When we are looking to place a trade, we may have a directional assumption on the underlying. We can use these directional plays in order to offset some delta risk or is an underlying has had a large move.
Today, Tom Sosnoff and Tony Battista are joined by Jacob Perlman as he discusses these type of trades in an efficient market. The guys discuss how the law of large numbers tells us that the more we do something, the closer the results will be to what is expected. However, Jacob makes the point and explains the math around the fact that this convergence to the mean can be very slow.