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Comment by lopatin | Hacker News Reader

Presumably retail options traders and less sophisticated firms

Yeah, I think volatility in the indian market was way too low, and Jane street just juiced it. normally that would be a losing proposition, but too many existing players were short volatility habitually… answer is not to kick Jane street out, but to enjoy the taxes Jane street pays on the gains…

Low volatility is good for everyone engaged in long term asset management. Jane Street just found a way to make everyone else less money while making a small amount for themselves.

> Low volatility is good for everyone engaged in long term asset management.

According to who?

There are plenty of pension funds nowdays that have people specialized in picking up mid sized companies after big drops.

it’s a known effect. Without going into details here, you can calculate first crossing time of a barrier in a stochastic process and observe that often the first crossing time decreases as the volatility increases. From there you can set one barrier at 0 (default) and draw your own conclusion.

I'm reminded of how the UK financial regulator banned "binary options" trading, since this was nearly always a scam run against unsophisticated retail investors who wanted to gamble and lost the majority of their "investment".

(one of the Yes Minister irregular verbs: I am providing liquidity to the market, you are long vega, he is a degenerate gambler)

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