Topic
The business of trading & options
7 articles drawn from The Edge Equation, its 24 industry studies and 100 companies profiles.
Explainer
How Payment for Order Flow Works: Robinhood, Citadel and You
Payment for order flow is how commission-free brokers like Robinhood get paid: wholesalers such as Citadel Securities pay to fill your orders. Here is how it works.
8 min read
Guide
How to Spot Backtest Overfitting: A 20-Question Checklist
Most backtests look better than the live results that follow. Here is how to spot overfitting, with the statistics, the common biases and a 20-question checklist.
9 min read
Case study
What Happened to Archegos Capital? The $10 Billion Collapse
Archegos grew from $1.5 billion to more than $36 billion in a year, then defaulted in March 2021 and cost its banks over $10 billion. Here is how it happened.
8 min read
Case study
What Happened to Long-Term Capital Management (LTCM)?
LTCM had two Nobel laureates, 40% returns and models that were mostly right. It still lost about $4.6 billion in 1998. Here is how leverage ended it.
8 min read
Case study
What Happened to XIV? Volmageddon and the Inverse VIX Note
On 5 February 2018 the VIX jumped 116% and Credit Suisse's XIV note lost about 96% of its value after the close. Here is how a real premium ended in a day.
8 min read
Explainer
What Is the Variance Risk Premium? A Plain-English Guide
The variance risk premium is the gap between options' implied volatility and the volatility that follows. Here is why it exists, who earns it and how it crashes.
9 min read