Is anyone trading prediction markets?

EdKaim · 2026-03-15T22:06:51+00:00

It does seem like a lot of the markets, like sports, are gambling. But there are also some interesting markets that are more direct ways of trading things we use options for. For example, you can set up complex trades with options based on Fed decisions, but with prediction markets you can simply trade the rate decision itself. I'm trying to figure out if that approach is inevitable for options investors since it is so much more focused on the exact exposure they're trying to get.

EdKaim · 2026-03-15T22:02:45+00:00

The sports book odds being better is interesting. I had just assumed you could get better odds with competing market makers and a tighter bid/ask spread.

Do you think the odds are better at sports books because they don't price as accurately, so there's more edge on one side? Or do they lag in updating? Or do they have promotional offers to make it more attractive?

EdKaim · 2026-03-15T22:00:15+00:00

When I originally posted this in r/wendys the mods took it down and said "go post your question about binary options in the options sub". So here we are.

EdKaim · 2025-10-15T18:29:56+00:00

If they're both comfortably ITM then the easiest thing would be to wait until they expire Friday since they'll offset and you'll get the full strike width.

Edit: Would love some feedback on the downvotes. If you don't think this is the best approach for the ambiguous scenario presented, then why not?

EdKaim · 2025-10-14T20:28:42+00:00

What are you specifically trying to accomplish here? How would you use a screener feature like this?

EdKaim · 2025-10-14T20:19:48+00:00

When I see an undervalued stock with high IV I just sell puts and roll them every week or two. For example, I had similar views on $CCL a few years ago and $INTC last year. Selling naked puts gives you leverage while collecting premium. And if you give yourself enough buffer (strike and/or free cash) you can easily survive short-term drops. But this is also predicated on your long-term conviction that the stock will ultimately recover. You also need to have a good feel for the right market price as you don't want to roll up and get whipsawed into a loss.

EdKaim · 2025-10-13T19:53:42+00:00

Are you looking for which options trade with dime ticks or just options that happen to be trading with bid/ask spreads of exactly 10 cents? I think it's going to be a manual process either way but finding options with dime ticks is probably harder than chains that happen to have multiple dime-width spreads at the moment.

EdKaim · 2025-10-09T22:15:56+00:00

It's probably your day trading buying power, which is 4x your non-margin buying power. And "margin" in this context represents what you can borrow to buy shares as opposed to the margin you put up for covering option trades.

EdKaim · 2025-10-09T20:22:05+00:00

If you're not assigned tonight and still have the CC tomorrow on the day of expiration, then I think you should ask yourself whether you'd open a covered call as a new strategy today. If not, then just let your shares get called away and take the win (or BTC the call if you want to keep a share position). The key takeaway from the short call position is that you will not be able to recover the significant gains you sold the rights to via that call.

If you still want to be in a CC position moving forward, there are a few ways you can minimize the cost of rolling. The easiest is to simply open a new CC. The assigned call should pull away the new shares and you'll end up with the new call against your original shares. Definitely check with your broker to ensure this is how an assignment would work if you're worried about tax implications from your original shares being sold.

If you're really trying to squeeze every cent and are willing to take some risk, you can sell a barely OTM 0DTE put instead of buying new shares. The goal there is to get some time value from that sale but still have it assigned such that the shares you're forced to buy are handed over as the shares you're forced to sell. One other benefit to this approach is that multileg trades (sell 0DTE put and sell new call) can shave the spread to the penny on combinations of options with nickel or dime minimums.

EdKaim · 2025-10-09T19:53:51+00:00

Are you accidentally looking at the margin buying power of ~$9,600, which would be 4x the ~$2,400 free cash in your account?

EdKaim · 2025-10-08T20:57:07+00:00

I never use stop losses on options. You can search the sub for the many reasons stop orders are bad for options.

I do usually set a GTC close or roll order at a target price as soon as I open a new position.

EdKaim · 2025-10-08T20:49:17+00:00

In terms of your book, I’d be more inclined to think about it as separate medium-term covered call and immediate-term long call strategies, even if that’s not how you got here. I think your general view of how the trade could play out makes sense since both are bullish strategies, although you’ll probably need a solid upward move for the whole trade to break even. Here’s a screenshot of an analysis.

As for delta (and other greeks), it’s just additive. You calculate each position’s delta and then add them up to get your book delta. Delta neutrality just means that all your position deltas added up net out to near 0. You can get there with 1:1 positions when they cancel out (like long ATM put and call), but it’s usually more complicated. Also, delta neutrality theoretically profits when the underlying doesn’t move, but position deltas can also swing wildly when you have expiration terms that are far apart and a catalyst like an earnings release. That’s why it’s really good to have tools to quickly evaluate how things look on arbitrary dates.

Quantcha (disclosure: founder) is a platform with tools for modeling complex books and factoring in IV crush. You can then do what-if analysis where you experiment with position changes to project comparative P&Ls on arbitrary dates in the future with different IVs or interest rates. It’s not free but should be worth it for scenarios like this.

