Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: willcousa who wrote (179999)	12/27/2004 5:46:24 PM
From: The Duke of URL©	Read Replies (1) \| Respond to of 186894

"It was not Black-Scholes that got them in trouble it was hubris." It wasn't The Airplane that killed King Kong, it was love. (The opening line from the way the Jefferson Airplane would open their set at San Francisco's Winterland.) But in a sense it was Black Scholes, dynamic hedging does not work! It sounds good and you can get a Nobel Prize but entropy sets in every time you change the position. Meaning that every time you make a move, two things happen. One is the miniscule delay before you put the new hedge in place and two is the transaction "friction". (If there is someone real as a counterparty, and not just a Fannie Mae made up fictional entity, THEY will want to make a small profit for doing the deal. You do enough and there will be no principle left. It is roughly the same theory as to why a "pepetual motion" machine cannot exit.