysis for every round, as until now the consensus on best belts are based on speculation.
From what I can tell, the HE has a bad reputation. On protection analysis, AP-I does good damage when hitting a critical component, but doesn't do well on wings or the main fuselage. I would estimate that without a pilot snipe or fire, it would take 3-4 shells to the same spot of the wing to snap it, four shells to the tail to break the controls, but only 1-2 shells to destroy an engine. FI-T appears to explode on impact, but does little damage. It would probably take 3-4 shells to the same spot to snap a wing, five to the tail to kill the controls, but four for an engine. Overall, the AP-I seems better, as it appears to have a higher muzzle velocity, is likely to start fires (which can kill much more reliably then the guns damage itself), and pens more, so is more likely to reach the pilot. FI-T can also be useful, but seems to spark more often, and its lack of pen make it useless when hunting bigger planes. For dogfighting it can be better, as snapshots during turning tend to hit flat wings, and while AP-I passes right through, FI-T damages the whole wing. Its lack of pen doesn't matter, as planes that dogfight you are small and lightly armored, and the spread of damage can do more on a hit. If your style is being on an enemies tail and fighting armored and big enemies, AP-I is best for fires, pilot snipes, and killing engines. If you prefer turnfighting, snapshots, and fighting light enemies, FI-T might be best for you.
On the topic of guns, from what I am seeing, the Russian air tree is preforming much worse in the current meta then its contemporaries. From tier I to VI its planes are generally outclassed, with few notable exceptions such as the MiG-17AS and the IL-2s. At low-mid tiers their engine performance and guns are mediocre, and in upper tiers the Phantom is dominant. Gaijin will surely see that people are not grinding out the Russian tree nearly as much as other nations with better planes. I cant predict what they will change to attempt to balance this, or even if they will do anything about it at all, but it is possible that, as we have seen in the past, if a certain thing is underperforming, it will have its characteristics improved, and if it is over preforming, vice versa. I think we can all agree that ShVAKS are underperforming, but the question is whether Gaijin will do anything about it.
It is easily a 7.7 worthy in terms of performance, but its bad guns mean it is 6.7 and faces props and early jets, both of which can do nothing against it if the pilot is smart and does not take unnecessary risks. It reminds me of the He 100 when it was at 1.7. A plane that preforms incredibly well, but as it had guns worse those that of biplanes, it was placed at a br at which it faced biplanes, and nothing could touch it. Good players were in a position where they could not be killed if they played it right, and could shred the enemy team.
Overall it could be argued that it is the best plane at its BR, but it depends on how much you like guns. If you are experienced in nations with bad guns such as Brittan, Russia, Japan, and France, you may like this plane. If you are more inclined to nations with powerful guns, having to adjust to shitty guns would probably not be fun.
Below is a list of pros and cons it has compared to other planes it faces.
As a summary of its characteristics; it is better then everything it faces, but its lackluster guns make it rare to be able to use its performance advantages to get more than two kills per sortie.

The setup of the "Strategist" event will make it very rare
There are a few things I have seen about the event itself that are extremely likely to make the BI very rare. First; although we are in quarantine, people are very busy with work and school, and it took around four hours a day for 10 days to get the Merk or the BI. It was also during the work week, so most people could only grind those four hours in addition to the work they already had, and one weekend. If people had a day or two off, they may have been able to grind it then, but Gaijin in their infinite wisdom capped the rewards at 40 per day, so players could only earn 1/6th of the materials needed (3 offensive docs at 80 intel per doc means 40 intel x 6 days). Thus to get it for free you had to participate in an intense grind for the max reward for at least 6 days, and many people didn't have the time. This was bound to make the reward rare, as who in their right mind would spend hours every day on intense grind for a videogame? (Needless to say I am not in my right mind)
The second characteristic which makes the BI rarer is the fact that the Merk comes before the BI, and in addition, the Merk can be exchanged for the BI, but the BI cant be exchanged for the Merk. Go to the Strategist map and you will see what I mean; three docs for a Merk coupon, and the Merk coupon can be exchanged for a BI coupon. If you had the choice between getting a BI or a Merk for free right now, the logical decision would be to get the Merk, because you know if you get the BI, you are stuck with the BI, but if you get the Merk, you have a chance to exchange it if in the end you decide that you would prefer the BI. This means more players will keep the Merk, as well as put the Merk up for sale rather than the BI, because its logical that if you can exchange it for a BI, it would be more valuable because it gives you the chance to get both instead of just being worth itself. It was also believed and repeated by Youtubers covering the event that the Merk would be the better vehicle to sell to make money. Considering the pervious two points, it is odd to consider that in practice the BI coupon is selling for 5 gjn more than the Merk. We will get into the reasons why this happened in the next section, but it has to do with the fact that the Merk appears to be the better reward (as we reasoned logically before), and thus people kept it and neglected the BI, making the BI rarer in the end.
As the Merk was exchangeable for the BI, most people kept the Merk. As of right now there are 9.3 times more Merks than BIs on the market. The last characteristic of the event that will make the BI much more rare is the fact that the Merk will no longer be exchangeable for the BI on the 12th. As we have seen, there are disproportionately more Merks than BIs, and when the possibility to exchange the one to the other stops, there will still be many times more Merks than BIs, making the BI much rarer.

How players see the BI + how they act in the market
One of the most interesting and hard to measure variables about things like these event vehicles are peoples opinions towards them. Fortunately for me, there are myriads of Reddit and fourm posts from the average player about their feelings on the event, as well as many Youtube posts about the event which most WT players watch, and my own experience in the game, where I played consistently with and against teams full of Merkvas, while in Air battles there were only 2-3 BIs per game, and I was able to talk with players of each to get a general impression of what they think of them.
The first thing to consider is the first impression everyone had when the event was announced. The first thing almost everyone saw was that there is a rocketplane with two shitvaks, only 45 RPG, and less than 2 mins of fuel, and almost every comment about it was that it would be really bad. From what we knew, all signs said it would be true! We had no idea that its flight characteristics would turn out to be practically the best at its tier, it would have more engine power than the 163, and the fuel would be manageable with throttle control. On the other hand, we had the Merkava 3D. This was seen as easily the better vehicle, from first sight is is a very good looking tank, while the BI looked like dildo with wings. On top of that, the Merk boasted the best round in the game, good general performance, part of a Israeli collection, has a good supporting lineup and a great repair cost. Based on this primary info, the BI seems quite bad, just a meme plane, while the Merk seems like a very good vehicle.
Now lets consider the Youtubers. They are good players who had early access to the vehicles, and have quite an influential voice. What they say, especially if many of them agree, would be believed by the majority of their audience, and thus those interested in grinding the vehicles (Especially if it reinforces their first impression). In all the videos of early gameplay and ideas for how to grind the event, the advice that the Merk was the better vehicle, and that to make money it would be best to sell the Merk, was almost universal. Everyone who made a video said that the BI itself was ok, but its guns were extremely frustrating to the point of being almost useless, while the Merk was portrayed as quite good. Now there is a thing to consider about WT Youtubers. As it is usually one of their prime sources of income/favorite hobbies, they play WT a lot, more than the average player and their viewers. As they play so much, they get really good, and for tanks; "No armor is best armor" (Phlydaily). The gun is the thing that matters the most to really good players, and armor is there for if a mistake is made and you are in a position where the enemy can shoot you (Spookston and others). As Youtubers tend to be above average players, they note it has the best gun (round) in the game, and ok survivability. As they are very experienced, they can position themselves so as to not get killed, and with the best round, do really well. But as mentioned before, armor is for if mistakes are made, and boy does the average player make mistakes.
Even in my B1 ter and Tiger H1 (famously OP tanks), I can get penned a lot because I make mistakes. Nearly everyone agrees that the Tiger H1 is OP at its br, almost unpenable if played right, but if a flanking enemy shoots you, you get sniped, or there is more than one enemy to angle against, you are easily penned. It takes a good player to position correctly, to know when and how much to angle, to not ever expose a flat plate. I tend so hear people say that when they play allies they can never pen Tigers, but when they play Tigers they always get penned. The point I am trying to make is that the average player is average, and not having armor to protect them when they fuck up means they die. Look at the OP R3, and yet most R3 players rush a cap and come in guns blazing and get killed instantly. It is a good vehicle, but the lack of armor makes the average player not do great in it. The R3 is similar to the Merk in the fact that they are really good vehicles with bad armor, and while they are great for experienced players who know every spot in the map and how to correctly position by heart, most will just push and be disappointed when they get killed by a sniper every time. Long story short, the Youtubers said that the Merk was a really good vehicle because of its gun, but for most players its just OK if not underwhelming, and the the state of allied 10.3 confirms it. When considering the BI, Youtubers opinions started to change once they had the BI for longer. It started out as being not recommended at all, but slowly they began to learn how to fly it and that it is actually quite fun. This change is the same learning curve we all have experienced with jets. It was a completely new and unique playstyle, and even the really good players had bad first experiences because they didnt know how to fly it properly and use all its incredible performance advantages. Thus, slowly the BI has been enjoyed by those who play it more and more, and consequently, the opinions of the Youtubers and players about it have improved.

Initial opinions about the BI/in favor of the Merk:
A BI... to fly - War Thunder Napalmratte
🔴First Look - Bereznyak-Isayev BI-1 - War Thunder LiveStream🔴 WhooptieDo
The Issue with War Thunder's events Ash
War Thunder's Event Problem Spookston
War Thunder - Merkava Mk.3D "The Hard Hitting Prize!" Bo Time Gaming
Holding The Line - Merkava Mk.3D War Thunder DEFYN
Merkava Mk.3D - IT IS HERE - Crafting Event "Strategist" Vehicle... RagingRaptor
Players who I had met in-game who had just unlocked the BI crashed or ran out of fuel and ammo a lot, and said that it was ok but its guns were trash and its flight characteristics were very weird.

Recent positive opinions on the BI:
Day 3 Thoughts - Wargame "Strategist" - War Thunder TheEuropeanCanadian
2 Minute Hero The Iron Arminian
The Russian Ohka | War Thunder BI ConeOfArc
Players wo have played the BI for longer now, such as those who have spaded it, appear to get 1-2 kills on average per sortie, then btb to rearm and come back to the combat. Overall they usually get 1-3 kills per game and rarely die. They say that it is very fun once you get the hang of it, and that you can easily outmaneuver the enemy, stay alive, and get shots on target, but the worst part is the 45rpg and bad damage. Even with every shot on target after getting an enemy slow, only 45 chances to shoot limits how much the planes superb performance can be used before a btb.

Now lets consider value. As the BI was first considered to be trash, the initial expectations of the market were quite low:
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While in contrast the Merk had many buy orders, and for higher prices. This makes sense as people thought that it was much better. As people began finishing the event, they would keep whichever they wanted more, usually the Merk judging by the lack of entire teams of BIs at 6.7. If they wished to sell, they would but up the Merk, as everyone said it was more valuable and would sell better. Thus the Merk coupons came onto the market by the hundreds, while even now there are less than a hundred BI coupons for sale. Now armed with the knowledge of supply of each vehicle, lets look at the current prices of each. The lowest 32 sale orders for the Merk are 80 gjn, while there is a single BI going for 85gjn, then more priced higher. This doesnt make sense, why is the coupon for the supposed better vehicle (which can also be exchanged for the more expensive one) cheaper than the supposed worse one? You could just buy the Merk for cheaper and exchange it for a BI through the Strategist map, why is the price so high? The answer is a fundamental principal of supply and demand, the fact that the fewer of something there is, and by extension the rarer something is, the more valuable it is. As of right now, the advice has been to not sell the BI, but to sell the Merkava, which means everyone intending to sell, either listed a Merk coupon on the market, or is saving it to sell when the price goes up, and much fewer have done similarly with the BI. The only thing keeping them more or less balanced is the fact that you can exchange a Merk for a BI, so their differences in price are limited. But soon the final stage of the event will be over, and this conversion will be no longer possible, leaving a ton of players with Merk coupons on the market, and an extremely limited number of BI coupons. This precipitates a huge inflation in the cost of the BI, because as of now only around 90 new BIs will ever be created, while there are hundreds of Merks that can be redeemed.
As it is such a unique vehicle, and the opinion of those who play it is generally improving, it will likely be highly regarded, and as such drive up its price quite a bit on top of the fact that it is going to be quite rare already. Something quite similar happened with the AU-1 from the last event, but now there much less BIs on the market than AU-1s after 6 months, and the AU-1 is not nearly as unique as the BI!

Two chances to buy it for cheap
Right now the BI is going for 85 Gajouble Roubles, but if you are interested there are two ways to pick it up for less. Unfortunately, as it was an event vehicle, there is no way to get it for free anymore, and the limited supply means that the price will only go up as it gets rarer.
The first method is one I thought up and made a post about earlier which you may have seen. It involves buying the Merkava, which due to saturation is going for 5 gjn less than the BI, then going to the Strategist crafting map and converting your Merkava into a BI. Its easy and saves you 5 bucks, but if you want to do this you better hurry, as the event ends in a few hours and you wont be able to exchange it for a BI any longer.
The second method is less sure, but will probably work. As the anniversary sale approaches, sellers in the market, including the sellers of the BI, will want money to spend during the sale, and thus will sell their vehicles for lower prices instead of holding out at a higher price. If the sale is really good this year, then the price will lower more because they will really want the money to buy the packs on sale. The drawbacks are that from now to the sale the price could rise substantially and even with the lowered price cost more then you can get it for now, and if the sale is bad, then the price of the BI wont lower.

