The hottest Derivatives Substack posts right now

And their main takeaways
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Top Finance Topics

Life in the Fast Lane With Robinhood Markets

TK News by Matt Taibbi • 2681 implied HN points • 21 Dec 25
💰 Finance Derivatives
  1. Robinhood grew fast by making trading feel like a game that gives quick dopamine hits, which attracts young, aggressive traders. That design encourages frequent, risky trading rather than long-term investing.
  2. The company’s main profit comes from selling customer orders (payment for order flow) to high-frequency market makers and pushing high-margin products like options and zero-day trades. Those products provide big leverage and can wipe out inexperienced traders while generating hefty fees for the platform.
  3. Robinhood is expanding into prediction markets, deeper crypto leverage, and partnerships with market makers to drive more engagement and revenue. That strategy locks users into riskier products and raises the chance many will suffer large losses if markets turn down.

What's Kalshi's revenue?

Technically • 31 implied HN points • 12 Mar 26
💰 Finance Derivatives
  1. Kalshi handled about 203 million trades and roughly $41.7 billion in volume, generating about $545.6 million in trading fee revenue from those trades.
  2. Over 82% of the activity is sports (including parlays), so the platform functions a lot like a sportsbook even though users trade peer-to-peer and Kalshi also acts as a market participant and liquidity provider.
  3. Fees follow a formula tied to P*(1-P) (taker fee ≈ round up(0.07·C·P·(1-P)), maker fee ≈ 0.0175·C·P·(1-P)), which makes fees highest near 50% probability and lower at extreme odds, and resolution practices and regulatory treatment remain somewhat manual and unsettled.

What War With Iran Means For Markets Monday

QTR’s Fringe Finance • 56 implied HN points • 28 Feb 26
💰 Finance Derivatives
  1. The U.S. and Israel have launched coordinated major strikes on Iran, including attacks in Tehran, and Iran has already retaliated with missiles and drones toward Israel and regional targets.
  2. Heavy, last‑minute options and gold/silver buying suggest some traders were positioned ahead of the attacks, meaning order flow signaled the event before it was public.
  3. The situation has disrupted regional airspace and could push markets two ways: a wider escalation that spurs volatility, safe‑haven flows and commodity shocks, or a more contained conflict that lets markets stabilize.

Commodity Taxes

Points And Figures • 399 implied HN points • 02 Jan 26
💰 Finance Derivatives
  1. Open prediction-market positions on December 31 can be treated like commodity contracts and must be marked to market, meaning you owe tax on any unrealized gains at year-end.
  2. Gains taxed under Section 1256 get a 60/40 split between capital gains and ordinary income, producing a blended rate often around 22%, and the tax is due even if the position later loses value.
  3. The 1986 tax reform closed a tax-sheltering loophole so losses after year-end can be carried forward, and consistency with commodity rules suggests prediction markets should follow the same tax treatment.

Pushing The Envelope In Crypto

Points And Figures • 239 implied HN points • 12 Dec 25
🔮 Crypto Derivatives
  1. Bitnomial launched a regulated crypto-margined exchange that lets traders use crypto as margin and settle trades in crypto. That enables deliverable perpetual futures instead of cash-settled contracts.
  2. They built a vertically integrated exchange and clearinghouse from scratch and are fully regulated by the CFTC, so positions are cleared and collateral is segregated like traditional futures. The team running it are industry veterans, not fly-by-night operators.
  3. New CFTC and OCC guidance allows independent and bank-affiliated brokerages to support crypto margin deposits and settlement, which could unlock capital efficiencies and wider access for US traders. This makes leveraged spot, perpetuals, and options with crypto-native margin more accessible without going offshore.
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4 US banks crash in 2 months: Banking crisis explained by economist Michael Hudson

Geopolitical Economy Report • 458 implied HN points • 07 May 23
💰 Finance Derivatives
  1. Economist Michael Hudson discusses the collapse of four US banks in two months, including First Republic Bank being taken over by JP Morgan Chase, highlighting the deep ties between government regulators and bankers.
  2. The collapse of banks like First Republic Bank can be attributed to high ratios of uninsured deposits and risky long-term mortgages, demonstrating systemic issues in the banking sector.
  3. The banking crisis is a result of the government's bailout policies, with large banks like JP Morgan Chase being given favorable deals despite being rated as the riskiest, leading to the undue burden on the economy and the potential for a deep financial collapse.

Ayahuasca and the Simulacrum

The Dollar Endgame • 359 implied HN points • 03 Nov 23
💰 Finance Derivatives
  1. Jorge Luis Borges' fable "On Exactitude in Science" explores the concept of representation and the consequences of abstractions overtaking reality.
  2. Psychedelics like Ayahuasca can challenge our perceptions by dissolving the ego and blurring boundaries between the self and the external world.
  3. The modern financial system, with its heavy reliance on derivatives, has created a simulacrum that central bankers manipulate, leading to a dangerous dependence on fake money.

