Stock Trading News

Monte Carlo simulations are a tool in finance for modeling and understanding the behavior of financial systems under various scenarios. These simulations use randomness to solve problems that might be deterministic in principle. Python, with its rich library ecosystem, offers an efficient platform for conducting Monte Carlo simulations. Here’s a guide on how to implement […]

There are many options pricing models with complex mathematical foundations and variables that go into determining what an option is worth. But in terms of the big-picture intuitive understanding of an option’s value is, it really boils down to two main factors: the probability that an option will be in the money (ITM) by expiration […]

Partial differential equations (PDEs) serve as the foundation for pricing complex derivatives and assessing risk. These equations enable the translation of financial theories and movements of market variables into mathematical language.   Key Takeaways – Partial Differential Equations in Finance PDEs, such as the Black-Scholes equation, are used for option pricing. Enables traders to calculate […]

In this overview, we look at a comprehensive range of terms and definitions for understanding the pricing of derivatives in finance. We cover various processes, concepts, and models.   Key Takeaways – Derivatives Pricing Derivative pricing involves models like Brownian motion and risk-neutral valuation to predict price movements and valuations, considering market risk and arbitrage […]

In quantitative finance, professionals often categorize models and methodologies into two main buckets: Q World and P World. These classifications represent two distinct approaches to quant modeling. They each have their own unique set of assumptions, objectives, and applications.   Q World vs. P World (Quant Modeling) The “Q World,” or “Risk-Neutral World,” uses adjusted […]

Hamada’s Equation is a financial tool that separates a company’s total risk into two distinct categories: business risk and financial risk. By understanding and analyzing these risks separately, investors and managers can make better-informed decisions. This equation also integrates elements from the famous Modigliani-Miller Theorem, providing a more comprehensive view of a firm’s risk profile. […]

3-asset and 4-asset portfolios can be used to simplify your approach. We look at various combinations to help you get an idea on how to structure such a portfolio. We are primarily focusing on risk-adjusted returns. While many may just want a stocks-heavy portfolio to try to maximize their returns, we take more of an […]

Elections can have significant power over financial markets, both immediately and over time. This sway is due to the potential economic consequences of the policy proposals from different candidates/parties and other factors we’ll cover. And financial markets and economies also have sway on election outcomes (i.e., an underperforming economy may increase the likelihood of a […]

In trading, there are countless variables that can impact the outcome of any trade, so intuition can be a reliable tool in many circumstances. For experienced traders, it can provide an intuitive edge – guiding them beyond data and analytics. But what really is intuition, and how does one use it in trading?   Key […]

We all know stories about Enron, Worldcom, Wirecard, and other large companies that, suffice to say, didn’t pan out for traders and investors betting on their success. They weren’t the first and won’t be the last large companies to fall. What happens to the broader market and economy in such circumstances? A stock that constitutes […]