Day: October 28, 2022

ETFs are relatively new financial products and have gained popularity in recent years. The ETF industry now consists of thousands of funds with well over $5 trillion in assets. All ETFs are traded on major exchanges like stocks, and most are designed to track an index or asset. For many investors, ETFs provide various desirable features such as liquidity, diversification, low expense ratios, and tax efficiency.
Trading decisions often depend on the trader’s subjective belief of the distribution of the asset price on a given future date. For example, if a trader anticipates a big price movement for a company stock after its earnings announcement, then perhaps a long straddle position makes sense. There are many instances like this. And as time progresses, the trader will learn more about the price distribution by observing price fluctuations.
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