macrocephalopod

You have found a market inefficiency you can exploit. Now ask yourself: - How could a trader exploit this inefficiency? - Why *haven't* other traders exploited it and used up its capacity so it isn't an inefficiency anymore? 1/5

Bad answers to this question include: - Because I am smarter than everyone in finance - Because I worked harder than everyone else - Because I used a fancy algorithm. 2/5

Good answers include: - Because I misunderstood something - Because it has a return profile that's difficult to endure (negative skew, highly correlated w known risk factors) - Because it's slow converging and requires you to take on significant mark-to-market risk 3/5