The Skinny on Options: Abstract Applications

Crash Asymmetry

| Apr 29, 2024
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    Tom Sosnoff, Tony Battista, and Jim Schultz transition from casual banter about sports to a deep dive into Schultz's dissertation regarding market asymmetries in institutional trading. He hypothesizes that executing large sell orders in a down market incurs higher costs compared to buying in an up market due to short seller constraints. Despite skepticism, he illustrates how these constraints lead to higher informational asymmetry and increased difficulty in selling during market downturns. The hosts lightly critique the complexity and practical relevance of academic finance theories, while wrapping up with lighthearted anecdotes and a quirky fact about a hidden $20 bill in the library copy of Schult's dissertation.

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