Conclusion (TL;DR)
After looking at all aspects of the event, the behavior of the players, and the vehicle itself, I have found that it is a very fun and good vehicle if used right, and that it is more unique than any other vehicle on the market except the E 100 and the P-59, all of which offer a completely unique experience that can be replicated by practically no other vehicle in game. The Merk is has a good gun and looks good, but is not that unique, while the BI is very fun.
In terms of value, the BI is already much rarer than the Merk, and its cost on the market will soon increase to surpass the Merk by far. If you are interested in it, I would recommend acquiring it soon before it gets too expensive.
If you have a still have a coupon and are deciding which vehicle to redeem; first consider your current experience with top tier American tanks. If you enjoy that type of combat, would like an addition to your top tier lineup, or want to use this tank to grind tier VII, the Merk offers what you want. If you dont play high tier ground RB and dont have a lineup at that BR, want a vehicle that offers significant advantages over the enemy, and want to have fun and not stock grind, than the Merk may not be for you. If you want a vehicle that offers an experience unlike any other in the game and you find outmaneuvering your opponents fun, the BI may be for you. You dont need a lineup, you dont need to suffer a bad stock grind and horrible team composition, and you dont even need to have any Russian planes, you can just get it and start flying.

Truly the best reward is the Lübeck F224. A decent amount of grinding to get a quite good vehicle, although because Gaijin didn't design Naval battles to be fun no one plays them. If they added some more good sea premiums I am sure they would revamp naval because they would have an incentive to do so. It could be fun as well if low tier sea grind wasn't so terrible.
The worst reward is easily the half track. At such a low BR, battles are rarely fun. The vehicle itself may be iconic, but if it was the 75mm variant at a higher BR I would be much more inclined to get it.
If I were to design the event there are a few things I would change. I would still want it to be necessary to grind so people would play and get these rewards on top of normal tree grind, a win-win, but not to much to burn out the participants. Ideally, there would be two tiers of reward instead of three, the first with the 75mm variant of the half track or the Lübeck. This way there are two good vehicles to choose from for a lesser grind, and people are happier for it. It may also entice more players to get into naval. The second tier reward would be the BI or the Merk, as these are good vehicles and the grind is just right. In addition only tier III and up would be allowed, no more sealclubbing innocent new players with the B1 ter or F4U 1A. In addition to these rewards I would make gameplay more important in getting the rewards. When I was grinding, I could drop a single bomb from my 264 and be AFK the whole match and get enough activity for the reward, but in a fighter I needed more than one kill to do that, and you don't have the option to climb into space as you need to fight for activity. There was a pitiful reward for actual performance, the assault groups, and even then you only got it if you got first place. I would make the event last slightly longer as well, and perhaps add another reward to each tier to make there be good variety and represent minor nations. Thus players would be satisfied to get one or two of their preferred vehicles, while those set on hardcore grind could get all three tier one rewards and one tier two, or two tier two rewards and one tier one reward max.
I procrastinate writing my essays for school by writing an essay for WT, ironic.
Some information I referenced may have changed slightly between me writing it and you reading it, for example, it may be after 12:00 GMT on the 12th, so exchange of coupons will no longer be available, and the market data may have shifted a bit.
As of the exact moment of posting the event will end in 6h 32m. It is 11:27, I have school tomorrow, and I am tired so I will check responses in the morning.
If you have read my whole paper, good job! (If you just scrolled here, see the TL;DR in the previous section) I wrote it because I want to help any players who are interested as well as players who have the BI and are learning how to fly it, and because what I saw and learned seemed very interesting to me, and I wanted to share it with others who may be as interested about this event. If I am wrong in a certain area, or some info is not up to date, please let me know.
submitted by Slipers to Warthunder [link] [comments]

Globe & Mail: Canadians need to rethink their bank-heavy portfolio strategy

This will probably be very offensive to most of the bank lovers here, but nevertheless...
Canadians love their bank stocks. Maybe too much.
Over the past few decades, the country’s biggest lenders have rewarded their shareholders with generous dividends on top of big capital gains. After so many years of sterling performance by bank stocks, multitudes of Canadian investors are now heavily invested in shares of the Big Five, confident that further gains by the financial giants will help finance their retirements.
It may be time to rethink that bank-heavy strategy. Canadian banks aren’t going to go bust, but their future is nearly certainly going to be less bright than their past.
Among the headwinds facing Canadian lenders is the near-record level of debt among Canadian households. That crimps possibilities for further bank lending, especially if the pandemic proves to have a long-lasting effect on economic growth.
In areas such as wealth management, Canadian banks confront growing competition from fintech rivals that promise to deliver state-of-the-art advice at rock-bottom costs. Meanwhile, they must grapple with a domestic market that is already saturated with traditional banking services. Increasingly, Canadian banks are looking beyond Canada for growth, but their foreign ventures have yet to deliver a gusher of profits.
Most worrisome of all is the corrosive effect of lower-for-longer interest rates. Short-term policy rates in Canada and the United States are now hugging zero, while 10-year Government of Canada bonds pay only about 0.63 per cent.
This low-rate situation is likely to persist, not just in Canada but around the world. Jerome Powell, chair of the U.S. Federal Reserve, made it clear in a speech this week that he sees U.S. interest rates staying down for a long, long time to come. Also this week, Isabel Schnabel, a member of the executive board of the European Central Bank, delivered a rousing defence of the ECB’s negative-rate strategy.
Banks find it difficult to prosper when interest rates fall to near zero. Consider Japan, where the yield on the benchmark 10-year bond plunged from more than 8 per cent in 1990 to below 1 per cent in 1998 as the economy slid into a deflationary funk.
The combination of low interest rates and slowing economic growth devastated Japanese banks. Their shares lost half their value on average between 1998 and 2011.
At the time, many people tried to blame the dismal performance on the peculiarities of the Japanese economy. However, subsequent events have demonstrated that other countries’ banks are equally vulnerable in similar circumstances.
In any economy where growth is slowing and interest rates are falling, banks suffer. They have to grapple with slumping demand for new loans. At the same time, they need to set aside more money to offset future loan losses.
Banks also make less profit on every dollar they do succeed in lending out. This is because banks generate much of their earnings by borrowing short and lending long – that is, paying savers relatively little in exchange for short-term deposits, while charging borrowers considerably more for longer-term loans.
The spread between the deposit rate and the lending rate is known as the net interest margin. The bigger the net interest margin, the better for a bank’s bottom line. But low interest rates squeeze margins by reducing lending rates. Bank profits suffer as a result.
European banks have seen how ugly this math can get. The continent’s lenders suffered brutal declines in their share prices after 2014, when the European Central Bank dragged some key interest rates into negative territory in an attempt to spark an economic revival.
The euro zone’s big banks – including BNP Paribas SA in France, Deutsche Bank AG in Germany and Banco Santander SA in Spain – now trade far below their 2014 prices. Over the past five years, the iShares MSCI Europe Financials ETF has lost 5.3 per cent a year.
Investors appear to have concluded that U.S. banks are equally vulnerable. The KBW Nasdaq Bank Index, a yardstick for U.S. bank performance, has tumbled 31 per cent this year.
Warren Buffett, for decades a big investor in bank shares, is slashing his bets on many major U.S. financial institutions. According to regulatory filings in August, he sold billions of dollars worth of shares of JPMorgan Chase & Co. and Wells Fargo & Co. He also dumped the remainder of his Goldman Sachs Group Inc. stock.
John Higgins, chief markets economist at Capital Economics, believes investors should step away from the banking sector. He argued in a note this week that financial stocks in general will continue to lag behind the broader market as rock-bottom interest rates continue to squeeze net interest margins.
“The valuations of many financial firms are now very low from a historical standpoint,” he wrote, noting that the typical bank now trades below its book value. “Nonetheless, we anticipate that their valuations will remain depressed.”
Fans of Canadian bank stocks may want to ponder whether there is any good reason to think this country’s bank shares will be exempt from the global malaise.
This country’s big lenders do offer some undeniable virtues. Most notable are their diversified business models, which span not just lending, but areas such as wealth management and capital markets that can generate fee income even in a low-interest-rate environment. On top of that, Canadian banks take pride in their cautious approach to risk management and their high levels of equity capital in comparison to their assets. All of that bolsters confidence in the Big Five’s ability to maintain dividend payouts.
But will that be enough to stave off the problems facing the banking sector? It seems unlikely. Japanese and European banks boasted many of the same advantages, but failed to prosper in low-rate environments.
If anything, Canadian banks appear especially vulnerable because of their relatively high valuations. Royal Bank of Canada, this country’s largest bank, trades for 1.79 times its book value. By comparison, JPMorgan Chase, the largest U.S. bank, changes hands for 1.33 times book. If Royal Bank were to slide to a valuation similar to JPMorgan’s, the pain for Royal shareholders would be severe.
Investors in Canadian bank shares should keep their expectations in check. The dividends will keep on coming, no doubt. But hoping for a lot more than that may be a stretch.
submitted by closingbell to CanadianInvestor [link] [comments]

Biden's New START and modern nuclear war

Well, boys, I reckon this is it - nuclear combat toe to toe with the Roosskies. Now look, boys, I ain't much of a hand at makin' speeches, but I got a pretty fair idea that something doggone important is goin' on back there. And I got a fair idea the kinda personal emotions that some of you fellas may be thinkin'. Heck, I reckon you wouldn't even be human bein's if you didn't have some pretty strong personal feelin's about nuclear combat. I want you to remember one thing, the folks back home is a-countin' on you and by golly, we ain't about to let 'em down.
Major Kong, Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb [quote here] [full film available here at archive.org, highly recommend, definitive American dark comedy on the subject]
Hello! We're sort of taking a break from East Asia-specific this week to talk about a great conversation-starter: Thermonuclear war. As developments in this area have not entirely halted in the past few decades, and yet I suspect most [not all--there's probably like one 80-year-old or something] of the readers of this post were either not alive during the Cold War or were too young to really appreciate most of what was happening during that period, I feel that it's important to cover the topic, especially with "great-power competition" being a new buzzword and the possibility that the NPT and the other arms control and limitation agreements that have been prominent for the past few decades falling apart being very real.
I'm sorry in advance if I occasionally get a bit repetitive but I think I've made a fairly comprehensive post on the subject, and I don't think I've particularly biased it one way or the other [though of course, that's what I would think].
Bunker-buster = nuclear warhead designed to destroy hardened sites, like bunkers or missile silos
Nuclear weapon = nuclear bomb = nuclear warhead = weapon that uses an operating principle based on nuclear physics
Thermonuclear weapon = more advanced type of nuclear weapon that uses fusion as its primary energy source rather than fission
Warhead = the part of the weapon that goes boom
Fuze = what sets off the bomb, distinct from fuse, which is an electrical part
Intermediate Range Nuclear Forces Treaty = one of the biggest arms control treaties in recent years, barred the US and USSRussia from having land-based missiles that were nuclear capable with a range from 500km to 5500km]
Ballistic missile = missile that travels in ballistic trajectories, fast, difficult to intercept, accuracy problems and always powered by rockets
Cruise missile = missile that travels in the atmosphere, smaller, difficult to intercept but easier than ballistic missiles--but harder to detect, powered by jet engines and air-breathing and thus slower
SRBM = Short-range ballistic missile [1000km range or less, most less than 300km to comply with MTCR or less than 500km to comply with the former INF Treaty]
MRBM = Medium-range ballistic missile [1000km to 3000km range, common in arsenals outside the US and Russia]
IRBM = Intermediate-range ballistic missile [3000km to 5500km range, common in arsenals outside the US and Russia, previously barred by the INF Treaty
ICBM = Intercontinental ballistic missile [5500km+ range, standard in US and Russian arsenals, China, France, and possibly North Korea operate a handful]
SSBN = "boomer" = ballistic missile submarine, nuclear powered and nuclear armed [no conventionally armed ballistic missile subs exist at present to the best of my knowledge, the only proposal being known a Trident conventional version]
Early warning = the systems used to detect missile launches and track them, could be ground-based radars or satellites
MIRV = Multiple independent reentry vehicles, a way to attach multiple warheads to one missile
SLBM = submarine-launched ballistic missile
Tactical nuke = determined by usage, not yield, tactical nukes are meant to be used in conflicts that do not escalate to an all-out nuclear war
Countervalue = a capability to strike against an opponent's cities and hard targets
Counterforce = a capability to strike against an opponent's hardened missile silos
Gravity bomb = nuke dropped from a plane
Nuclear triad = the full set of nuclear delivery methods: Air-launched cruise missiles/bombs, submarine-launched missiles, and ground-based missiles
SDI = "Star Wars" = strategic defense initiative, the origin of all of America's modern missile defense efforts
ABM = anti-ballistic missile
Nuclear sharing = a system via which nuclear warheads, owned by the US, are located in NATO countries [and in the past non-NATO countries] and can be turned over to their management in wartime
Some particular pieces of hardware to know about:
Trident = the submarine-launched ballistic missile currently used by the US and UK, can carry up to 14 warheads in MIRV configuration [typically 4 under treaty limits], solid-fueled and an ICBM as well as a SLBM
Minuteman-III = the current ground-based nuclear deterrent of the United States, ICBM, also MIRVed to handle 3 warheads, built in the 1960s originally and solid-fueled
Peacekeeper = MX = LGM-118 = the most sophisticated ground-based ICBM fielded by the United States and, possibly, by any power, solid-fueled and carried 12 [limited by treaty to 10] MIRVed warheads. Retired in 2005 due to high cost and arms limitation treaties. Meant to replace Minuteman.

