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Barchart
Barchart
Josh Enomoto

The Saturday Spread: How the Game of Baseball Can Be Used to Effectively Trade Options

It doesn’t seem like it at first glance but baseball utilizes a heavy dosage of Russian axioms. Borrowing from the foundational work of Andrey Kolmogorov, what we know as sabermetrics is essentially applied probability theory. Fundamentally, every MLB team conducts forward distributions, expectation values, state transitions (i.e. Markov chains), Bayesian updating and regressions.

With the benefits of advanced analytics so obvious to even casual onlookers, it raises an uncomfortable but necessary question: if a children’s game utilizes the relevant and logical frameworks of Russian axioms, how is it that the financial publication industry lags so far behind?

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