Re:NYC taxi meter and options pricing
by PaulHoule on Tuesday October 27, 2020 @10:15AM
(#24907613)
That article would benefit from editing.
He's covering a lot of ground and might have done better to lead with the graph that he made with his product, which shows that the average speed of cabs has gone down a lot.
The options curves that he talks about then involve: (1) how does slower driving impact the earnings of cab drivers and (2) is a cab driver motivated to drive faster or slower?
If log-normal distributions, greek coefficients and such were really relevant they should be realized to something like "delta was 0.2 in 2011 and 0.4 in 2012 because of X and with the consequence Y"
I am still left wondering how do the following factors combine:
- increasing traffic from increasing population and economic activity
- increasing traffic from increased ride hailing competition (those yellow cabs have a quota, but the challengers don't)
- increasing traffic from deteriorating conditions on public transit
- cab drivers deciding to drive faster or slower because of what they learned at the Chicago School of Economics
and that's were "gross misapplication of theory" comes in. When profit is the small difference between two large numbers it is easy to lose a whole basketball team's worth of shirts pricing options -- every crisis a new generation of quants learn the hard way that Marx had a point about the "declining rate of profits".
He's covering a lot of ground and might have done better to lead with the graph that he made with his product, which shows that the average speed of cabs has gone down a lot.
The options curves that he talks about then involve: (1) how does slower driving impact the earnings of cab drivers and (2) is a cab driver motivated to drive faster or slower?
If log-normal distributions, greek coefficients and such were really relevant they should be realized to something like "delta was 0.2 in 2011 and 0.4 in 2012 because of X and with the consequence Y"
I am still left wondering how do the following factors combine:
- increasing traffic from increasing population and economic activity
- increasing traffic from increased ride hailing competition (those yellow cabs have a quota, but the challengers don't)
- increasing traffic from deteriorating conditions on public transit
- cab drivers deciding to drive faster or slower because of what they learned at the Chicago School of Economics
and that's were "gross misapplication of theory" comes in. When profit is the small difference between two large numbers it is easy to lose a whole basketball team's worth of shirts pricing options -- every crisis a new generation of quants learn the hard way that Marx had a point about the "declining rate of profits".