1. The Bomb

The very first nuclear bombs relied on fission, the power of splitting atoms of fissile material to generate vast amounts of energy very quickly in a chain reaction. The general principle here is critical mass. Once a critical mass of the fissile material is achieved--usually either Uranium-235 or Plutonium-239--it activates a chain reaction which results in a nuclear explosion. These bombs are very simple in operating principle--pretty much anyone could build one if given the requisite materials. The main problem, and the reason we have not yet seen a nuclear warhead DIY, is that the fissile materials are very difficult to get. One must either synthesize plutonium in an atomic pile or use one of the various methods developed to enrich uranium--gaseous diffusion and centrifuges being the major ones. Either one takes a significant amount of time and specialized equipment, at least to produce nuclear weapons in any quantity. However, when you get down to it, any sufficiently motivated group could build one of these--at least if not stopped by another, more motivated group. Even North Korea could do this.
The next step in evolution was the boosted fission nuke. It represented a nuclear weapon that was more capable, but not radically so. By adding fusion fuel to the nuclear weapon, specifically the fission assembly, you could get a better yield--splitting more of the atoms in the core assembly before it suffered a critical existence failure and got spread out over several square miles. Fission-boosting is also fairly easily done, with the main obstacle being obtaining enough deuterium, lithium, and/or tritium to do the job correctly. These are, to my knowledge, pretty seldom seen; but I would suspect that both Pakistan and North Korea have them.
Thermonuclear weapons are, however, a major leap in capability. Much larger yield warheads can be built, in the multi-megaton range, and miniaturization is also possible, which is very useful for missiles in particular. Thermonuclear weapons rely on adding a fusion "secondary" stage, which is set off by a "primary" fission stage and generates vast quantities of energy. However, thermonuclear weapons are much more difficult to develop than fission-based weapons; largely because they rely on exotic materials and classified physics to operate. The United States itself has had difficulty building new thermonuclear weapons, or refreshing ones in current inventory, because it has lost knowledge of how to build some key materials. Most nuclear powers, however, are believed to or known to possess thermonuclear weapons, the exceptions being Pakistan and North Korea.

2. The Cold War

Nuclear weapons were probably the defining feature of the Cold War, at least once it finally began in earnest in the 1950s. To this day, the Cold War defines the cultural conception of nuclear weapons.
What this is about, though, is more a mechanical than philosophical or sociological discussion, explaining why nukes were, and are, used. Or rather, are planned to be used, because despite hundreds of nuclear tests, nobody has ever used a nuclear weapon in wartime in just over 75 years, since the US dropped a crude plutonium device on the Japanese city of Nagasaki.
The very beginning of nuclear war involved hundreds of strategic bombers--first B-29s, which actually cost more than the Manhattan Project to develop--and then more advanced jet bombers, the most iconic of which and perhaps the most enduring is the B-52 Stratofortress, which the US Air Force expects to remain in service through possibly the end of the century. These were the only viable delivery vehicles, and thus both the US [well, mostly the US] and the Soviet Union rushed to build as many of them as possible, with [unfounded] concerns of a "Bomber Gap" resulting in the construction of thousands of strategic bombers. In the event of war, these bombers would take off from their bases and drop nuclear bombs on enemy positions. For a substantial length in time, the US actually maintained a constant patrol of B-52 bombers with nuclear warheads onboard, which, in the event of a surprise attack, would retaliate against the USSR. It is one of these bombers which Dr Strangelove focuses on--though I should note that only a handful of people actually possessed the ability to launch a nuclear strike, and even then only in contingencies when the president was unavailable, and this persists to this day, excepting submarines--which will be mentioned in a moment.
However, technology marched on, and soon the ballistic missile became the delivery vehicle of choice. Early ballistic missiles were relatively crude, based off of the original V-2 design and whose quality was largely determined by how many Nazis you had stolen at the end of the Second World War. However, technology continued to evolve, and soon ICBMs had enough accuracy to launch countervalue attacks. These attacks targeted cities and aimed to deter an enemy from launching a first strike by ensuring that doing so would destroy the nation of the attacker. This doesn't mean that ballistic missiles were the only delivery method, though. Smaller nuclear weapons were built, designed to be delivered by air. They offered greater accuracy and tactical utility, and lowered the risk of a strategic nuclear exchange breaking out. It was around this time that tactical and strategic nuclear exchanges began to be devised in nuclear theory, with tactical nukes becoming essential to NATO war plans due to the numerical, and sometimes qualitative, inferiority of their conventional forces when faced with Warsaw Pact opponents. Nuclear weapons found their way into practically every kind of format. Nuclear-tipped air-to-air rockets were an early invention, aimed at shooting down massed bomber formations. Nuclear-tipped surface-to-air-missiles soon followed. Nuclear anti-ship missiles, nuclear artillery, and even "backpack nukes" like the Atomic Demolition Munition all were developed for a variety of purposes. Nuclear depth charges, nuclear torpedoes--if you put explosives in something, chances are someone drew up a plan to put a nuke in it. [as an aside, Cold War schemes to use nuclear weapons to perform massive construction projects, such as liquidating the Athabasca Tar Sands or creating a giant salt lake in Egypt, are one of my favorite Cold War relics]. Nukes were the bread and butter of Cold War strategy in a way that seems hardly conceivable today. This is largely why both the US and USSR had stockpiles of tens of thousands of weapons.
Mutual assured destruction, or MAD as it is commonly known, was also derived during this time, suggesting that the way to prevent nuclear war was by ensuring that any initiation of nuclear combat would lead to certain destruction. The development of SSBNs and SLBMs, which provided a way to ensure survivability of the nuclear arsenal and a sure second strike capability--usually countervalue because of the lower accuracy of SLBMs--seemed to make this set in stone. These would avoid destruction in a first strike by hiding within the ocean, and would then launch based off of orders issued from base--or, in the case of Britain, off of orders written by the Prime Minister and secured in the submarines to be opened in event of war.
Unfortunately, life tends to make things more complicated, and this was and is the case with MAD. The first problem that developed was that of the MIRV, or Multiple Independent Reentry Vehicle. This allowed missiles to carry large numbers of warheads, as many as twelve in the case of the LGM-118 Peacekeeper [probably the most sophisticated ICBM ever developed, the Soviet R-36 threw 10 and Trident D5 14 smaller warheads]. As a result of this fact, combined with increasing accuracy of reentry vehicles [especially, it is thought, on the part of the United States], a counterforce strike that could eliminate an enemy's ground-based nuclear deterrent became possible. MIRVs also place a high value on first-strike because each MIRVed missile can destroy numerous enemy silos but is correspondingly more vulnerable to first-strike as it replaces a dozen independent missiles with a single one. As a result limitations of MIRVed warheads have been a major focus of arms reduction treaties and several attempts have been made to ban usage of the technology altogether. Other problems complicated the situation further, such as anti-ballistic missiles, which potentially could shelter a nation from a weak second-strike. However, this broadly describes most of the key elements of nuclear war, skipping over the vast cultural and political impacts of nuclear weapons for the most part, because that's not really what I'm focused on here.

3. Arms control and non-proliferation

From the moment the US first got its hands on the bomb, it sought to keep it away from everyone else, including a very miffed Britain which had been promised access to the secrets learned from the Manhattan Project as a result of the contributions of its "Tube Alloys" program to the American development of the bomb. The Atomic Energy Act of 1946, or McMahon Act, has largely set American nuclear policy since its creation. Britain ultimately developed its own nuclear bomb, and the Soviets, in a large part thanks to the involvement of traitorous American nuclear scientists, developed their own bomb as well. By the 1950s, the world was in a frantic race to build the bomb--those who had it, to build more of them, and those who didn't, to get them. Even Sweden ran a nuclear weapons program. France got the bomb, and China did as well--much to the chagrin of the Soviets, who had undergone a dramatic split with the Chinese a few years earlier and whose original research work was invaluable in contributing to the Chinese nuclear program. It must be understood that back in those days building nuclear weapons was much more difficult than it is now, without computers or without even easy resources as to how they functioned. Nowadays, I can learn how to build a nuke off of Wikipedia, and, barring the ten tons of heavy water, hundreds of kilograms of natural uranium, and large quantity of nitric acid required, doing so is a relatively trivial task.
The real shift, however, began around 1970. The first major act in this was the development of the Non-Proliferation Treaty, in which all the nuclear powers promised to work towards the reduction and abolition of nuclear weapons, and in return the majority of non-nuclear powers agreed not to build nukes, and it is upon this foundation that the modern order is built. However, it has hardly proved perfectly successful--only six years later the detonation of the first Indian nuclear weapon occurred, which had been built using Canadian technology that had not been adequately controlled, or, indeed, controlled at all--the reactors Canada sells are, by the way, essentially DIY kits for nuclear weapons. As a result, an increasingly involved control regime began to be built. The IAEA was founded and membership was generally required for the ownership of nuclear reactors. The nuclear powers banded together to ensure that critical components of nuclear programs were not exported, pressured nations in their own blocs into cancelling nuclear programs [as the US did to both South Korea and Taiwan], and, barring some relatively low-profile cheating on the part of China, which has sold peripheral equipment to North Korea, Pakistan, and Iran, this vast patchwork mostly held together. As a result, instead of a predicted 30-40 nuclear weapons states, there are only 9 today.
Also around this time, both the US and USSR recognized that spending large quantities on building ever-increasing quantities of nuclear weapons without either side gaining any decisive advantage was helping absolutely nobody, and the two states began to agree to various reductions in arms and limitations in weapons development, including the ABM treaty and SALT.

4. Anti-ballistic missiles and Star Wars

Eventually, starting in around the 1970s, people got the idea that maybe you could stop ICBMs. This sounds absolutely ludicrous--but it wasn't, per se, impossible, and it led to a lot of really advanced, science-fiction sounding technology.
The very first method was to launch interceptor rockets that carried H-bombs of their own, aiming to detonate them close enough to the missiles that they would either destroy the reentry vehicles, their electronics, or cause a non-critical "fissile" of the warhead. This was halted, however, by the 1972 Anti-Ballistic Missile Treaty, one of the first big arms limitations agreements, and also by a simple fact: Ground-based missile interceptors are generally much more expensive than building additional missiles--for instance, the US Ground-Based Midcourse Defense costs more to produce, missile for missile, than a LGM-118 with 12 warheads. This treaty actually held for its full term, despite what you may have expected, as it did not limit research, only the actual building of anti-ballistic missile systems, and actually, IIRC, excluded space-based defenses via omission. However, until Ronald Reagan came along, the idea of ABMs was largely cast to the wayside.
Reagan, however, revived the idea quite famously in his Strategic Defense Initiative, dubbed "Star Wars" by many. It explored a number of ideas, many of which were quite outlandish--one of the more successful proposals, at least in terms of how much funding or attention was devoted to it, involved setting off nuclear warheads in space to power x-ray lasers to shoot down enemy missiles, which if nothing else sounded really cool. By far the most practical program to emerge out of this, however [a rather relative merit], was called "Brilliant Pebbles". It relied on a constellation of tens of thousands of kinetic interceptors, small, only a few kilograms each, which would target and destroy any ballistic missiles in low orbit. This plan was supposed to solve the issue where interceptors were more expensive than missiles, and allow the US unquestioned missile superiority.
It was also around this time when surface-to-air missile systems, originally designed with the mission to shoot down aircraft, began gaining limited anti-ballistic missile capabilities, which were... somewhat underwhelming in the Gulf War, though the technology was brand new at the time.

5. Peace dividend

When the Cold War finally ended, one of the parts of the peace dividend that probably made more sense than most was the vast savings made on nuclear weapons. The trend had already begun in the late Cold War, but once the Berlin Wall fell and the Soviet Union collapsed, stockpiles fell from tens of thousands of warheads to just a few thousand on the part of the US and Russia. All sides had a vested interest in arms reduction, and so those thousands of warheads were disassembled and largely turned into fuel for nuclear reactors.
Ballistic missile defenses also got cut. The original Brilliant Pebbles scheme was cancelled and replaced with a less-expensive but substantially less effective program called the Ground-Based Midcourse Defense, which relies on a relative handful of interceptor missiles in Alaska to shoot down ballistic missiles in the midcourse stage; primarily designed with China or North Korea in mind [oddly enough the first ballistic missile defense program of the US was also designed with the intent of stopping a Chinese nuclear attack]. Ironically Ground-Based Midcourse Defense ended up costing a large portion [more than half] of what the final Brilliant Pebbles implementations were proposed at, for a system with very limited capabilities [this cancellation may have also been part of what killed the DC-X spacecraft].
Vast fleets of SSBNs were disassembled. Expensive delivery platforms and programs, like the MX Peacekeeper, were scrapped. All in all, the threat of nuclear war practically vanished, excepting on the subcontinent, where India and Pakistan engaged in nuclear showboating multiple times. It's really hard to understate the sheer magnitude of what happened, with the number of warheads in existence shrinking from around 70,000 to 10,000 or so, with around half of those today being inactive. The US Navy went from stocking multiple warheads on each ship to removing them entirely from the fleet, aside from, of course, the SSBNs.
The successor states of the USSR, aside from Russia itself, were successfully convinced to hand over their nuclear weapons in exchange for security guarantees--Ukraine most infamously--and their fissile materials were turned into [relatively] harmless nuclear fuel. South Africa became the first nation with an independently developed nuclear arsenal to voluntarily denuclearize, admittedly largely out of fear of what the black population might do with the bomb.
Other areas saw major reductions and non--proliferation efforts. The Nunn-Lugar Cooperative Threat Reduction Program decommissioned large quantities of nuclear delivery vehicles and Soviet biological and chemical weapons sites. The Missile Technology Control Regime expanded and enveloped most nations with the capability to develop ballistic missiles and long-range cruise missiles, making nuclear weapons delivery difficult for the aspiring third world dictator--for instance, an Iraqi program to develop a ballistic missile in partnership with Argentina was scrapped by American pressure and Argentine admittance into the MTCR. While India and Pakistan still harassed each other, their open non-nuclear conventional war assuaged some concerns while raising others [perhaps nuclear powers could engage in conventional war after all]. Nuclear programs in several countries were stopped by diplomatic pressure, as in Libya, rather than by Israeli bombing campaigns.
For a time, all was peaceful. In the last decade or so, however, things have changed--and for the most part, they have done so below the radar of even Washington policymakers.

