Tyler Cowen wrote a piece on why the Rockets drafting injury-prone center Yao Ming was like writing a naked put.

"…So why did the Houston Rockets draft Yao Ming? They couldn't not draft him. The lessons for financial markets are obvious. Drafting Yao Ming is like writing the disguised naked put. You see the money in front of you, you see the return in front of you, you see the potential in front of you, none of the alternatives are so glamorous, and so you can't not do it. Besides, other players get injured too…"

Perhaps the metaphor makes sense to the extent writing puts and drafting an injury-prone player both have asymmetrical reward structures with divergent modes and means. But Cowen seems to be inappropriately disparaging both activities. Writing equity index puts has historically been profitable. And at least in baseball it appears a GM can sign injury-prone players at a sufficiently large discount to be more than fully compensated for the risk.


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