Weinstein argues that quoting the gain on one batch of tail-protection options obscures the capital allocated and earlier premiums that expired worthless. Comparable performance should be reported as return on total assets, not return on a selected option premium.

A single option batch can return many times its premium.
Earlier batches may have expired worthless.
Trade-level return and fund-level return use different denominators.
Return on assets provides a more comparable performance measure.

“Did you see them say they lost a hundred percent?”
Boaz Weinstein · 55:35

“it's all the exact same way that we know returns to be, which is return on assets”
Boaz Weinstein · 55:57

#performance reporting#tail risk#returns

Hot Take· 1

Hot Take1:07:55

Large Losses Should Produce Humility, Not Louder Forecasts

Weinstein criticizes categorical market predictions, especially from investors already experiencing major drawdowns. Recency bias encourages people to project recent conditions indefinitely even though markets can invalidate confident calls almost immediately.

Drawdowns should trigger an extra dose of humility.
Strong claims require strong evidence.
Statements that something cannot happen invite rapid falsification.
Recent months or years are a weak basis for permanent forecasts.

“great claim should be backed by a great evidence”
Boaz Weinstein · 1:08:35

“we should all be super humble because prediction is a very hard business.”
Boaz Weinstein · 1:10:07

#forecasting#hubris#recency bias

Explainer· 3

Explainer14:07

Why Lehman's Failure Broke Otherwise Offset Trades

Before central clearing reduced counterparty exposure, buying and selling the same credit risk often left banks with two separate swaps rather than a closed position. Lehman's failure therefore disrupted enormous chains of offsetting contracts and created losses unrelated to the desks' intended market exposure.

Offsetting trades remained as separate bilateral swaps.
Dealers were linked through long chains of counterparties.
Lehman's default impaired one link while the matching obligation remained.
Post-crisis infrastructure substantially reduced this form of risk.

“you were part of a daisy chain where you buy protection on General Electric or IBM from Morgan Stanley, who buys it from Lehman.”
Boaz Weinstein · 14:17

“even if you bought and sold something, instead of being out of the trade, you would have two swaps on.”
Boaz Weinstein · 14:28

#lehman brothers#counterparty risk#credit swaps

Explainer50:13

Why Being Right Is Not Enough Without an Asymmetric Payoff

Weinstein contrasts a conventional short position with credit protection that can multiply many times over after a default. The insight is that analytical correctness and payoff design are separate skills: an investor can correctly identify a collapse yet produce little impact if the position has limited asymmetry.

A small short can earn only its initial portfolio weight when the stock reaches zero.
Cheap credit protection can generate multiples of the premium paid.
Position structure determines whether a correct thesis materially affects returns.
Company analysis and payoff engineering are distinct capabilities.

“That kind of payoff profile is a different skill set than the skill set of analyzing companies.”
Boaz Weinstein · 50:45

“I see examples where people get things right, whether it's Enron or Lehman, but they but it didn't change, it didn't change their the outcome…”
Boaz Weinstein · 50:48

#asymmetry#position sizing#credit derivatives

Explainer1:10:49

When Market Price Becomes Physics Instead of Valuation

Weinstein describes meme-stock prices as products of supply, demand, options hedging, and forced short covering rather than conventional estimates of economic value. Stimulus-fueled option demand met limited volatility supply, amplifying movements and sustaining unusually high volatility after COVID.

Excessive short interest can create the conditions for its own squeeze.
Out-of-the-money call buying changes dealer hedging demand.
Short-volatility sellers disappeared after suffering severe losses.
Price can temporarily reflect market mechanics more than business value.

“the price of something is much more determined by the physics of it.”
Boaz Weinstein · 1:11:31

“you didn't have the supply, you had the demand.”
Boaz Weinstein · 1:13:03

#meme stocks#options#market structure#volatility

Story· 5

Story02:15

How Weinstein Went From Chess Beginner to No. 2 in Three Years

Weinstein began tournament chess at thirteen after seeing an older student ranked among the country's best. Obsessive practice took him from beginner to second in the United States for his age group within three years.

He did not begin tournament play until age thirteen.
A highly ranked older student gave him a concrete target.
The improvement required thousands of hours of focused effort.

“And so in three years I went from a beginner to number two in the country for age fifteen sixteen.”
Boaz Weinstein · 02:36

#chess#mastery#career origins

Story07:41

The Men's-Room Encounter That Opened Goldman's Door

Goldman initially told Weinstein, then a college freshman, to return years later. A chance encounter with David DeLucia led to extensive interviews, but no suitable program existed until Weinstein suggested adapting the firm's family program and persisted until he was placed with MBA interns.