Why 3 US banks collapsed in 1 week: Economist Michael Hudson explains

Geopolitical Economy Report • 358 implied HN points • 15 Mar 23
💰 Finance Derivatives
  1. Economist Michael Hudson discussed the collapse of US banks, noting similarities to the 2008 financial crisis and the reliance on government bailouts.
  2. The Federal Reserve's handling of interest rates and bailouts in response to bank collapses indicates systemic issues in the financial sector.
  3. Derivatives, specifically highly leveraged bets, are looming as a significant risk for the banking sector and could trigger the next big crash.

Why Crypto Options Matter Now

DeFi Education • 299 implied HN points • 21 Oct 23
🔮 Crypto Derivatives
  1. Crypto options markets are growing even when other areas of trading are down. This is important to note because it might indicate future recovery in the industry.
  2. Deribit is the largest exchange for crypto options, and their trading volumes are increasing.
  3. Investors should pay attention to the growth in crypto options, as it may signal potential opportunities in a recovering market.

The LIBOR scandal, part 1: background

The Jolly Contrarian • 79 implied HN points • 08 Apr 24
💰 Finance Derivatives
  1. Banks have structural interest rate risk, which they manage by borrowing at a low rate and lending at a high one.
  2. The LIBOR rate was created as a benchmark for banks to set their interest rates and trade standardized instruments.
  3. Interest rate swaps changed the game by allowing banks to trade interest rates with counterparties, impacting how they managed their structural interest rate risk.

Quant Letter: December 2025, Week-2

The Parlour • 21 implied HN points • 14 Dec 25
💰 Finance Derivatives
  1. Reinforcement learning and other AI methods are increasingly used for investment decisions, portfolio optimization, and pricing, with a clear push toward simpler, explainable, and reliable strategies rather than black-box complexity.
  2. Researchers are building better risk models for tail events, jumps, and volatility calibration to capture heavy-tailed returns and interest-rate dynamics, aiming for more accurate pricing and stable capital allocation under stress.
  3. Open-source tools and model-evaluation frameworks are accelerating automation and workflow in quant finance, but the rise of algorithmic and passive trading is also heightening systemic risks, especially in emerging markets.

Genesis on the Chopping Block

DeFi Education • 479 implied HN points • 05 Jan 23
🔮 Crypto Derivatives
  1. Genesis Global is a big player in the crypto world, dealing with trading, lending, and custody services.
  2. They have millions in trades and provide services mainly for big clients like institutions.
  3. The current situation suggests that they might be facing some tough challenges ahead.

About that ISDA Pt 3: The Preamble

The Jolly Contrarian • 59 implied HN points • 17 Feb 24
💼 Business Derivatives
  1. A preamble in a legal document sets the scene and primes you for the contract, like a story's beginning. It's where important elements are hinted at before they become relevant.
  2. ISDA (International Swaps and Derivatives Association) has evolved from older versions like the 1992 ISDA to the more widely-used 2002 version, highlighting the slow adoption of new agreements in established industries.
  3. The ISDA Master Agreement includes important sections like the Schedule, which fine-tunes termination provisions and tax representations, and Transactions, which vary widely based on the type of swap being made.

Prediction Markets Grow Up

Net Interest • 12 implied HN points • 05 Dec 25
💰 Finance Derivatives
  1. Prediction markets have rapidly scaled up: millions of users, weekly volumes in the billions, and top traders winning large sums.
  2. Regulation has softened, with legal wins and exchange approvals letting platforms offer political and derivatives-style contracts and join mainstream financial debates.
  3. The main fight now is for liquidity and market design — firms are raising huge capital and competing to attract traders so these markets can run as smoothly and widely as stock exchanges.

Perpetual Swaps / Intro to Derivatives

DeFi Education • 639 implied HN points • 31 Oct 21
🔮 Crypto Derivatives
  1. Derivatives are financial contracts that get their value from underlying assets, like futures and swaps. They help traders in risking less money for potentially larger rewards, but also come with increased risks.
  2. Perpetual swaps are a popular type of derivative in crypto because they allow traders to hold positions indefinitely. This means you can bet on price movements of cryptocurrencies without actually having to own them.
  3. Using futures allows for predictable costs and known risks, while perpetual swaps offer more flexibility but with variable costs. Traders can choose based on whether they prefer stability or flexibility in their trades.

Perpetual Protocol (Part 1 of 2)

DeFi Education • 559 implied HN points • 06 Nov 21
🔮 Crypto Derivatives
  1. Perpetual Protocol is a decentralized exchange where users can trade derivatives. This means you can buy and sell contracts that represent an underlying asset's value without owning the asset itself.
  2. Users can leverage their trades by up to 10 times. This allows traders to potentially make more money, but it also increases the risk of losing more.
  3. The protocol uses a specific token called PERP. This token is important for conducting trades and participating in the platform's governance.

