Amaan's Almanac

The prices on the options ticker might be faker than they appear. The last few weeks have been eventful to say the least. The markets just weathered three huge events, namely: RBI Repo rate hike US inflation data Federal Reserve interest rate hike In the light of these events, many people attempted to play the market using option spreads. However, many of these positions ended up in losses instead. The culprit behind this is the dreaded IV crush. The options market is unimaginably vast. Fortunes are created or lost on a daily basis. There's a reason why experienced options traders call the market the "options battlefield". Options are priced using the famous Black-Scholes model. It is a differential equation that takes in five input variables: the strike price of an option, the current stock price, the time to expiration, the risk-free rate, and the volatility. Countless literature has been published on options and technical analysis of options data. It is for these reaso...

" RBI is not bound by any stereotypes and conventions; we will continue to be dynamic in our approach. " The RBI Governor has set the stage for monetary policy moving into FY-23. It is an exciting time for all market participants. Let's discuss what went down in today's trading day and how RBI's announcement affected the market. RBI Repo rate hiked by 50 basis points: The war in Ukraine has caused inflation to become globalised. To counteract this, an aggressive hike in repo rate was mandatory. At the time of announcement, the market did dip to its day low but soon after it became clear that the Cash Reserve Ratio (CRR) was left untouched a sharp rally was observed in banking stocks. It seems that unlike the hike in May, this hike was almost fully priced in. Inflation target raised by 100 basis points: Being pragmatic and realistic, the RBI has raised the inflation projections to 6.7%, taking into account the soaring prices worldwide. This news caused a slowdown i...

Personal finance has taken on a prominent role in public discourse in recent times. With the advent of the internet age, public access to financial instruments like mutual funds, bonds, equities, futures & options, currency derivatives as well as unconventional assets such as cryptocurrencies has increased exponentially. However, the advice that was prevalent in the 1990’s still does the rounds regularly. Invest your money in mutual funds and enjoy the power of compounding It can’t be denied that this advice has a lot of weight to it. Value investing and compounding has made a lot of money for a lot of people. However, this philosophy of investing has a few pitfalls as well.  Overdependence on Fund Managers: People usually look on the very long-term time horizon while evaluating a mutual fund scheme. This can range from 20 to 30 years. However, fund managers come and go and past performance of a mutual fund has low correlation with fund performance in the next 5 or 10 years. I...

  “The ideal engineer is a composite … He is not a scientist, he is not a mathematician, he is not a sociologist or a writer; but he may use the knowledge and techniques of any or all of these disciplines in solving engineering problems.” —Nathan W. Dougherty, American civil engineer The E-Yantra Robotics Competition is India’s biggest PBL (Project Based Learning) robotics competition - hosted by e-Yantra, IIT Bombay. I took part in the 2021-22 edition of the competition, which was coincidentally the 10th edition. Through this post, I'd like to share my experience and the things I learned in 6 months of the competition.  A Journey Begins I came to know about the competition in August, 2021 through my friend Hrithik Singla who was the President of Volt, the Electronics Club of School of Engineering, JNU. My initial reaction was to not take part in the contest as I was currently preparing for the Graduate Aptitude Test in Engineering (GATE).  However, the idea of a collabor...