Resolve to Yes if someone wrote a detailed post/comment explaining to me what "derivative mark-to-market LONGVOL tranche correction" is within the next 10 days.
For the post/comment to qualify, the post has to explain what "mark-to-market", "LONGVOL", "tranche" each means individually, and what these words put together means. Ideally provide some historical context around those terms as well.
I reserved 500 Mana bounty for the person who explained it the best. Anyone who traded in this market can cast a vote on who best explained it.
Markets that referenced the LONGVOL tranche:
Will Eliezer Yudkowsky tweet about a major derivative mark-to-market LONGVOL trauche correction by EOY? | Manifold Markets
Is @IsaacKing an expert in LONGVOL trauche corrections? | Manifold Markets
Related questions
🏅 Top traders
| # | Name | Total profit |
|---|---|---|
| 1 | Ṁ34 | |
| 2 | Ṁ26 | |
| 3 | Ṁ19 | |
| 4 | Ṁ15 | |
| 5 | Ṁ11 |
Probably Spindle just picked investopedia pages out of a hat. But rationality is the ability to rationalize nonsense, so let's give this a shot.
"Tranche" is Spindle's term for putting lots (>1000, usually >10000) of mana into a dumb position.
"LONGVOL" means long volatility -- profiting from market movement in either direction, losing if the market stays the same.
"Mark-to-market" means valuing things at their current market value, which sounds fine but in practice can lead to shenanigans. E.g. this is one of the accounting tricks that Enron used. ("What does the market say?" isn't perfectly objective)
So together, this means that a bunch of companies have overextended on out-of-the-money options, and are hiding that by using mark-to-market accounting models that don't accurately describe the amount of risk they have on their books.
They turn a profit as long as nothing dramatic happens, but our hero Spindle is going to throw a wrench in the works by TRANCHEing some wackjob position while being massively LONGVOL. This will force whoever is SHORTVOL to pay up and reveal their accounting, and the loss theoretically causes a chain effect that multiplies the effect of the original TRANCHE. Lots of very dramatic things happen, and Spindle's LONGVOL is suddenly very valuable.
The correction continues until the books accurately reflect reality, Spindle walks away rich, and the devious accountants are left despondent.
@citrinitas thanks, since no one else has a better explanation for me I think you deserves the bounty. Bet Yes on the market and I will resolve it to Yes
https://manifold.markets/Zorn/for-trasnfer-to-citrinitas
I think you missed a few, here's a group for all markets relating to major derivative mark-to-market LONGVOL trauche corrections.
https://manifold.markets/group/major-derivative-marktomarket-longv
@IsaacKing Thanks for running it through ChatGPT. I assume ChatGPT's explanation for LONGVOL tranche isn't quite correct?