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Research

A selection of Lake Hill thought pieces which provides insight into our philosophy and process.

2024

Insure Against the Unpredictable and Move On
What are the chances the power goes out on a large ship?
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Regime Change
A new force in the options market is causing a structural shift
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Waiting for a Sure Thing to Work
The massive increase in call option selling has created an opportunity
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2023

0DTE Options Unmasked
Zero Days to Expiration Options (0DTE) have taken the market by storm. We analyze them and provide an FAQ.
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Buying Defensive Put Options on a Budget
Take advantage of the odds by buying and selling options with positive expected value
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It Just Came Out of Nowhere
The Importance of Combining Risk Diversification with Risk Mitigation
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2022

A Primer on Drawdown Mitigation
How can you mitigate drawdowns?
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Edison's Light Bulb Failure
Be patient and disciplined
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The Best Laid Plans
Path dependency and Speed can be Turned into a Feature
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The Trend Is Your Friend
Trend-following Succeeds at Last
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Times Of Stress Create Opportunities
Investors should always be prepared for uncertainty and upheaval
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2021

Colonial Pipeline and The Evolutionary Need to Imitate
If the other guy is doing it, perhaps I should do it too?
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Don't Mess With El Paso
What can Texas' electric grid tell us about the financial markets?
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Ergodicity Killed the Cat
What if there was a definitive formula for success in the markets?
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High Skew Is the New Reality
Those who do not adapt will be left behind.
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It's A Bull Market, What's to Worry About?
We care more about skew than the direction of the equity markets
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Social Order
Turbulent times affecting our society is just another chapter
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Swimming With Whales
Whales can make a splash at unexpected times
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Shock Scenarios And Understanding The Process
The importance of combining "What if?" analysis with "What then?" processes
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When The Tried and True No Longer Works
When The Tried and True No Longer Works
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2020

Are You Ready for The Next Downturn?
The current market environment may be giving you false comfort
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Bank Runs in The Time Of COVID
Similar to the Fed, investors have access to an expanding set of tools
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Crisis Playbook
Have a plan and execute
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Day Traders And the Stock Market
Market despair and euphoria makes the case for option strategies
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The Law of Large Numbers
The core of what we do at Lake Hill
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Navigating A Sea of Uncertainty
Positions should change over time
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Patience Is an Edge
How long might it take for these puts, or any options position (long or short), to payoff?
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Searching For True Diversification
Is there a direct way to hedge the downside without giving up too much of the upside?
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Times Of Stress Create Opportunities
Hedge and profit from uncertainty.
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What Are We Rooting For?
Having an edge doesn't guarantee profits. You must be disciplined and patient.
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Where Do We Go from Here?
Similar to the photosynthesis process, investors could benefit from mitigating the effects of rainy days.
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Wimbledon Aced It
Strategy, Discipline, and Persistence pays off
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EARLIER

Investing In A Roulette Wheel
A simplistic analogy to help explain risk management and capturing an edge in investing
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Hedging Left-tail Risk With Right-tail Options
Find the portfolio protection you need without bleeding to death along the way
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What Is The Edge And Why Should It Work?
Looking at the difference between implied and realized volatility
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Importance Of Properly Sizing Investments
Make portfolio allocation decisions based on both expected and unexpected outcomes
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Calibrating Expectations Using Sharpe
Define your risk tolerance and manage your expectations accordingly
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Evolution Of Hedging And Derivatives
The history of hedging since the 1800's
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The Popularity And Pitfalls Of Weekly Options
Beware the risk of ruin from systematically selling options with negative edge
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Shock Scenarios And Understanding The Process
The importance of combining "What if?" analysis with "What then?" processes
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Analyses Versus Biases In Bonds And Options
Behavioral biases and preconceived notions can lead to suboptimal decisions
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How Long Does One Have To Wait For An Option To Pay Off?
A look at the roulette wheel to understand timing, capital management & the importance of discipline
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Options Replication And Delta Hedging
A fundamental lesson about options
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Insurance Companies Are Liquidity Providers
Striking similarities and subtle differences between insurance and options
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Innovations In Risk Transfer Over The Past 4000 Years
The history of options: Straight outta Mesopotamia
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Tail-Risk Hedging By Systematically Buying Puts
A simplistic approach that provides false comfort
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Cargo Cult Trading And Option Overlay Performance
Observing that something seems to work can blind you to how badly it can fail
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