The original HR interview ended without an opportunity.
A chance encounter connected him with a senior trader who loved chess.
He completed more than 25 interviews.
A playful but persistent proposal helped Goldman create a place for him.

“one thing is never give up.”
Boaz Weinstein · 09:14

“You have a program for sons and daughters but not brothers of sisters.”
Boaz Weinstein · 09:16

#goldman sachs#internships#persistence

Story32:00

Why Saba Capital Is Named for Weinstein's Grandfather

Saba means grandfather in Hebrew. Weinstein chose the name to honor his maternal grandfather, a carpenter who obtained false papers, hid people from the Nazis, and helped save Weinstein's mother after her birth in the Warsaw Ghetto.

The name was first used for Saba Principal Strategies at Deutsche Bank.
Weinstein's grandfather helped hide and rescue people during the Holocaust.
The family retained the name when the team spun out as Saba Capital.

“Saba means grandfather in Hebrew.”
Boaz Weinstein · 32:20

“I really felt, as a kid, an incredible debt to to him, and I wanted to honor him by by calling it that.”
Boaz Weinstein · 32:36

#saba capital#family history#holocaust

Story34:35

Inside the New York Fed the Weekend Lehman Failed

Weinstein joined other bank credit heads at the New York Fed to determine whether they could reduce exposure before Lehman stopped operating. Deutsche had hundreds of thousands of direct swaps facing Lehman, yet the group could unwind only a tiny number before markets reopened.

The Fed asked banks to game out Lehman's closure before Monday.
Separate rooms handled credit, rates, mortgages, and other exposures.
Weinstein worked from Saturday afternoon until early Sunday morning.
The scale of contracts made the attempted unwind largely symbolic.

“could you unwind all sorts of trades contingent on them not being there? Like, let's let's do a pre mortem.”
Boaz Weinstein · 34:55

“it was really like dectures in the Titanic.”
Boaz Weinstein · 35:05

#financial crisis#new york fed#lehman brothers

Story40:45

The Detective Work Behind Saba's London Whale Trade

Saba noticed that an obsolete credit index series remained unusually active and was priced inconsistently with related instruments. Trading patterns suggested that one dominant participant was distorting the market, so Saba took the other side and later unwound a $15 billion position with JPMorgan.

An older credit-index series retained abnormal interest.
The components and index were priced inconsistently.
Month-end trading patterns suggested pressure from one participant.
Saba made several hundred million dollars but remained much smaller than JPMorgan's position.

“there was it was basically everybody against one”
Boaz Weinstein · 42:17

“it was more the detective work to find it than the than the actual game that I think is is what stays with me.”
Boaz Weinstein · 44:43

#london whale#jpmorgan#credit derivatives

Takeaway· 2

Takeaway1:20:43

Want the Trading Job? Start Attending the 7:30 Meeting

Weinstein says aspiring traders often ask for opportunities without first demonstrating sustained interest. Reading research, attending open meetings, and asking informed questions create evidence that a candidate already behaves like someone who belongs on the desk.

Do not wait for a formal invitation to every relevant open meeting.
Study current research and ask informed questions.
Use initiative to demonstrate interest before requesting a transfer.
Business-focused assertiveness is often welcomed when it creates value.

“some people want it, but they don't do the things they need to do to deserve it.”
Boaz Weinstein · 1:21:43

“there's almost nothing that would be too aggressive for someone to do, like showing up at a meeting they weren't invited to that fifty people…”
Boaz Weinstein · 1:21:48

#career advice#finance careers#initiative

Takeaway1:22:20

Your Imagination Is Probably Not Wild Enough for Markets

Negative long-term interest rates, pandemic shocks, war, and broken pegs demonstrate that seemingly impossible outcomes can occur. Weinstein advises investors to consider a broad distribution of scenarios rather than relying exclusively on the central forecast or recent market regime.

Market history repeatedly violates previously accepted boundaries.
Recency bias narrows the scenarios investors consider.
Rare events can offer exceptionally asymmetric payouts.
Scenario breadth can be more useful than confidence in one central forecast.

“my imagination for how crazy things could get is not enough.”
Boaz Weinstein · 1:22:37

“we're in a world where the impossible can be possible and we should think creatively about um a range of outcomes instead of what's the…”
Boaz Weinstein · 1:23:48

#scenario planning#tail risk#recency bias

Frameworks in this episode

Closed-End Fund Discount Activism

Cross-Market Dislocation Screen

Drawdown Survival Reinvestment

Low-Carry Credit Tail Hedge

Trust-Value SPAC Arbitrage

Insights & moments

⚡Myth Buster· 1

Why a 4,000% Option Gain Is Not a 4,000% Fund Return

◆Hot Take· 1