Blog Posts

Capital structure arbitrage (CSA) is a financial strategy used by hedge funds and proprietary trading desks. This strategy involves taking advantage of pricing discrepancies in a company’s capital structure. A company’s capital structure is comprised of its mix of debt, equity, and other securities. These pricing discrepancies can occur due to a number of reasons, […]

Tulip Mania, one of the earliest recorded financial bubbles in history, provides a fascinating case study for modern traders and investors. The rapid rise and fall of tulip bulb prices in the 17th-century Dutch Republic serves as a reminder of the potential consequences of irrational exuberance in financial markets. By examining the historical context, key […]

Interest rates can be unpredictable, yet they’re a big driver of asset prices, making it difficult to know what to do with your investments for tactical traders. Interest rate immunization is a strategy that can help you protect your investments from interest rate risk. In this article, we’ll take a closer look at interest rate […]

The potential you can make from day trading varies widely among individuals, largely due to differences in capital, strategy, discipline, risk management, and markets traded. We’ll look at the question across a variety of different variables.   Key Takeaways – How Much Can You Make Day Trading? Capital Starting capital significantly impacts potential earnings, with […]

Modern finance and trading is seeing many ongoing shifts. For example, we increasingly see a shift away from pure equity and credit strategies toward more balanced strategies – i.e., balancing risk across asset classes to enhance portfolio stability.  These methods address the limitations of traditional approaches that often concentrate risk in equities.  We’ll explore this […]

Leveraged ETFs target daily returns to maintain a consistent leverage factor, such as 2x or 3x, of the underlying index’s performance. This daily reset ensures predictable amplification of returns for short-term traders. But it can lead to significant deviations from expected performance over longer periods due to compounding effects.   Key Takeaways – Why Leveraged […]

A gamma squeeze is a sudden, sharp rise in a stock’s price, often triggered by a rush of options trading activity. It’s driven by the actions of market makers and their hedging activity in response to the activities of options traders.   Key Takeaways – Gamma Squeeze Leverage Driven Volatility A gamma squeeze occurs when […]

Synthetic ETFs are different from standard ETFs in that they don’t own the actual assets they track. Instead, they use derivatives like swaps to replicate the performance of a particular index, like the S&P 500. Think of them as a mirror reflecting the movements of an index, rather than a basket directly holding all its […]

In “The Alchemy of Finance” (1987), famed trader George Soros presented his theory of reflexivity. This theory challenges traditional market assumptions by asserting that market prices aren’t merely a reflection of underlying fundamentals, but are also influenced by the perceptions and biases of market participants themselves. We’ve discussed in other articles how markets don’t perform […]

Financial plumbing is essentially the behind-the-scenes infrastructure of finance. It’s the network of systems, institutions, and processes that make the flow of money possible. Without it, payments wouldn’t clear, trades and investments couldn’t be made, and markets wouldn’t function. Accordingly, it’s important for all traders to understand the basics of financial plumbing.   Key Takeaways […]