6. A Return To The Old Days?

Things in the past decade or so, however, have changed the nuclear situation substantially.
First on the list is that North Korea now has nuclear weapons and, it seems, a deterrent. This has seriously tested the efficacy of non-proliferation already, with the merit of non-proliferation when North Korea and Pakistan have weapons being rather suspect. Iran is also building nukes. North Korea's case was, and is, dangerous in particular because it suggests that, barring strong support from a great power, nukes are the only way to maintain autonomy [Ukraine and Libya both offering examples of why surrendering nukes, or even a nuclear program, is a bad idea to the world], and that they aren't too difficult to get. North Korea also may well already be engaging in proliferation activities as a revenue source--it's already known that they sell ballistic missile delivery vehicles and have exported materials related to chemical weapons production in the past, so exporting nuclear technology is hardly a stretch, especially given that North Korea is not seriously threatened by these activities and they provide a useful revenue source for the regime. As a result, the non-proliferation circle built over decades by the various great powers now has a rather large North Korea-shaped hole in it. This, however, isn't leading to big changes in Russia, China, and the United States. Rather, technological advancements, largely by the US and China, are slowly nibbling away at the tenuous nuclear peace.
Second is the problem, for Russia, created by the new Trident super-fuze. Under cover of a "refurbishment" of the Trident warhead family, a new fuze was introduced. However, this fuze is no mere one-for-one replacement: Instead, it allows the warhead to detonate within a range of zones that could destroy the target, allowing warheads that would previously overfly the target and miss to instead detonate in an airbust directly above said target. In effect, it increased the power of Trident by as many as five times, and has made it into a counterforce or first strike weapon. Quoted figures are a .86 probability of kill for a 10kpsi target, about as hard as defensive structures get, and .99 probability of kill for a standard, 2kpsi hardened target. As most of Russia's missile silos are only secure to the point of the latter, and Russia uses liquid-fueled ICBMs for the most part that are much more sensitive to attack than Western or Chinese solid-fueled ones, what this means is that Trident is now capable of wiping out Russia's entire ground-based strategic deterrent at extremely short notice. This has, it seems, quite possibly frightened Russian leadership, and is the likely reason why they have been desperately trying to devise new outlandish delivery vehicles, like an unmanned nuclear torpedo or a nuclear-powered cruise missile. This is further complicated by the fact that Russia has more or less completely lost its space-based ballistic missile warning network and does not seem to have the capability to replace it, which means that Russia must rely on land-based early warning radars to inform it of a nuclear strike. As a result, Russia will have as little as ten minutes of warning for an incoming nuclear attack, and will have essentially no idea what it will look like or what scale it is on. When Russian sources say they'll treat any ballistic missile strike as a nuclear attack, they probably aren't lying, because their sensor network is so bad they can't tell whether a sounding rocket is a nuclear first strike, and their survivability is so bad they can't afford to not launch.
There's also the interesting problem presented by the development of a new low-yield Trident warhead. While it might possibly have some use, many believe that low-yield nuclear weapons are dangerous because they blur the line between conventional and tactical nuclear war, and the use of Trident as a delivery vehicle runs a substantial risk on account of the fact that it may be difficult for an adversary [such as Russia] to discern that the vehicle is a tactical nuclear strike rather than the beginning of a strategic exchange. These same very concerns scuppered a conventional variant of Trident proposed for the Prompt Global Strike program, which would have used Trident to launch large conventional payloads, a bad idea for multiple reasons.
Arms agreements that defined the 1990s and 2000s have also begun to fall apart. The cancellation of the Intermediate-Range Nuclear Forces Treaty was just the latest in what has been a slowly escalating trend since the 2002 expiration of the anti-ballistic missile treaty. The Plutonium Management and Disposition Agreement, for instance, which required the US and Russia to convert their stockpiles of plutonium into MOX reactor fuel, is also dead, ostensibly for financial reasons on the part of the US, but quite possibly to allow the US to retain its 80+ tons of plutonium in a diluted form so it can be easily converted back into warheads [keep in mind only a few kilograms of plutonium is needed for a warhead so we're talking about thousands of devices in the several hundred kiloton range].
Why this is happening is an interesting question, and it seems that both the US and Russia [but, to be honest, mostly the US] are involved in the end of these arms restriction treaties. The first problem, and most obvious, is China. China has a general policy of not engaging in arms-limitation treaties, viewing them as a way for dominant powers to retain their position, and has a nuclear arms reduction policy that amounts to "get rid of all of your nukes and then we'll talk". With China becoming an increasingly significant threat to the United States, the arms controls placed on it by agreement with Russia have become problematic for American strategic planners. In particular, the limitation on intermediate-range forces was seen as a major difficulty given the increasingly capable conventionally armed intermediate range ballistic and cruise missiles that are one of the edges the PLAN holds; and, I suspect [but cannot prove] that planners within the US government view tactical nuclear war with China as a very real thing they should plan for, with the US using nukes first to gain a decisive tactical advantage and not escalating to a strategic exchange--this is enabled by the fact that China has essentially no tactical nuclear weapons, seems to believe it can avoid nuclear war with the United States [or possibly not--I've heard both], and a very small strategic stockpile of which only around 50 missiles can hit the continental US. Russia, on the other hand, has a rather different problem. Its conventional forces in Europe are inferior in quality and quantity to what NATO can field, so it has to plan to make up the difference with nuclear weapons. Furthermore, the increasing sophistication of American capabilities in ways which Russia simply cannot match means that the survivability of the Russian nuclear force is beginning to be called into question, and thus a larger arsenal is required to ensure that a strategic deterrent can be maintained as it has traditionally. As a result, both parties are abandoning arms treaties with, well, reckless abandon.
Finally, the development of increasingly capable ballistic missile defenses, especially by the United States--which now holds pretty much all the cards in the event of nuclear war--means that nations will be required to develop either new and more sophisticated delivery vehicles, or, alternatively, produce more warheads, to ensure that they can maintain deterrence. These include the SM-3 anti-ballistic missile, which can intercept ballistic missiles in the midcourse stage, though only shorter ranged ones and not full ICBMs at the moment, and which is being deployed by the US not only aboard its numerous destroyer fleet but also in "AEGIS Ashore" sites in Eastern Europe [which also caused concern by Russia because these units could easily fire ground-launched cruise missiles that were banned under the Intermediate-Range Nuclear Forces Treaty], and were to be deployed in Japan before local opposition halted construction. The US also designed THAAD, or Terminal High Altitude Area Defense, which provides an interceptor to destroy even ICBMs in the terminal stage, and has made significant improvements to the Patriot missile system which enhance its ABM capabilities. The US has also discussed reviving technologies from previously abandoned schemes such as the YAL-1, a 747 that aimed to shoot down ballistic missiles with lasers at a range of hundreds of kilometers [though it was suggested the new implementation be on a stealth drone] and even considered further research into space-based interceptors--which seem far more feasible in a day and age when private companies are already putting up constellations of advanced communications satellites in similar numbers to those proposed for the "Brilliant Pebbles" scheme.

7. Conclusion

As a result of these shifts, the current lull in nuclear war preparations and small nuclear arsenals of today may not last much longer. Indeed, to an extent, the lull has already ended.
Without a doubt Biden will try to negotiate a renewal of New START--he himself has stated his intent to do so multiple times, but the short time window he has in which to renew it [it expires on 5 February 2021, little more than a week after his inauguration] means that whether he will be successful is uncertain. Even if New START is renewed or brought back in a new form I would expect it to be much less restrictive and a de facto abandonment of the arms reduction that has characterized the last thirty years of nuclear policy. I also don't think that New START, even extended, will last past 2026--that's the point when major nuclear modernizations are set to begin to the US arsenal, including the introduction of the Columbia-class SSBN into service and replacement of the 1960s-era Minuteman III ICBM that constitutes the ground-based deterrent.
Both the US and Russia are poised to make major modernizations to their nuclear arsenals and I expect both of their stockpiles to grow barring a renewal of New START as presently constituted. I also expect that the US may well begin preparing to build new facilities for nuclear weapons production, as its old ones have pretty much all closed at this point. Nuclear weapons may also begin to see a return to the naval field, with nuclear-tipped anti-ship missiles and torpedoes possibly seeing revivals--watch for a return to the US's historic nuclear ambiguity policy on whether or not its ships carry nuclear weapons.
New forecasts say that China is poised to double its nuclear arsenal in the next decade, and I suspect these ones will actually turn out, because China knows that their arsenal at present is too small to pose an effective deterrent to tactical nuclear war and may, within a relatively short time, become an ineffective strategic deterrent.
The list of states with nuclear weapons is likely to grow--South Korea is a near sure bet for reasons I have described previously, but I would not be surprised to see more states get the bomb. Iran seems likely to build one unless stopped via force, and they've gotten quite close already. However, more than the number of states which will possess nuclear weapons outright will grow, I predict a major expansion in nations which attempt to reach a nuclear-latent state. The recent burst of smallsat launchers provides a perfect cover for ballistic missile systems to be developed; drone technology and electronics have made cruise missiles easier than ever to design, and nuclear power will be sought after by a large number of states with potentially ulterior motives--once a sufficient stockpile of used fuel is made reprocessing it to extract the plutonium within is relatively trivial, and I expect more states to push for reprocessing technology and "full control over the nuclear fuel-cycle". As a result, strategic planners may ultimately have to reckon with a world in which most nations [or far more than the 9 current nuclear-armed states] could well develop modest nuclear arsenals within a few months to a few years.
As for what the US should do--well, my opinion is that the US should just embrace the inevitable. During the Cold War, the US saw that France wasn't going to be stopped from building the bomb--so instead they helped the French build their weapons and thus gained the trust and friendship of the entire French strategic community, at least to an extent where their nuclear and even conventional forces were de facto reintegrated into NATO.
That has lessons for today, I think. If something is going to happen one way or another, the US should just embrace it and try to help the process along and gain the trust and friendship of the nation involved, provided such a move is not directly contrary to American interests. For instance, take South Korea. If it becomes clear that South Korea intends to build nuclear weapons, the US would be better off discretely enabling that by amending its Section 123 agreement and clandestinely supporting the program than trying to fight it.
The US should also seriously reconsider whether it should maintain a non-proliferation stance, although I can see strong cases on both sides. Non-proliferation has failed to stop Pakistan or North Korea, and at that point it's really rather questionable whether it works, but for the moment it's the only thing that's holding the Middle East and world as a whole back from a nuclear arms race. If Iran does get the bomb, I doubt that the US will continue to hold onto that position. At that point [or this point] most of the nations the US doesn't want to have the bomb either already have it, cannot be stopped from getting it without war, or just flat out can't build it due to lack of money, will, and resources. It's unlikely that the US will openly support proliferation, especially Congress, but I find it quite probable that the US may well take a "wink-and-a-nudge" approach to the whole issue. A Section 123 Agreement might be amended to allow reprocessing and a solid-fuelled smallsat launcher sold or authorized, but how was the US government to know that the nation was pursuing nuclear weapons?
Furthermore, the US should start preparing as if an all-out nuclear arms race may resume, because it may well do so. Developing a new comprehensive ballistic missile defense strategy is part of this, possibly including Brilliant Pebbles--I'm a strong advocate of at least researching the solution especially given that so many hurdles already have been met by private companies like SpaceX--but also terminal defenses and directed-energy weapons. The US should also begin thoroughly examining the use of nuclear weapons in a modern context and prepare facilities needed for the production of additional warheads, including possibly a lithium-separation site to manufacture additional tritium, as well as reprocessing sites to produce additional plutonium.
[citations in comments due to max character limit]
submitted by AmericanNewt8 to neoliberal [link] [comments]

Basic Quant Trading Strategies

I am a former Wall Street quantitative trader and researcher in NYC. I have often seen people aspiring to be quants build projects themselves, but fall into the trap of blindly fitting statistical models to the data. I have written an article to give people a better insight into strategies deployed on the Street.


One way traders make money is through an arbitrage or a risk free trade. Suppose you could buy an apple from Sam for $1, and then sell an apple to Megan at $3. A rational person would orchestrate both legs of these trades to gain $2 risk free.
Arbitrages are not only found in financial markets. The popular e-commerce strategy of drop-shipping is a form of arbitrage. Suppose you find a tripod selling on AliExpress at $10. You could list the same tripod on Amazon for $20. If someone buys from you, then you could simply purchase the tripod off AliExpress and take home a neat $10 profit.
The same could be applied to garage sales. If you find a baseball card for $2 that has a last sold price on EBay for $100, you have the potential to make $98. Of course this is not a perfect arbitrage as you face the risk of finding a buyer, but the upside makes this worthwhile.

Positive expected value bets

Another way traders make money is similar to the way a casino stacks the odds in their favour. Imagine you flip a fair coin. If it lands on heads you win $3, and if it lands on tails you lose $1. If you flip the coin only once, you may be unlucky and lose the dollar. However in the long run, you are expected to make a positive profit of $1 per coin flip. This is referred to as a positive expected value bet. Over the span of millions of transactions, you are almost guaranteed to make a profit.
This exact principle is why you should never gamble in casino games such as roulette. These games are all negative expected value bets, which guarantees you to lose money over the long run. Of course there are exceptions to this, such as poker or card counting in black jack.
The next time you walk into a casino, make a mental note to observe the ways it is designed to keep you there for as long as possible. Note the lack of windows and the maze like configurations. Even the free drinks and the cheap accommodation are all a farce to keep you there.

Relative Pricing

Relative pricing is a great strategy to use when there are two products that have clear causal relationships. Let us consider an apple and a carton of apple juice. Suppose there have a causal relationship where the carton is always $9 more expensive than the apple. The apple and the carton is currently trading at $1 and $10 respectively.
If the price of the apple goes up to $2, the price is not immediately reflected on the carton. There will always be a time lag. It is also important to note that there is no way we can determine if the apple is trading at fair value or if its overpriced. So how do we take advantage of this situation?
If we buy the carton for $10 and sell the apple for $2, we have essentially bought the ‘spread’ for $8. The spread is fairly valued at $9 due to the causal relationship, meaning we have made $1. The reason high frequency trading firms focus so much on latency in the nanoseconds is to be the first to scoop up these relative mispricing.
This is the backbone for delta one strategies. Common pairs that are traded against each other includes ETFs and their inverse counterpart, a particular stock against an ETF that contains the stock, or synthetic option structures.


