Volatility as Beta
an update
Back in June, we had introduced the concept of VRP as a beta benchmark that your option trading should beat. Its been live for eight months and on track to a ~20% CAGR. Here’s a quick update.
There were some scares along the way - tariffs, FII exits, etc… You can see them on the daily P&L chart. But overall, being short volatility has made money thus far.
Markets this Week
More here: country ETFs, fixed income, currencies and commodities.
Links
Research
The Price of Parenthood: Childcare Costs and Fertility (abigaildow)
This paper studies how childcare prices shape fertility decisions - whether to have children, when to have them, and how many to have. I find that higher prices reduce birth rates, delay first births, and lengthen the interval between first and second births. A 10% increase in the price of childcare leads to a 5.7% decrease in the birth rate (4 births per 1000 women).
The Social Tax: Redistributive Pressure and Labor Supply (wiley)
Low-income groups report strong pressure to share earned income with others; in addition, social groups that undertake more interpersonal transfers work fewer hours.
“Captain Gains” on Capitol Hill (NBER)
Using transaction-level data on US congressional stock trades, we find that lawmakers who later ascend to leadership positions perform similarly to matched peers beforehand but outperform them by 47 percentage points annually after ascension.
India
India’s CPI quickened to 0.71% year-on-year in November (reuters, reuters).
Union Cabinet approves SHANTI Bill to allow private players in civil nuclear sector (deccanherald).
India’s blistering growth has a quality problem. GDP is speeding ahead at 8% in the world’s fifth-largest economy but the government is doing the heavy lifting on investment. Policymakers have spent years trying to coax companies into spending more, with limited success. The result: growth that looks fast but feels flimsy (reuters).
In under 24 hours, Microsoft and Amazon pledged more than $50 billion toward India’s cloud and AI infrastructure, while Intel on Monday announced plans to make chips in the country (cnbc).
Revised US Biosecure Act Could Unlock Opportunities For Indian Pharma Companies (ndtvprofit). And for Korian bio firms as well (chosun).
Mexico’s tariff hike to hit 75% of India’s exports; duties to rise up to 50% from Jan 2026 (timesofindia). Companies like Maruti Suzuki, Hyundai, Bajaj Auto, Hero MotoCorp and TVS count the country as a major export hub. Among auto part makers, companies like Sona Comstar and Samvardhana Motherson have presence in the country, including a manufacturing plant (livemint).
India and France have struck a deal to revise their 1992 treaty (reuters).
Recent policy changes have removed four major barriers that had made India uncompetitive in synthetic garments (business-standard).
Long accustomed to subsidising grain, fuel and rural jobs, India has stumbled into something more radical: paying adult women simply because they keep households running, bear the burden of unpaid care and form an electorate too large to ignore (bbc).
Cheap and powerful AI campaigns target voters in India (restofworld).
How AI is rewriting India’s debt recovery playbook (livemint).
row
Dotcom on Steroids: Part II (gqg)
China’s exports are putting it on a collision course with Europe (bloomberg).
Netflix and the Hollywood End Game (stratechery)
EU makes more from fines on US tech, than tax from ALL of public European tech (x).
Major automakers say China poses ‘clear and present threat’ to US auto industry (reuters).
The primary U.S. response to China’s first-mover advantages in emerging auto technologies has been protection. A smarter strategy would seek to compete by supporting producers and collaborating with allies, while managing security risks (cfr).
China’s Eating Everyone Else’s Manufacturing Lunch (econjared)
Scientists create new solid-state sodium-ion battery (livescience).
Almost 60 major low-carbon hydrogen projects have been cancelled or put on hold this year, as the industry is hit by spiralling costs, policy uncertainty and a lack of buyers. Green hydrogen made using even cheap renewable energy can cost about double that produced with fossil fuels (ft).
Hedge funds that rely on sophisticated modelling and systematic trading have been rattled by a series of mini-crises (ft)
The CFTC has launched a pilot program for digital assets allowing Bitcoin, Ether, and USDC as collateral for margins in the derivatives markets (binance).
Same Cart, Different Price: Instacart’s Price Experiments Cost Families at Checkout (groundworkcollaborative, nytimes). Also: How the dollar-store industry overcharges cash-strapped customers while promising low prices (theguardian).
Ozempic is changing how we spend money and time, plus what we eat (wapo)
Engines, steam engines, were invented in 1700. And what followed was 200 years of steady improvement, with engines getting 20% better a decade. For the first 120 years of that steady improvement, horses didn’t notice at all. Then, between 1930 and 1950, 90% of the horses in the US disappeared. Progress in engines was steady. Equivalence to horses was sudden.
Meme of the Week
