What is Grid Trading? How can crypto traders use this strategy? Why Decentralized Exchanges (DEX) should consider it to increase the depth of their order book.
Dispersion trading is an ETF/index arbitrage strategy that consists of trading the difference in the volatilities between an ETF/index and its individual stocks. One can set up a dispersion trade by buying straddles on the stocks and selling straddles on the ETF/index. Dispersion trading works, because ETF/indices tend to move less than stocks, opening up chances to profit from these mispricing.
Dispersion trading exploits the variance in expected volatility between index options and options on the individual stocks of the index. Generally, the implied volatility in index options is not low enough compared to the implied volatility in stock options. This inconsistency leads to opportunities to benefit from the fluctuating spread.
Why do we love this strategy?
Dispersion trading is a low-risk strategy where you either make a small profit or hit a big jackpot. It's safe because ETFs and indices usually don't swing wildly. But if a stock in your trade suddenly jumps or drops due to major news, you could earn a lot from the bet you placed on it. And if nothing much happens in the market, the small profits from your short straddle in the ETF or index trades will cover the costs of your long straddles in the stocks.
Dispersion trading is an ETF/index arbitrage strategy that consists of trading the difference in the volatilities between an ETF/index and its individual stocks. One can set up a dispersion trade by buying straddles on the stocks and selling straddles on the ETF/index. Dispersion trading works, because ETF/indices tend to move less than stocks, opening up chances to profit from these mispricing.
https://thetatitans.com/home/dispersion-trading/
https://huggingface.co/datasets/Dispersion/Dispersion/blob/main/readme.txt
https://github.com/arctictrader13/Dispersion-trading/blob/main/README.mdhttps://en.wikipedia.org/wiki/Correlation_trading
https://r1.community.samsung.com/t5/others/3-usa-states-are-hoping-for-samsung-to-invest-in-their-chip/m-p/25172766/highlight/true#M23594
https://www.quora.com/Why-are-dispersion-trades-short-volga-Going-short-index-implied-volatility-and-going-long-single-stock-implied-volatility/answer/Arctictrader?ch=15&oid=1477743722378172&share=e2c71c35&srid=XvvWu&target_type=answer
https://medium.com/@dispersiontrader/dispersion-trading-0bdf6f46b656
https://www.imdb.com/title/tt25187488/
https://medium.com/@dispersiontrader/dispersion-trading-0bdf6f46b656
https://www.slideshare.net/slideshows/dispersion-trading-is-an-etfdocx/265531920
https://maxonblog.hatenablog.com/
https://forums.developer.nvidia.com/t/accelerated-portfolio-construction-with-numba-and-dask-in-python/192696
Dispersion trading exploits the variance in expected volatility between index options and options on the individual stocks of the index. Generally, the implied volatility in index options is not low enough compared to the implied volatility in stock options. This inconsistency leads to opportunities to benefit from the fluctuating spread.
Why do we love this strategy?
Dispersion trading is a low-risk strategy where you either make a small profit or hit a big jackpot. It's safe because ETFs and indices usually don't swing wildly. But if a stock in your trade suddenly jumps or drops due to major news, you could earn a lot from the bet you placed on it. And if nothing much happens in the market, the small profits from your short straddle in the ETF or index trades will cover the costs of your long straddles in the stocks.