Correlations are mutual connections between two things. When they trend in the same direction they are said to have a positive correlation, and the vice versa is true for negative correlations. A popular example of positive correlation is the number of shark attacks with the number of ice-cream sales. It is important to note that shark attacks do not cause ice-cream sales.
Often times there are no intuitive reason for certain correlations, but they still work. The legendary Renaissance Technologies sifted through petabytes of historical data to find profitable signals. For instance, good morning weather in a city tended to predict an upward movement in its stock exchange. One could theoretically buy stock on the opening and sell at noon to make a profit.
One important piece of advice is to disregard any retail trader selling a course to you, claiming that they have a system. These are all scams. At best, these are bottom of the mill signals that are hardly profitable after transaction costs. It is also unlikely that you have the system latency, trading experience or research capabilities to do this on your own. It is possible, but very difficult.

Mean reversions

Another common strategy traders rely on is mean reversion trends. In the options world the primary focus is purchasing volatility when it is cheap compared to historical values, and vice versa. Buying options is essentially synonymous with buying volatility. Of course, it is not as simple as this so don’t go punting your savings on Robinhood using this strategy.
For most people, the most applicable mean reversion trend is interest rates. These tend to fluctuate up and down depending on if the central banks want to stimulate saving or spending. As global interest rates are next to zero or negative, it may be a good idea to lock in this low rate for your mortgages. Again, consult with a financial advisor before you do anything.
submitted by chriswugan to quant [link] [comments]

/r/thetagang needs a FAQ/wiki so I wrote one

EDIT: Wiki now exists


What is this place? What is theta gang?

/thetagang is a sub for traders who are interested in selling options.

An option? What's that?

Options are derivative financial instruments, which means they derive their value from an underlying, such a stock or commodity. Options are a contract in which the buyer has the right but not the obligation to buy or sell the underlying at an agreed upon price on or by a certain date.
All options have an expiration date after which they stop trading. Because they eventually expire they are also wasting assets, which means they lose extrinsic value as time passes. This is where theta gang comes in.

Uh huh... I don't really understand anything you just said, but I'm curious, why would anyone want to trade options?

There are two main reason why someone would want to trade options: hedging and speculation.
Consider an investor who buys a stock but is worried about a price decline. They can purchase options (put contracts) to protect themselves if the stock's price were to fall. And if they think a stock is overvalued and want to short it, they can purchase options (call contracts) to protect them should the price rise. In both cases the investor is hedging their trade because they are trying to profit from the stock and not the options.
The other reason is speculation. Options allow someone to make a directional bet on a stock without buying or selling the actual stock (the underlying).

Why would someone bother with trading options when they can just trade the underlying?

Leverage. Equity option contracts are standardized and each contract (also called a "lot") is for 100 shares of the underlying. It's a way to have exposure to the underlying without needing the capital to buy or sell 100 shares for each contract. In other words a smaller amount of money controls a higher valued asset.
Options allow a buyer to make amazing profits. If a trade goes incredibly well, they could see profits anywhere from 100% to 10,000% (a few are even lucky enough to get 100,000%). And despite being leveraged the most amount of money they can lose is what they paid to buy the options. This is known as the premium and is paid to the seller.
The option buyer's losses are limited to the premium and their profits are potentially unlimited, whereas for the seller the losses are potentially unlimited and the profits are limited to the premium.

WHAT?!? Why on Earth would anyone sell options with a payout like that? Especially when you could become rich so easily?

If only it were that simple.
The reality is most options expire worthless. If you buy options not only do you have to get the directional bet right, but you have to get the timing right as well.
If you buy a stock and it goes nowhere for a while and then suddenly takes off in price, you make money from this trade. Not necessarily for options. They eventually expire and if the stock soars after the option expires, tough luck. You get nothing and lose all your money.
All of the incredible gains you see with options happen because the underlying made a huge move in a relatively short period. In other words, you have to take an immense amount of risk to make a boatload of money. It's far more likely that the options expire worthless and you lose everything.
And if getting the direction and timing right wasn't hard enough, it gets even worse. Options are priced to lose. Recall that options are a wasting asset. An option slowly loses extrinsic value as time passes. This is referred to as theta decay. If the underlying doesn't move in price fast enough (in the right direction, of course) to offset the loss in theta, you lose money.
This leads to an interesting outcome: an options buyer can be right and still lose money, and an options seller can be wrong and still make money.

WHAT?!?! How can someone be wrong in a trade and still make money?

The value an option has can be split into two parts: intrinsic and extrinsic.
Remember how options have an agreed upon price to trade the underlying at? That's called the strike price. As an example, if a call option has a strike of $10, and the stock is trading at $10.50, the option has $0.50 of intrinsic value.
The extrinsic value is also known as the time value of an option. It's the risk premium the seller receives for taking on the risk of selling options. Using the same example as earlier, if the option is trading for $1.10, the extrinsic value is $0.60.
The intrinsic and extrinsic value combined are the option's premium, and the seller receives this premium in full. So if at the date of the option's expiration the stock is trading at $10.70, the option is worth $0.70. The seller's $0.40 profit is the buyer's loss. And if the underlying is at $10 or less on expiration? It expires worthless and the buyer loses 100%.

This sounds too good to be true. If most options expire worthless why doesn't everyone sell options and get rich?

If only it were that simple.
It's true options are priced to lose and that most expire worthless. What is a wasting asset for the buyer is a wasting liability for the seller. However, it's still a liability and sometimes that liability can end up being a real loser.
It's not just a matter of a win/loss ratio. The magnitude of the wins vs. losses must be considered. The most an option seller can make is the premium, but they can lose far more than that if the underlying moves against them. It's possible for a seller's loss to be multiples of the premium they received for selling an option. If an option seller is really unfortunate, they can experience a loss on a single trade that wipes out months of profits.
There's no easy money to be made trading options.

The Greeks

Let's pretend that I know what options are. How do the Greeks apply to option sellers?


Delta has multiple meanings:
  1. How much the option's price changes relative to a change in the underlying's price.
  2. The option's equivalent of a position in the underlying (a directional bet).
  3. The probability the option expires in-the-money.
Definition #2 is important to understand when making delta neutral bets (discussed later). These profit from a decrease in volatility along with collecting theta. It's possible to construct a trade where a movement in the underlying does not change the position's value (or by much).
Definition #3 is an approximation. Many option sellers like to sell out-of-the-money options with a delta of 0.30, which means they have an approximately 30% chance of expiring ITM.


Delta is not a constant. An option's delta changes as the underlying's price changes. Gamma measures how much delta changes relative to a change in the underlying's price. Option buyers have positive gamma, whereas sellers have negative gamma.
Long (positive) gamma works in favor of the buyer. As the underlying moves further ITM, gamma increases delta and profits accelerate. As the underlying moves further out-of-the-money, gamma decreases delta and losses decelerate.
Short (negative) gamma works against the seller. As the underlying moves further ITM, gamma increases delta and losses accelerate. As the underlying moves further OTM, gamma decreases delta and profits decelerate.
Gamma is bad news for sellers. Theta gang has always been at war with gamma gang. Gamma is also the reason that delta hedging is so difficult when it comes to being delta neutral.


Beloved theta. The namesake of /thetagang. It's why we're here all here and why you're reading this.
Theta represents the time value of an option. It's the extrinsic value of an option, and as each day ticks away the time value decreases a little. That amount is determined by theta. Theta decay is nonlinear and accelerates as expiration approaches.
The goal of an option seller is to profit from collecting theta. One could sell an option that's ITM and profit from the underlying moving OTM, but that's not a theta bet, that's a directional bet. ITM options also have less time value than at-the-money options. ATM options have the most time value and so the most theta to collect, but are at a greater risk of expiring ITM compared to OTM options.
The more days to expiration an option has the slower the theta decay. 30-45 DTE is a very popular period to sell. Others prefer weeklies.


Vega measures how much an option's price changes relative to a change in implied volatility.
The IV of an option is the market's estimate of how volatile the underlying will be in the future. The higher the IV the greater the time value of an option, which means options with higher IVs are more expensive.
Option buyers want to buy when volatility is low because options are cheaper. Sellers want to sell when volatility is high because options are more expensive.
The best time to sell options is during the gut-wrenching periods when no one wants to sell because volatility is so high (such as the March 2020 crash). Options become extremely expensive and there are juicy premiums to collect. Look for large spikes in IV.


Vomma (or volga) is a much lesser known Greek. It measures how much an option's vega changes as the implied volatility changes.
Out-of-the-money options have the most vomma. This detail will be discussed later in a horror story of option selling gone wrong.


Rho measures how much an option's price changes as interest rate changes.
No one cares about rho anymore thanks to interest rates being stuck at rock bottom for over a decade.


What are some basic details about volatility that are important to know?

Both option buyers and sellers care about volatility (at least they should). Buyers want to purchase when IV is low and sellers want to sell when IV is high.
An option's IV in isolation does not actually tell you if IV is high or low. It must be compared to the historical IV for that option. Two popular methods are IV rank and IV percentile.
For example, if options on XYZ have an IV of 35% and options on ABC have an IV of 45%, on the surface ABC has higher IV. But if XYZ has an IV rank of 75% and ABC only 40%, XYZ's IV is actually higher relative to its historical IV and may be better suited for selling.
There are different ways of measuring volatility and it's important to not mix them up:

What is volatility skew?

To understand what volatility skew is we have to go back to the 1970s.
You may have heard of a theoretical options pricing model called the Black-Scholes or Black-Scholes-Merton model. This model was published in 1973 and became very popular. It was widely adopted in the options market.
The original Black-Scholes model predicts that the IV curve is flat among the various strike prices with the same expiration. It didn't matter if the strike price was OTM, ATM, or ITM, they all had the same IV.
IV stayed this way until the stock market crash of 1987, where the DJIA dropped 22.6% in a single day. This single event changed the options market forever. The IV curve was no longer flat but instead demonstrated a volatility smile (conceptual graph). Strike prices further from ATM started trading at higher IVs.
The crash was a gut punch to investors that taught them extreme moves in markets were more common than you would expect, and options started being priced accordingly. But the volatility smile is not symmetrical, it's actually skewed.
OTM puts have a higher IV than OTM calls. This is due to markets falling much faster than they rise (they take the escalator up and the elevator down). This causes more demand for OTM puts to protect long portfolio positions. Most investors are long the market, and some will sell covered calls which increases the supply for OTM calls.
Note that this is true for equity markets. Commodity markets behave differently. Normally there is a floor in commodity prices (although for commodities with storage or delivery constraints, as we learned in April 2020 they can dip below zero) and IV is higher for OTM calls compared to puts, because commodities can suddenly spike in price due to supply side shocks.
In equity markets IV is inversely correlated with price, that is, IV rises when prices fall (reverse or negative skew). This isn't necessarily true for commodities where rising prices can mean an increase in IV (forward or positive skew).

The story of James "Rogue Wave" Cordier of OptionSellers.com: A tragic lesson in how not to sell options

James Cordier is a former money manager who has the dubious honor of not only losing all the money of his clients by selling options, but even leaving them with a debt because the losses were so staggering.
James was a proponent of selling options and had even written a book about it. He had a now defunct website, OptionSellers.com, which targeted individuals with a high net worth. His strategy was simple: he was selling naked options on crude oil and natural gas. For years he made he made his clients plenty of money. Things were great. Until they weren't... and the results were catastrophic. His clients lost everything and even owed money to their broker, INTL FCStone. Where did James go so wrong?
James was selling naked strangles on natural gas and crude oil. In November 2018, both markets moved against him, but the real losses came from his naked natgas calls. He sent an email with the subject line "Catastrophic Loss Event" to his clients on November 15th, dropping the bombshell that not only was all their money gone, but they may be facing a negative balance.
If you look at a chart of natgas you can see why his accounts blew up. Natgas experienced a huge spike in November and his broker liquidated their positions at an absolutely massive loss.
What mistakes did he make and what can we learn from them?
1. Picking up pennies in front of a steamroller
Part of his strategy involved selling deep OTM naked calls on natgas (call leg of short strangles). Deep OTM options typically don't sell for very much, so in order to collect more money you sell a bunch of them to make it worth the trade.
This is a terrible idea and no one should ever sell a bunch of deep OTM naked options. It can work great for years, until one day it blows up your account. In order to collect a decent premium you have to overleverage yourself. This is extremely risky and you will eventually experience a major loss one day. The odds are not in your favor.
The underlying does not even need to cross the strike price for you to lose money. The underlying's price simply needs to move significantly closer to the strike price and you'll be deep in the red. This is made even worse if volatility spikes, which increases the option's price and your losses (discussed in detail in the next point).
Notice what happened the following months: natgas prices crashed back to what they were before the spike. Had James not overleveraged his positions, he could've ridden the losses out to a profit. In fact, all those options probably would've expired worthless.
There is another reason not to sell deep OTM naked options. Imagine you're a speculator with a small account (e.g., /wallstreetbets). They want to trade but they can't afford to buy ATM or slightly OTM options, so what do they do? Buy deep OTM options, bidding the price up. When a market moves big and the small-time speculators want to trade it, all they can afford are the cheap options, which are deep OTM. This is bad news when you're short them.
2. Not understanding the relationship between price and volatility
Remember how for commodities volatility can be positively correlated with price? Natgas is one of them, and when the price spiked so did volatility. James did not understand the consequences of this.
When you are short options, you have negative vega. As the price spiked so did volatility, and the short vega position piled up his losses in addition to being short delta.
But vega is not a constant. We finally get to discuss vomma now. Vomma measures how much an option's vega changes as IV changes. In other words, as IV increases, so does vega thanks to vomma. When you're short vega and vomma, this is bad news.
Remember which options have the highest vomma? That's right, OTM. So as IV increased, not only did his losses increase due to rising IV, but vega itself started increasing thanks to vomma, further accelerating his losses.
He got wrecked four different ways: being on the wrong side of delta, gamma adding to delta, being on the wrong side of vega, and vomma adding to vega.
3. A total absence of risk management
Risk management is essential when it comes to trading, and selling options is no exception. Selling naked options can expose you to extreme risks, and to ignore it is simply reckless. It's more important to avoid a huge loss than to make a huge profit, because all it takes is one big loss on a trade to make recovering from it impossible, ending your career in theta gang.
Tail risk is a very real concern in trading, and those "rare" events actually happen more frequently than traders expect (fat tails). Look at a price chart of natgas over the past twenty years. You can see random spikes sprinkled throughout the chart. James never stopped to think, what would happen to the value of my positions if natgas were to suddenly spike in price, which I know has happened in the past, and will happen again someday? How could I protect myself against this scenario?
It's pretty obvious that if a one-day or even few weeks move manages to blow up your account and completely undo years of profits, you have zero risk management in place. This stems from not understanding how the natgas market works, and trading it with no regard to risk.
Selling naked calls on natgas is a terrible strategy because natgas can have sudden price spikes, and IV will spike with it. A much better strategy would've been selling a call backspread. You sell an ATM or OTM call, and you buy two or more calls that are further OTM. That way if natgas did spike your losses are limited, and you might even turn a profit on the spike.
Spend the time necessary to learn about the underlying. And don't neglect risk management. If you're going to sell options, you absolutely must understand how the underlying behaves and its relationship with volatility, otherwise you cannot have proper risk controls in place.