The Economy In The West Is Backed by Hot Air

Oz’s Newsletter • 39 implied HN points • 17 Apr 23
💰 Finance Derivatives
  1. The economy in the West is backed by imaginary assets like derivatives that can crash the economy if their true value is revealed.
  2. Banks create money out of thin air through loans backed by these imaginary assets, causing inflation and instability.
  3. The Anglosaxon-controlled Western economy must address its financial problems, regulate finance, and rebuild the economy on real-world connections to prepare for future challenges like AI and geopolitical shifts.

What immortal hand or eye: The Archegos affair, Part 1.

The Jolly Contrarian • 39 implied HN points • 23 Jul 22
💰 Finance Derivatives
  1. Family offices, even though seemingly benign, can engage in risky behavior that can have significant market impacts.
  2. Securities markets are complex environments where probabilistic risk management tools may fail, especially in extreme scenarios.
  3. Regulations requiring banks to pay out variation margins can inadvertently pour petrol on a fire during market volatility, leading to unintended consequences.

Inside dYdX: On-Chain Perpetual Futures

Coin Metrics' State of the Network • 0 implied HN points • 01 Jul 25
🔮 Crypto Derivatives
  1. The DYDX token is important for the dYdX platform, allowing users to vote on decisions, earn rewards, and help secure the blockchain. This means that holding and using the token is beneficial for both the platform and its users.
  2. dYdX has added a lot of new markets for trading, with 267 options available. This gives traders access to a wide variety of assets, making it easier to find new opportunities in the market.
  3. Despite strong interest in BTC and ETH trading, liquidity on dYdX can fluctuate. This means there are times when it's harder to trade efficiently compared to traditional exchanges, highlighting different behaviors among traders.

Exploring Crypto Market Dynamics through Options Data

Coin Metrics' State of the Network • 0 implied HN points • 20 May 25
🔮 Crypto Derivatives
  1. Options are becoming a key part of trading in crypto. They help traders manage risks, express their views on price changes, and understand market sentiment better.
  2. The use of Bitcoin options has surged significantly, showing that more people are getting involved in options trading. Most of the activity happens on the Deribit exchange, which is quite popular among traders.
  3. Market positioning through options shows a bullish outlook for Bitcoin, while Ethereum has a more mixed sentiment. This means traders are more confident about Bitcoin's future price than they are about Ethereum's direction.

Corporate Hedging: The Down Side

Musings on Markets • 0 implied HN points • 27 Nov 08
💰 Finance Derivatives
  1. Not all risks should be hedged. Some risks can be passed on to investors who may want that exposure, like how oil companies shouldn't hedge oil prices.
  2. Companies should hedge against important risks that can greatly affect their operations, like insurance for physical damage or stabilizing fuel costs for airlines.
  3. Firms can also benefit from seeking out risks where they have an advantage. This can lead to success if they understand and exploit those risks well.

Buffett and Black-Scholes

Musings on Markets • 0 implied HN points • 01 Mar 11
💰 Finance Derivatives
  1. Warren Buffett believes the Black-Scholes model gives bad values for long-term options, which is a viewpoint that some disagree with.
  2. Buffett's opinions on option valuation may not consider newer methods that adjust the Black-Scholes model for better accuracy.
  3. You can still be a successful investor without knowing how to value options, as long as you avoid investments that rely heavily on them.

Best of State of the Network in 2024

Coin Metrics' State of the Network • 0 implied HN points • 31 Dec 24
🔮 Crypto Derivatives
  1. Bitcoin saw significant changes this year, especially with the launch of spot bitcoin ETFs and a major halving event, which affected miner revenues and the overall ecosystem.
  2. Ethereum is evolving with its modular structure, increasing staking opportunities, and upgrades like Dencun, making transactions more scalable and efficient.
  3. The stablecoin market grew tremendously, with new players entering the space, while decentralized exchanges became essential for trading and providing liquidity in the crypto landscape.

Capital Concentration in an Expanding Crypto Universe

Coin Metrics' State of the Network • 0 implied HN points • 20 Jan 26
🔮 Crypto Derivatives
  1. Capital is concentrating in major crypto assets, with Bitcoin dominance rising and stablecoins and on‑chain derivatives taking a larger share of total market value.
  2. The altcoin universe is narrowing and becoming top‑heavy, as the top 10 altcoins now make up about 82% of altcoin value and fewer tokens remain above $1 billion market cap.
  3. Large‑cap tokens have decisively outperformed mid and small caps since 2023, signaling investors favor more liquid, established assets and that the market is maturing and consolidating.