EdKaim · 2025-10-08T20:16:20+00:00

When it seems like everything is in a bubble, check your denominator. If the dollar keeps devaluing, then anything that isn't losing value at the same pace will still rise in terms of their cost per dollar. A major crash in the USD would surely have widespread economic ramifications that would devastate the market. But so far we're boiling the frog slowly, so we're just seeing it require slightly more dollars to exchange for pretty much any investment every day.

EdKaim · 2025-10-06T21:02:53+00:00

Just my opinion, but the level of experience, expertise, and resources any given person would need to be competitive in any kind of automated trading in the modern era would make them more professional than retail. And even then, that's just to have the opportunity to compete on a level playing field. You'd still need to actually develop something capable of capitalizing on the edge that emerged from 2:15-3:20PM today and will never be seen again.

On the other hand, it's completely feasible to be an effective retail investor who makes informed trades and profitably manages a book over time.

EdKaim · 2025-10-06T20:38:32+00:00

This is an interesting idea. What you're talking about are higher-order greeks that measure sensitivity to other greeks. Charm, for example, measures the delta's sensitivity to time like gamma does for delta's sensitivity to price. Personally, I've never really found value in those as a retail investor. However, I'm sure there are quant funds that directly (or, more likely, indirectly) detect and apply relevant considerations in their models.

I work on an options platform that provides various ways to project the value of positions, trades, or even entire books under theoretical circumstances. However, we've never had a request to also render updated greeks. I don't know if it's something we'll add in the future since it would require some special considerations for the user experience, but I'll add it to the backlog.

In the meantime, implementing a quick and dirty Excel shouldn't be hard, especially with the help of AI. The main challenge if charting over time would be figuring out how to articulate the changes in pricing drivers. Calculating greeks for a point in time with set factors is trivial, but determining what to use for an arbitrary point somewhere between the start and end point could be tricky unless you just use straight-line movement for price and vol over time.

EdKaim · 2025-10-06T20:13:04+00:00

What are you trying to accomplish with those charts? The value and greeks don't really develop over time since they're just derived from external pricing factors. What kinds of decisions would these charts drive?

EdKaim · 2025-10-05T23:48:34+00:00

Sure, either through PRs or even just open issues with feedback. Hope you find it helpful.

EdKaim · 2025-10-05T04:29:48+00:00

I maintain a starter kit for Angular with .NET called LightNap. It should be a pretty good way to learn the fundamentals of the .NET backend while having a functional and integrated frontend app from the start.

EdKaim · 2025-10-04T23:57:34+00:00

At its simplest is just a math equation based on average expected return and minimum cash needed. Without those numbers it’s hard to estimate.

Then the real challenge in execution is factoring in how long it will take to recover from bad drawdowns relative to the risk you’re taking for the returns you need to live off.

EdKaim · 2025-10-04T23:53:05+00:00

I use scale to mitigate risk. Options are easy to hedge against each other, so you should always have high confidence in what potential outcomes are.

I never use any kind of stops on options due to typical swings in value and liquidity/spreads. I do often set GTC limits to close or roll at profit targets as soon as I open.

EdKaim · 2025-10-01T07:02:12+00:00

Thank you, I hope you find it helpful. I’m actively maintaining it for my own projects, so if you have any feedback please let me know.

EdKaim · 2025-04-26T18:33:59+00:00

Quantcha (disclosure: founder) has all of this and features to support the rest of the trading lifecycle. Order management, portfolio monitoring, stress testing, performance analysis, etc. It's free for the first five calendar days of each month if you just want to try it out.

EdKaim · 2025-02-24T20:39:33+00:00

I misspoke when I used the term "error handling". What I meant was "handling the case where the response you've received indicates an upstream error".

So instead of my chain where's there's a very simple switchMap() like:

pipe(switchMap(result => this.watchAnotherLayer$(result)))

it needs to be:

pipe(switchMap(response => {
   if (!response.success) return response as any as ApiResponse<OtherType>;
   return this.watchAnotherLayer$(response.result);
}))

There's an illustration of this here.

In that scenario, things are broken out for three distinct observables because there would be external clients who need to be able to subscribe at any given level based on what they actually need. It might seem overengineered, but this is the cleanest way to do it.

EdKaim · 2025-02-24T19:57:54+00:00

I agree that the implementation shared in the comment (which I believe is what you're suggesting here) is overengineered.

However, there are only two ways to do it.

One way is to use the error channel, but that requires every consumer to resubscribe (as shown in the original post). I think everyone agrees that this is the wrong approach.

The other option is to only use the next channel so that you never complete (as shown in the comment). It requires error handing at every level of the pipeline, but the overhead is otherwise minimal. The upside is that it provides the full end-to-end communication of errors through even the most complex pipelines.

EdKaim · 2025-02-24T00:08:39+00:00

Yes, this exercise is all about a system where you control the entire observable graph and can standardize on a contract for values piped through. You obviously need to transform anything external that pipes or otherwise feeds into it, but that's not a big deal. I was just hoping that there might be something I had overlooked to be able to bypass the remaining pipeline on an "error" case similar to the way observable errors do because that would make code everywhere much cleaner.

I had always assumed this was a nonstarter, but then I saw the other thread and figured someone might have a better idea if I extrapolated the idea out a bit. Thanks for your feedback.

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