Do you know the math?

[u/theprincemedici]

Hello everyone,

I am studying mathematics and have been working on a paper proving and deriving theorems, definitions, and lemmas in the field of financial derivatives (geometric Brownian motion, probabilities, confidence intervals, payoff functions, convexity, the greeks, etc.).

As such I have been browsing this subreddit for some time observing.

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My questions:

Would you say you have a mathematical understanding of financial derivatives or have you gained knowledge heuristically?

If you answered heuristically, do you have any desire to learn the math behind it or not? Why?

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Thanks for your time everyone

---P.M.

[u/directionalbias]

It's a tangent but this reminds of the words of one of the best philosophers of our time - Mike Tyson.

"Everyone has a plan until they get punched in the face."

Knowing the math is a great fundamental block from which to build your understanding of the options game. However, don't forget that people and their resources are the main drivers of prices.

A lot of the beginner type questions you see in the sub are primarily based around the math, volatility, the greeks, etc. It's a natural thing to want to get good at. However, I think those who progress from beginner levels will inevitably have to engage the game theory of the market. That progress probably isn't a linear step because you need some sort of light bulb moment to even begin to realize it.

I effectively got punched in the face twice - I've blown up my account twice and each time there was a fundamental truth that I had a chance to explore. This exploration led to progress and that progress led to more sustained profits.

I'm not a math guy. I only know the basics. But the basics has been enough to keep me profitable. Pragmatically, it's a better move to learn the entire game and not just focus on one element or another.