What are some popular option selling strategies?

The most popular would be covered calls and cash secured puts.
CCs involve selling OTM calls on a stock you own. The short call position is covered by owning the underlying, hence the name (opposite of naked). A single equity options contract is for 100 shares, so an investor sells one call for every 100 shares they own. If the stock price rises beyond the strike price, the seller keeps the premium, but the options will get exercised and the shares called away. They sell them at the strike price, missing out on the extra gains beyond the strike. The seller still makes money on the sale, just not as much as they would have if they sold them at market price. If the stock grinds sideways, the options expire worthless. And if the stock falls in price, the options will also expire worthless, but the seller will lose money on their long stock position. Chances are they will lose more money than the premium they collected from selling the CCs.
A CSP is a naked put that's sold either ATM or OTM with enough money in the account to cover the stock purchase if the option gets exercised. If the stock grinds sideways or rises in price, the puts expire worthless. However, if the stock falls in price the options will get exercised, and the seller will be forced to buy the stock from the options buyer at the strike price, most likely suffering a loss greater than the premium they received.
A CC has the same downside risk as a naked put. If the stock declines in either scenario the investor risks losing far more money than the premium received. If you are comfortable with the risk of selling CCs you should also be comfortable with the risk of selling CSPs. However, you can lose more money in the CSP scenario if you buy back the put before expiration if IV rises enough, vs. holding it to expiration.
Selling a CSP always means selling a naked put. It is not a covered put because you have cash to buy the stock. Whether or not you have enough money in the account to buy the shares at the strike price is irrelevant. A CP means you are also short the underlying, hence it is covered. It's the same idea as a CC, except it has unlimited risk due to there being no theoretical limit the price the stock could increase to, whereas a long stock position can't go below zero (not a guarantee for certain commodities).
Other common strategies are wheeling and volatility crush.
The wheel is similar to selling a strangle but not quite the same. You sell CSPs on a stock you wouldn't be opposed to owning, and in the unfortunate case of being assigned, you then sell CCs to recoup your losses. If you've been selling CSPs for a while you may still be net up when assigned, but if the stock craters you're looking at a significant loss. You hope the stock slowly climbs while selling CCs, but if the stock suddenly spikes your shares may get called away and you miss out on recovering your losses on the upside.
There are variations to the wheel before being assigned. A jade lizard is selling an OTM call spread where the max loss on it is less than the premium collected from selling the CSP. Ideally the stock will trade in between the short put and call strikes and all options expire worthless. You can also trade a ratio put spread instead of just a put.
The volatility crush trade is a delta neutral strategy. It profits not from a change in the underlying's price, but from IV decreasing. It's very popular right before earnings. IV on a stock can spike just before an earnings report is released due to uncertainty (vol rush). Unless you have insider information, you can only guess what the results will be. After the report is released, IV crashes because the uncertainty is gone (vol crush). Everyone knows the results.
You find a company who's about to report earnings and the IV on their options has spiked. You then sell expensive ATM calls, and because ATM options have a delta of about 0.5 you buy 50 shares for every call sold. Your net delta is zero (delta neutral) because you've offset the negative delta from the short call position by buying shares which gives you positive delta. By hedging your delta you've eliminated directional risk. After earnings are released, IV craters and you buy back the options at a cheaper price and sell your shares.
In theory this sounds like an easy way to profit. In reality it's not due to our archnemesis gamma gang. Delta is not a constant and as the underlying's price changes so does delta. If the stock soars after earnings, the call option's delta will increase and your delta exposure will become increasingly negative as the stock rises in price. If the stock tanks, your delta exposure will become increasing positive as the stock falls in price. In either scenario you start losing money from your changing delta position, and the amount you make from IV decreasing must be greater, otherwise you lose money overall on the trade.
You can try to nudge your delta in a direction to hedge against this. If you're bullish on the stock you can overweight your exposure and buy more shares so that you have a positive delta. If you're bearish you can underweight your exposure and buy fewer shares so that you have a negative delta. If you're correct, good news for you. But if you're wrong, you lose more money than if you were delta neutral.
Then you have a plethora of spread trades, such as vertical, horizontal, diagonal, and ratio, some with creative names. There are far too many to cover in this guide in detail. All of them have at least two legs (each leg is a component of the options trade) to the trade where you are both long and short options.

How does assignment work?

There are two main types of option styles: European and American. European options can be exercised only on the expiration date. American options can be exercised at any time before (and of course on) the expiration date.
When an option is exercised, the Options Clearing Corporation randomly selects a member firm that is short the option, and the firm uses an exchange-approved method to select a customer that is short the option. The OCC processes all assignments after market close, and because it processes closing buys before assignments, there is no possibility of assignment if you buy back your short position during the day's trading hours.
An option buyer can exercise their option even if it makes no sense financially and they would lose money. It's their right to do so and you are obligated to fulfill it if assigned. Even if an option expires worthless it can still be exercised. The buyer may be speculating that major news gets released after hours (some options trade until 4:15 PM ET) and when the market opens again the underlying has moved favorably and their gamble paid off. To avoid risking this scenario simply close out the day of expiration.
Only about 7% of options get exercised and the majority occur close to expiration. This is because options still have extrinsic value before they expire, and once exercised the buyer loses the extrinsic value. It makes more sense for them to sell it.
Be aware that if you are assigned you may see a large negative balance or buying power in your account. This may be because the underlying stock trade has not settled yet. It normally takes T + 2 (trade date plus two business days) to settle. Settlement means an exchange of money and securities. Payment is made from the buyer's account to the seller's, and the seller's securities are transferred to the buyer's account. The other reason would be the value of the new stock position. If you have a small account and are now long or short hundreds or thousands of shares, the market value could far exceed the cash value of your account. You'll be forced to close out by your broker. Once either the trade settles or you close out the large negative balance disappears.

What are some scenarios I can expect assignment, especially early assignment?

If an option expires ITM you can expect it to be exercised. Unless instructed otherwise, the OCC will automatically exercise any option that expires at least $0.01 ITM.
Deep ITM options about to expire are candidates for being exercised. They start behaving like the stock itself since there's zero real chance of them not expiring ITM. They have no extrinsic value and in fact may trade slightly below their intrinsic value (at a discount to parity, parity being the intrinsic value). This is because no one really has any incentive to trade the option anymore, especially when they could trade the stock instead, which has more liquidity. A market maker would agree to buy it at a discount and at the same time open a position on the stock and exercise the option, profiting from the discount arbitrage. For example, XYZ is trading at $50, and a 45 call is trading at $4.95. A MM buys the call while simultaneously shorting 100 shares, exercises the option and collects the risk-free profit of $0.05:
(50 - 45) - 4.95 = 0.05
Selling spreads is a very common theta gang strategy, so let's examine the case of early assignment and assignment after expiration.
You sold a 50/55 vertical call spread for $1.40 on XYZ that's trading at $53. It expires in a few days but for whatever reason the buyer decided to exercise early and you were assigned. You're now short 100 shares at $50 while still long the 55 call. Because vertical spreads are risk defined trades, this isn't a big deal. You're still long the 55 call, so you have upside protection which will cap your losses at $360 (500-140) should the stock move past $55. You could take the risk of riding it out and hoping the stock falls or you can close out the trade, accept your losses and move on.
The other scenario is assignment at expiration. This is actually the more dangerous case of the two. Imagine the same circumstances except it's expiration day (Friday). The stock closes at $53, the short call expires ITM, and the long call expires worthless. The short call is exercised and you're assigned. Because you no longer have upside protection anymore, this is not a defined risk trade but instead undefined. You're short the stock over the weekend and no one knows what the opening price will be Monday. If major news gets published Sunday the stock could soar. Or it could crater. This is not the kind of risk theta gang likes to take. You should always close out of your short options on the day of expiration if there's a real chance of them expiring ITM, especially when your long options will expire OTM. Otherwise at that point you're now delta gang.
If both the short and long options are ITM at expiration, the most you can lose is the spread minus the premium received. You might as well close out to avoid the hassle of being assigned and exercising your long options.
The specter of early assignment gets raised quite a bit around the time dividends are paid. The scenarios are different for calls and puts.
You may have read that if the time value of an ITM call is less than the dividend, the call is at risk of being exercised early. This is not because the investor will make money from exercising. Let's illustrate with an example. To be paid a dividend you must own the stock before the ex-dividend date. Call owners do not receive dividends. If you buy the shares on or after the ex-date you won't be paid the dividend, so the call owner will exercise it the day before the ex-date.
XYZ is trading at $50, and a 45 call is trading for $5.25. It's paying a $1 dividend and the ex-date is tomorrow so the buyer exercises the call. They're now long XYZ at $45. The ex-date arrives, the dividend is paid, and the stock is discounted by the amount of the dividend, and is trading at $49. They sell and wind up losing $0.25. What happened? Simply add up the numbers:
(49 - 45) + 1 - 5.25 = -0.25
Whenever you exercise an option you throw away the extrinsic value. It doesn't matter how large the dividend is, since the stock's price is discounted by it on the ex-date. This is a losing trade. The only way the trade could make money is if the stock isn't discounted by the full amount. Sometimes this happens (other news gets published) but this is nothing more than a gamble if attempted. It's not an arbitrage opportunity.
In fact, as the ex-date approaches you may see ITM call options trading at parity. This occurs because the stock's price will be discounted by the dividend, and so the option's intrinsic value will decrease as well. Buyers don't want to be left holding it going into the ex-date because they're going to lose money, so the selling pressure drives down the option's price to parity. It may even trade at a discount, presenting the earlier discount arbitrage opportunity.
If the corresponding put with the same strike price as the call is trading for a price less than the dividend minus interest, then the call would be exercised and you would be assigned early. The trader long the call would exercise their call and buy the put, since this has the effect of recreating the same trade, except they receive the dividend.
It's actually puts that offer a dividend arbitrage opportunity if the time value is less than the dividend. Using the example from earlier, a 55 put is trading at $5.25. You buy 100 shares of the stock at $50. Ex-date arrives, the stock is discounted to $49. You exercise the put, selling the stock for $55, collect the $1 dividend and profit a risk-free $0.75. Add up the numbers again:
(55 - 50) + 1 - 5.25 = 0.75
You may already be guessing what happens to ITM puts as the ex-date approaches. Their price increases due to buying pressure, since the option's intrinsic value is about to increase by the dividend's amount. Once the time value at least matches the dividend the arbitrage opportunity no longer exists.
One other scenario where you may be assigned is when the underlying is trading close to the option's strike price on expiration day. You don't know if it will expire ITM or not. This is called pin risk. What should you do if you're short? Close out. It's not worth the risk if the underlying moves adversely after market close and the options are now ITM. Just close out.

Should I close out of a position after collecting most of the premium earlier than expected?

This is a good idea. A lot of people follow a rule where if they've collected at least 50-80% of the premium they close out of the trade and move on to the next. They especially follow the rule when it happens much sooner than expected.
Collecting the last tiny bit of premium isn't worth what you're risking (a relatively large amount of money to make a small amount). You're picking up pennies in front of a steamroller. What will happen one day is the underlying will make a dramatic adverse move, eliminating all of your profit and even putting you at a loss. You'll be cursing yourself for being greedy and not closing out earlier.
A lot of brokers will even let you close out of a short options trade for no commission if you can buy it back for only five or ten cents.

My position moved against me. What can I do about it?

You have a few choices.
1. Close out
Close the trade. Accept your losses and move on. How do you decide if it's a good idea to close? Ask yourself, if you didn't already have this position would you do it now? Would you open the position now given the current price and market circumstances? If not, close out.
You're going to end up on the wrong side of trades sometimes. It happens to everyone. Sometimes closing out is the right idea. Other times it's not. You can't predict the future, so don't beat yourself up when you make the wrong decision. But always be mindful of risk management and keep your losses small.
2. Ride it out
It's not unusual for option prices to spike only to collapse in price later on. If you haven't overleveraged yourself you have the funds available to ride out the trade. If the answer to the earlier question about opening the trade now is yes, it's reasonable to ride it out. You might even consider selling more contracts, but remember to never overleverage.
Just make sure the HAPI (hope and pray index) isn't high, otherwise it's a sign you should close out.
3. Roll
Rolling is a good idea when you think the trade in the short term is a bad idea, but long term will make money. You close out of your existing position and open a new one. This is ideally done simultaneously so you don't trade into the position one leg at a time, risking a poorer fill on price (slippage) or only getting only a partial execution and your positions are now wrong.
Rolling up is rolling to a higher strike price. Rolling down is rolling to a lower strike price. And rolling out or forward is rolling to a later expiration date. Typically you roll out, and possibly up or down. Whatever you decide, the goal is to roll to a new position that you can sell for more than the loss on the old position. That way you can at least recover your losses, and if you're fortunate, still turn a profit.

