/biz/ - Business & Finance

[Anonymous No.1816567]

I'm an actuary and part of my job requires me to memorize books of investment strategies, mostly option strategies, and hedging strategies.

However, I don't actually have any brokerage account of my own or anything yet.

If I decide to open some account with some brokerage firm, say TD Ameritrade, will knowing all these options strategies be helpful?

It's like a football player who has memorized a bunch of play strategies for different situations. I've had to take tests on them and everything so on paper I know how to theoretically respond if the market does something, but I want to know if this is practical or not.

Can I make a decent amount of money just trading in the options market? Obviously I understand the risk, but I just want to know if it makes sense for me to apply all the book knowledge I've had to learn on this.

(I'm going to practice with simulators and all that first, so I'm not going to dive right in.)

[Anonymous No.1816645]

I realize this board invests in little more than Bitcoin and Robinhood stocks but I still want to know.

[Anonymous No.1817366]

Theory helps you prepare, but practice will always hurt the first few tubes around (for your football analogy, the first tackle you get will ground you because your body will be in shock).

My advice, start low, with little sums of 250 to 1000$ (or whatever "low" is for you), to get the hand of it. Learn the unexpected bits that theory will have not prepared you for. After about a year, you can go in full retard.

[Anonymous No.1817373]

>>1816567
>If I decide to open some account with some brokerage firm, say TD Ameritrade, will knowing all these options strategies be helpful?

to a limited extent in that you have more 'options' with regards to how to profit from a particular view

though knowing some options strategies isn't necessarily going to give you any inherent advantage above simply knowing how to go long or short - you still need an edge and there is still no free lunch

[Anonymous No.1817378]

>>1816567
Care to say more about your job? Any recommendations for studying that stuff from a theoretical point of view?

[Anonymous No.1817447]

>>1817378
Not that guy, but as of the fourth exam, there are only two types of things you study:
>Probability, statistics, and modeling (1P and 4C)
>Financial calculations and derivatives (2FM and 3MFE)

It helps to understand it intuitively, but also to understand the logical underpinnings. I don't remember most of the derivative formulas, but I can derive them as needed, because the derivations make sense to me.

It also helps to think about them like a mathematician or an academic. First understand the problem that motivated them, then the research background that the results were derived in, then you can understand how they got it. I was in academia for a while, so it works for me.

If you have trouble getting a high-level, intuitive understanding, practice by rote until it's second nature to you. Also, from what I've heard, you don't use much of the exam material in your day-to-day job.

[Anonymous No.1817462]

>>1817378
I am an actuarial consultant, but at the lower level of the exams. If you know what an ASA is, it's like the first certification I have to get to become an actuary and I haven't gotten it yet but I'm well on my way. But while studying for exams FM (Financial Mathematics) and some of the others I've had to learn a lot of this stuff. And the company pays for all my study time and study resources, as pretty much every actuarial company does.

>>1817373
Noted. But I guess knowing this stuff can help me know how to profit when a stock doesn't move much or how to hedge a position. That's kind of what I was thinking.

Knowing this, I was thinking there might be an advantage for me to go into options as opposed to other markets.

>>1817366
Thanks for this advice.

>>1817447
This is correct and these are the exams I was referring to.

He's right that I use almost none of the exam material in my day-to-day job but being familiar enough with it does help me to know what different things are and how other actuaries got to their conclusions when I need to. I'm still very new though so it's a lot of learning for me.

The exams are really hard though. Even when I think I understand all the material really well, the exam questions always manages to twist the material in ways that I've never thought about it before.

[Anonymous No.1817468]

>>1817378
I know you asked for a theoretical point of view, but from a practical point of view I'd say just buy the ACTEX/ASM manual for whatever exam you're studying, read it through for the material and optionally do some of the practice problems. Once you've memorized the material, the real studying is the practice so get an Adapt subscription (online) and do their practice tests and quizzes by category and watch your Adapt level (something they give you when you log in) go up based on how well you know the material.

Learning the material and concepts by memory means nothing without many, many, many hours of practice.

[Anonymous No.1817474]

>>1817468
>>1817462
I didn't have problems with exams 1-3, but I've failed exam 4C twice. My study materials don't give derivations, so I have to memorize the formulas for a dozen probability distributions with no understanding of where it came from.

Also, I'm lazy and I don't work through enough problems.