I'm doing great! I'm winning on all my trades collecting that sweet, sweet, theta. I want to sell even MOAR!

Slow down there, speed racer.
The second worst thing that happens to new traders is they have a series of winning trades (the worst being they lose all their money). They become overconfident, think they have it all figured out, and place a trade that's way too big for their account. They of course don't realize how clueless they are, discover to their horror the trade was completely wrong, and end up digging through the remains of their now smoldering account.
You've made a bunch of winning trades. Great. Don't let it go to your head. Don't start scaling up massively simply because you've been winning lately. A better strategy is to risk a fixed percentage (e.g., 1-2%) of your account on each trade. As you make more money the dollar value of each trade increases but the percentage stays the same. That way when a trade ends up being a loser, which will happen, the damage is minor and you can still recover.
Theta gang is not a get-rich-quick scheme. If you're going to commit to this you're going to be doing it long-term, which means slowly making money.

I like to sell options on stock indexes like the S&P 500. Anything I should know?

SPY is extremely popular for trading options but there is a much better alternative: SPX. Why?
If you like to trade options on other indexes (or commodities), you should consider futures options. Both futures and futures options are 1256 contracts and receive favorable tax treatment.
EDIT: Hit character limit, rest of post here
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Meet The Freak 13

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I woke only grudgingly, resentful of the light streaming through the blinds, and unable to shake the hollow feeling that came with lack of sleep.
I'd been doing it to myself, of course, and I knew that. It was simply that I couldn't bear to let myself fall asleep while Wallace was still beside me. The heat coming off his body, and the reassuring scent of him fresh from the bath made me drowsy, but I'd fight to stay awake, listening to the steady rhythm of his breathing and the beat of his heart.
I simply didn't want the moment to end. It was that first night we'd spent here that had made me fall in love with the human inn, but it had been Wallace's remark that we may as well be living in a fortress that made me realize the precariousness of our circumstances.
We were safe, truly safe, for perhaps a few more days. There was always the risk that a group of light cavalry may try to make a suicide run at us, but our foes were not in such a rush. That aside, those with the skills to make such a run would not be easy to convince. No, it was The Long Night that I feared. Each one that passed brought with it the threat of invasion, and in some ways, I found the cure as distasteful as the disease.
The quality and loyalty of any potential subjects was one thing, and there was a particular type of young man I feared inviting into our sanctuary. But that was just it, this was our sanctuary, and I detested the idea of inviting anyone into it.
I had certain juvenile fantasies about the myriad places about our sanctuary that Wallace might have his way if given the proper prompting, and that would be a little troublesome if there were others about. But more broadly, if there were others about, I was going to have to 'behave'.
I couldn't sit out on one of the benches scattered about the park below, snuggled up next to the giant with the squishy heart. I might be trying to sell off my demesne, but even unlanded, I would always be a noblewoman. Unfortunately, there were standards of behaviour noblewomen were expected to maintain. Try as I might to flee from my responsibilities, they always seemed to find some way to constrain me.
It made me realize just how perfect the moment was, and how transient. Even the sound of Wallace's breathing, his heartbeat, made me hold him tighter. His breath came as quickly as if he'd been on a hike, and his heart- Even dead asleep, his heart hammered as if he'd just sprinted up and down the stairs. I knew Wallace would have it no other way, but I felt so guilty that it made me nauseous. Guilty that I was relying on him as a bodyguard, further straining his already overtaxed heart, and guilty that my first thought had been to curse my own luck. To curse the fact that it seemed like everything good in my life was snatched away as quickly as it was given. Wallace was his own person, not some bauble to be given or taken by providence, and it wasn't fair to him to treat him as such. To act as if the confluence of events that had brought him here were the result of some force in the universe seeking to reward or punish me specifically.
Inevitably, my long ponderous thoughts would grow muddled, I would lose my grip on wakefulness, and I'd fall asleep. The first couple of days, Wallace had stayed, letting me sleep on with my head resting on his shoulder as he read quietly. But today, as with yesterday, he'd managed to slip out of bed without waking me.
I sat up and ran my fingers through my hair. I hadn't re-braided it since Wallace had helped me wash and straighten out the tangles, and it had gotten a little messy while I'd been sleeping with it loose.
Wally wasn't in the penthouse or out on the balcony, as far as I could see. I went to the bathroom to splash some cold water on my face and gave my shoulder a look. The bruising had mostly faded, and while it was still sore, I could at least wash my own hair now. Not that I'd told Wally.
I didn't bother to dress. I had only a few more days of complete freedom and the 'tanktop and shorts' as Wally had called them, kept the relevant portions of my body covered. I was not about to wear a stitch more until I absolutely had to.
All cleaned up and ready to face the rising sun, I huffed and puffed my way up the stairs to the roof. In a day or two I'd be in good enough shape to wear my necklace once again, but I knew from experience not to rush recovery.
I checked the conference rooms outside the penthouse, but neither the office nor storeroom held the big man. I peeked my head into the storeroom and found there were more human treasures than when I'd last investigated.
Though the guests had been absent, we'd found abandoned belongings in several of the rooms, and had slowly been sorting through the collection. Stacked along one wall was the many luggage, along with selected pieces of hotel hardware that Wallace had suggested would be of little use, even if the hotel was powered. Spread out on the immense conference table and against the other wall were the piles we'd slowly been sorting the goods into. There were those things that were useful in and of themselves, that which was fit only to be scrapped for mana, and valuable items we might sell in the city. Dumped in one corner was what remained when we removed the useful, valuable, and mana rich. Much of the pile was clothing, in fact, the human luggage had contained almost nothing but clothing, but none of it would fit Wallace and little would fit myself. I'd chosen a few pieces, cleaned them with magic, and set them aside, but the rest was surplus to our needs. It was undoubtedly of high quality, and would be worth something should we bring it back to Parabuteo or Caniforma, but it wasn't quite so value-dense as say, jewellery.
Wally's office was a little tidier, and I skittered to the end of the room to leap into his big armchair. Notebooks, loose paper, pens, pencils, and a dozen shades of marker were piled in a semicircle around his workspace.
Pushed off to one side was a sheet titled "Enchanting Notes" with his scribblings on what I'd told him of the process, and right in front of the big chair was a leather notebook with brass fittings and a brass clasp. Resting lightly on its surface was a small note that read 'For V'.
I undid the clasp and flipped it open. Inside I found off-white paper with the consistent colour that I'd come to expect of human manufacture. I leafed through the notebook and found that aside from some scribbles on the last page, it was blank. I shrugged, I hadn't asked Wallace to set anything aside for me, but it had been some time since I had the time to draw, and this appeared to be the best pick of the bunch.
I took a few of the pencils and went up to the roof to see if I could track down the so-far elusive giant.
Wallace wasn't up on the roof, but peering over the edge, I could see him down on the hill below near a copse of trees. Judging from his posture, I guessed that he was writing something in a notebook, but it was hard to say at this distance.
Once The Long Night had ended and the tide had come through, the two of us had gone down to find the pickup truck still parked up next to the storm drain, none the worse for wear. It had taken a bit of doing, but we'd fashioned a rope ladder fit to bear Wallace's weight, and the two of us had gone for a walk about the area. Wally had later returned to drive stakes into the ground at various points around the perimeter of the hill, and in so doing we'd got a decent idea of just how large a safe area we had. We'd yet to properly survey the land, but according to the human, there were about sixty or seventy acres of grassland to make use of.
I thought that he might be drawing something, perhaps the trees, and I decided that was a fine idea.
Under a sunshade and beside a tall wicker screen where it would be out of the wind, was a padded lounge chair. I laid down on my stomach and set the notebook out in front of me, and I tapped the tip of the pencil to my lips, wondering what I might draw. And then I was struck by a fit of giggles as I recalled my musings about what a Wallace-owned harem would look like.
I began with Wallace himself. He had this way of sitting- lounging really -leaning back, with his arms spread across the back of the sofa, and an ankle propped up on one knee. I drew him as such, though made the sofa look a little more throne like, with a higher back and gilt up the legs and arms. Gilt rendered in charcoal or whatever these pencils were made of, but gilt all the same. I decided that Wallace didn't need a shirt, and I took great care in carving out the muscles in his chest and arms.
I bit my lip, and tapped the pencil on my chin, admiring my work. Of course, it wasn't much of a harem when there were no beautiful and lightly clad women, so I decided to add some of the girls from The Blushing Maiden.
He'd need someone to maintain order, of course, so at his right elbow, I drew my favourite of the Maiden's governesses. In a corset and tight leather pants, she had her hair in a severe bun, and held a selection of disciplinary implements ready for Wallace's use.
Tucked in close, clinging to his side, I drew two of the Maiden's bustier girls, clad only in a few scraps of fabric that covered even less than my shorts and tank top did. Two more sat at his feet, one clutching at his leg.
Standing across from him I decided would be a pair of elven mercenaries, wearing armour of an impractical design, inspired by several works of art that hung within The Blushing Maiden.
One of the mercenaries held a delicate chain that trailed from the collar of the figure kneeling between them. She was very slim, and facing Wallace, was viewed from behind. She was covered only by her hair, which flowed down her back and over her bound wrists to gather on the ground about her.
I giggled, as I titled the piece "W prepares for intercourse with V, regarding enchantment."
I knew something- likely entertaining in the extreme -had happened when Wallace joined me on the rooftop terrace. He was bright red, from the tips of his ears, right down to his neck. Even his hands were bright red, and he regarded me with some trepidation as I lay lounging with my sketchbook in my lap.
I tapped a finger against my chin, "What could you have possibly found, I wonder. Something scandalous, from the look of you, and why do you smell of fuel?"
"Um-" Wallace began haltingly, "I was siphoning fuel out of the other cars in the parking tower. But that's, uh-" he sighed and sat down heavily on the bench across from me, his head in his hands.
"Oh, this must be good," I giggled, "Come now, what is it?"
"So," he began, his voice muffled by his hands, "You remember how I wanted to experiment with enchantment, now that I have the basics?"
I frowned and furrowed my brows, "Yes, though I can't imagine where this is going."
He sighed again, and went on, "I figured communication was important, so I tried some, uh, things."
"Some things? What sort of things?"
"Things like," he winced, "A pair of linked books, where things written in one book show up in the other."
It was quiet for a moment, and I allowed myself a small smile as I opened the cover and flipped back to my first sketch, contemplating it.
"What's the matter?" I teased, "You didn't like it? I could draw some more pictures for you, if you like."
"You know, I think I'm good," he assured me, "We know it works, I think that's plenty."
"I'm surprised you came up here," I giggled, "I would have thought you'd wait to face me until you stopped being quite so red in the face."
"I tried," he grumbled, finally taking his head from his hands, "Didn't exactly work, besides, something's come up. I was fooling around with one of the other cars, thought I might be able to hotwire us something a little more modern, but I couldn't get the engine started. Immobilizer kicked in and I have no idea where even to begin with fixing it."
I shrugged, "As long as the truck still works, I don't see the trouble."
"Well, it's not 'trouble' exactly," he clarified, "Because even without the engine running, the electronics turned on," he hesitated. From experience, I guessed he was trying to decide how to explain some human concept, "So, the book you appropriated is just Communicate Plant. Brass for Communicate, and the paper for Plant mana, very simple-"
"Simple?" I asked incredulously, "Wally, that's a very complex enchantment, you could make a killing selling such things in the city. Can you imagine how useful something like your book would be in managing scavenging teams, or directing armies?"
"Well, actually I can imagine because humans have something similar, called radio. And I say the little enchantment there is simple, because compared to radio, it is. As far as I can tell, the books just work. There's no carrier wave, no concerns about signal strength, intervening obstacles, or interception. It just works."
"Carrier wave?" I frowned, "What's that?"
He spread his hands, "I only sort of know, I'm a software guy, not a hardware guy-"
"Not too soft I hope," I murmured.
"THE POINT IS," Wallace went on loudly, "The car I was working on has a radio, and on that radio, I picked up a very steady broad-spectrum signal-"
"Radio is complicated," he repeated, "Unlike the book, everyone has to talk in the same," he waved his hands vaguely, "space. If you only broadcast on one frequency, that's sort of like only talking in part of the space. The idea being, everyone finds their own part of the space, their own frequency. This signal was different, I could pick it up on every frequency the car's radio could tune in to."
"Why would anyone do that? I can understand the desire to eavesdrop on someone, but why announce your presence?"
"You wouldn't- or I guess you would," he hedged, "If you were trying to jam up their communications. Just broadcast static with a powerful enough emitter, and you could make the frequencies useless."
"Like screaming in someone's ear while they're trying to have a conversation," I suggested.
"Pretty much, but this wasn't someone trying to jam. This was a constant pulsing, once every couple of seconds. The only reason I can imagine to do that, is as a distress beacon."
"And you want to go chasing after this beacon," I realized, a little tiredly.
"Someone needs help," he said matter-of-factly, "Someone with radio."
"You think they're human?" I guessed.
"Or some other species with advanced tech, might be a bunch of elves with spaceships for all we know. But if they need help, they need help. Besides, I don't think we want Simon to swoop in and scoop up whatever goodies are near the beacon. We also want to get that thing shut off as soon as possible, the last thing we want is him poking around on our side of the mountains."
"You believe Simon has access to this radio technology?"
"I wouldn't put it past him. If he's been here a decade then that's plenty of time to find or make one-"
"Make one? I thought you said these were complex devices."
"Complex in operation. But I know the rudiments of making a simple crystal radio, it'd probably take me a week or two, but I could probably puzzle out whatever I can't remember. I think it's only reasonable to assume the same is true for Simon."
"Where is this beacon then?"
Wallace shrugged, "No idea. I've got signal strength, but no direction."
"Why then conclude that it's on this side of the mountains, or that Simon will fare any better?"
"The signal is as clear as a bell, and all that rock would shield the transmission. Either we wouldn't hear it, or it would be muffled and staticy. As for Simon, if he hasn't already got a radio in each city, just for simple comms, I bet he's going to send a couple out. Neither of us might have direction, but with a little clever math, you can triangulate where the signal is coming from, so long as you can take readings from multiple locations. That'll be easier the further away those locations are."
I nodded along, "Simon keeps properties in Parabuteo and Caniforma, it's fair to assume that if he's keeping in contact with human radio... I see, and if each city receives this same signal at a different strength. Hmm, I think I understand your concern."
"I just wanted to make sure you were okay. If you're not quite mended yet, I guess-"
"I am not staying behind!" I growled, "You can't drive the truck, and I refuse to be left behind to wring my hands while you galavant about."
"I'm all for having a galavanting partner," Wallace said hurriedly, "I just wanted to make sure you're in okay shape, you said you couldn't put your necklace back on till your shoulder was healed. I didn't want to rush you."
I gripped my wounded shoulder, squeezing it lightly, "We'd leave tomorrow?"
"Yeah," he replied softly.
"Then I should be in fit shape to go along with you," I assured him, "You said you were siphoning fuel from the other vehicles-"
"Yeah, I filled up the truck. I don't have any jerry cans to throw in the back, but the fuel tank on that thing is enormous. We should be good for a while."
I pushed myself to my feet, and glanced at the sky, "I'll help you gather-"
"Hey, just, you know, relax," he insisted, "I can still see a bit of a bruise, and you're not wearing your amulet. I'll pack our things, you just-"
I opened my mouth to speak, a biting retort at the ready, but held it back as a better idea occurred to me.
I lay back down on the bench and stretched languidly, "Maybe I'll sketch something else," I mused, smiling dreamily.
Wally beat a rapid retreat, and I smirked to myself as I watched him go.
I leaned over to the side and rested my head against the window, giving Wally space to reach in and fiddle with the radio.
It was nearly midday, not that one could tell, looking at the sky. The Father had departed around mid-morning, and shortly afterwards the bank of dark clouds, previously lurking on the horizon to the north, had rolled in. I couldn't catch the scent of rain on the air, and while the odour from the human heating device within the vehicle may have masked it, I guessed it was more a consequence of the chill that was causing Wallace's breath to fog.
And was there ever an awful lot of fog coming out of the big man. It was yet another frustration to leave me feeling guilty, him freezing in the back of the truck while I was warm and toasty at the controls. I was growing rather tired of our wild goose chase, but with Wally unwilling to complain about the cold or discomfort, I wasn't about to raise the issue while I travelled in comparative luxury.
It would be good to know whether we'd made any progress, however. He'd had me take a path away directly away from the hotel and the mountains behind it, not a straight path mind you. Instead, it was a series of wide zigzags, though he'd been shortening the width of each stretch as we drew away from the mountains.
"I think so. The signal isn't- I don't know, normalized?"
"And that means what exactly?"
Wally shrugged lamely, "That might not even be the right term, point is, the signal's getting louder as we get closer."
"Then why are we zigzagging across these hills?" I insisted, "Just point me in the right direction, and I'll take us there."
"It's not a directional antenna, the zigzags are how I'm figuring out direction. It gets louder or quieter depending on distance, but the change is so gradual that it's hard to tell which way things are going. I don't have a map either, just some sketches from the top of the hotel, and I think we've already cleared the horizon in any case. Might just be the weather, but I can't see the top of our base any more."
I twisted around to look over the back of the seat, and found it hard to disagree.
It was less than an hour before flurries started to fall, and I couldn't help but smile, thinking of the ice cream Wally and I had shared.
Usually in weather like this I'd be all in a rush, getting together with the others to put together a team to gather and compact as much of the snow as possible. It wasn't quite as good as ice, and you'd not want to actually put it in the drink, but when it came to keeping drinks or food cool, ice was awfully hard to come by. Not a problem now though, not with Wally's new spell.
We might not even need to promise mana as payment to any prospective subjects. Offer chilled wine, chocolate, and ice cream, and they'd fall at my feet.
But then a frightening thought occurred to me, like an arrow through the heart.
"Wallace, we're going to run out of ice cream," I breathed.
"What?" Wally called through the window, shouting over the noise of the engine.
I brought the truck to a halt and turned around in my seat.
"Icecream, we're going to run out!"
He laughed "I mean, yeah, eventually. There's a decent amount in the freezer, but you're right, it won't last forever," he acknowledged.
"That simply will not do," I informed him.
He stared at me blankly for a moment before shrugging, "Alright, I'll figure out how to make more."
My eyes widened, and I grabbed the back of the seat with both hands, "You will?"
"Yeah, I think it's just sugar, milk, and whatever flavour you want?" he frowned, "I don't know, I'll need to experiment a bit, but I remember making ice cream in school. It was a while ago, but I remember rolling this can back and forth across the floor. I'll figure it out, I promise."
I let out a little puff of arousal pheromones, and held Wallace's gaze with quiet intensity, "I would grasp you by the collar and draw you into a passionate kiss that would leave you weak in the knees, but I believe it would be a little awkward. The window is not quite large enough."
Wallace went a little pink, though I was rewarded with a sheepish grin, "I'll take a rain-" he began.
It was as if a dozen thunderbolts had split the sky, each one following the last so closely that they seemed to blur together.
The last of the thunderbolts hadn't even finished echoing across the landscape before I found myself laying on my back beside the truck with Wallace atop me. The change seemed instantaneous, in one breath I was sitting in the cab, and the next I was on the ground, all without seeming to move through the intervening space.
It was gunfire, I realized belatedly. If Wally's people could create a pistol such as the tiny one he provided me which fired and reloaded itself as fast as one could pull the trigger, it tracked that what I heard was some similar contraption. Larger though, judging from the noise, a rifle of some sort.
A moment later it was answered by another peel of thunder, this one lacking the bass of the first. It was a chattering sort of noise, and a moment later the bassy thunder rolled again.
"Wally," I urged, patting him lightly on the chest, "I don't particularly mind you throwing me to the ground and leaping atop me, in fact, I'm a little surprised it didn't happen sooner. I'm just not sure now is the best time."
He hadn't settled his entire weight upon me. While he was pressed close, he was still holding himself off of me on hands and knees. So as not to squish me, I imagine.
He grumbled a little, and lifted himself off, moving to crouch beside the front wheel.
"They're not shooting at us," he surmised, "I think they might actually be going after each other."
I rose to a crouch and brushed myself off, "I had understood as much myself," I replied wryly.
He'd been peering over the hood of the truck, but turned back to me now, "Sorry Val. You got shot last time because I wasn't trying hard enough. This time-"
"What do you imagine you would have done last time?" I demanded, "Drape yourself across the front window? I got shot last time because a crazy elf bitch hired by a future eunuch got lucky. You have nothing to apologize for, then or now. This leaves us with a question, do we still want to seek this beacon?"
Wally grimaced and glanced back over the hood of the truck.
"Is there any way to know if we're in a safe area?" he asked finally.
"At the moment? No. I have what I need to sight the Parabueto tower and take a reading, but with the weather," I waved my hands vaguely upwards.
"I'm just worried that if we don't deal with this now, we're going to have new neighbours with firearms right in our back yard. Might be a good idea to help out the good guys, say hi, just generally make a good first impression."
"Good guys?" I repeated, "I'm not certain how we'd determine which is which. Assuming such a distinction exists."
There was another round of chattering gunfire, followed by two quick blasts of thunder before the air went quiet once again. Visibility was quickly worsening as the falling snow grew thicker, but this time I was ready and able to take a reading off my compass.
I gestured with it to Wally, "I've got a fix on them now, we can go after them, I'm just not certain you're dressed for this."
Indeed he wasn't. My jumpsuit lacked gloves or any sort of head covering, but there were ample pockets for my hands, and my hair was thick enough to warm the top of my head and tips of my ears. As for the jumpsuit itself, it insulated quite well against the cold.
Wally was not quite as well equipped, in his blue trousers and a light short-sleeved shirt. We might have prepared more thoroughly, but Wally's coat had been in the pack we'd lost on the way to the hotel, and none of the clothing we'd collected from abandoned luggage had been anywhere close to fitting the enormous human.
"I'll be fine," he assured me, "The cold doesn't bother me as much. As long as I keep my hands and face from getting frostbitten, I can deal with weather a lot worse than this."
"As you wish, we'll press on then."
We took our places once again, and I guided the truck forwards slowly. Creeping up and down the intervening hills, white with snow, though blades of verdant green grass could still be seen poking through in places, I was careful not to feed too much fuel to the engine. I was beginning to understand the way the human machine worked, and keeping what Wally called 'the revs' from getting too high seemed to keep the engine from growling too loudly.
I found a trough between two hills and followed its meandering path as lead more or less in the right direction. Hopefully sticking to the low ground would allow us to get as close as possible without being spotted, but I suspected that such considerations would soon be unnecessary. The snowflakes, big and fluffy, were falling so thick that I couldn't see more than a few dozen yards beyond the end of the hood.
The ground and sky seemed to blur together, and I found my gaze wandering as I tried to keep track of the horizon.
I caught sight of something in the distance, little more than a patch of greyish white among the field of white. I slowed and turned to the side, at first assuming it was a tree or something of the like. But as I drew nearer, the shape resolved itself into a more humanoid form.
She noticed us in the same moment I finally made sense of what I was seeing, and she froze. She stood stock-still as she stared at us, and for a moment I thought she might have been one of Simon's maids, but the uniform wasn't quite right. As if the same instructions had been given, but to a designer with different tastes. More than that, she appeared human, and like Wallace, utterly inured to the cold.
I heard the truck creak, and Wallace stepped out of the truck with his hands spread wide.
"Are you okay?" he asked gently, though he had to raise his voice to be heard, "You need a hand?"
Her reply was utterly incomprehensible, which seemed to bring Wally up short. It took only a moment to gather his wits, and he answered in what sounded like the same tongue the woman used, though even I could tell he was struggling with it.
The woman glanced back over her shoulder several times as she and Wally exchanged words, but the two seemed to come to some agreement, as she began walking towards the truck.
Wally turned back, opening his mouth as if to say something, but he stopped as something caught his eye.
He pointed it out to the woman, and though I couldn't understand the words, the urgency in his tone was plain enough. The woman began to sprint towards the truck, and I finally caught sight of what had alarmed Wally.
The horseman broke into a gallop as he spotted the girl, and Wallace quickly glanced between her and the truck. He realized, as I did, that she'd not reach it in time, and the big man began to stride forwards towards the charging horseman.
Had I not spotted him take up his weapon? No, his hands were empty, and there wasn't time to fetch his axe either. Undeterred, he broke into a run, and the set of his shoulders belied not so much confidence, as indifference at the onrushing foe.
The rider raised his weapon above his head- a rifle I realized -in a clenched fist and bellowed a challenge as he turned the horse to head straight for Wallace.
The giant answered with a roar that seemed to make the very air vibrate, and just as man and horse met, he lunged and threw his shoulder forwards. The two struck with enough force that the impact made the truck shake on its suspension, and the rider went cartwheeling over the front of his horse as the creature screamed and stumbled. Wallace roared again- still on his feet -and struck the horse. He seemed to draw the power for the blow out of the earth itself. His calves and thighs tensed as he swung his hips and shoulders around, driving an arm straight out to catch the horse just behind the jaw. The horse didn't so much as whimper as it keeled over, snowflakes thrown up in a wave as it hit the ground.
Then Wallace turned to face the rider where he sprawled on the ground, his weapon fallen to one side, and I caught sight of Wallace's grim visage.
Oh gods, he's going to kill him.
The rider seemed to come to the same realization and, in a panicked frenzy, threw himself at the discarded rifle. It wasn't to be, but as Wallace bent to retrieve the weapon, a shot rang out, and a gout of white smoke enveloped Wallace's head and shoulders. The rider had drawn a pistol, and even now held it straight out, the barrel shaking as he waited for the smoke to clear.
Wallace straightened, rifle in hand, and with blood streaming from his forehead. His expression as he regarded the rider was utterly absent of emotion, and he glanced down at the rifle's lock- a wheellock -before returning his gaze to the man on the ground.
The man dropped the pistol and raised his hands to cover his head. He screamed something, and Wallace strode forwards. I put my hand on the door handle, unsure whether to intervene, and glanced over to where the woman was huddled by the passenger side door. I could only see her from the eyes up, but that was enough. There was interest in those eyes, fixed on Wallace as they were, but little other emotion could be found in those eyes. Certainly not mercy.
The man screamed again as Wallace neared, but he was spared not a second thought as Wallace came to open the passenger side door for the woman.
She glanced at the man still huddled on the ground, and asked Wallace something, who nodded at the back of the truck. She shook her head, and gestured at his forehead. He nodded, and she clambered over the side of the truck.
"We're going to help Ch-" he hesitated, "Our friend here," he explained, "But she's not the one who set off the beacon," he passed the rifle into the cabin with me, "Prince Joffery here also isn't the guy we heard shooting earlier, so there's someone else out there who needs help. Char-" he hesitated again, "Our new friend is tag along, and she'll patch me up while we put some distance between us and Joffery."
"Wally?" I asked hesitantly.
He reeked of anger, so strongly that I was stunned that rider still breathed. So strongly, that if I didn't know Wallace quite as well, I might be terrified right now. But on the outside, there existed only utter calm.
"There are people out there that still need our help," he said simply, "I'll be okay, Val."
He gently shut the passenger side door, and joined the woman in the back of the truck. I took a furtive look through the mirror set above the windshield and gave a little start as the woman's right hand seemed to break apart. Wally seemed unconcerned as a small nozzle was selected from among the many miniature tools, which the woman used to spread some sort of material on the wound.
I let out a long breath, shook my head, and put the truck in gear. This wasn't the weirdest day I'd had, out here in the wilds, but it was early yet. Maybe we'd find something yet more curious after lunch.
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