Thread

1. cwal37 · 1789793067 · focus · HN ↗

   For those who don’t know:

   <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Onion_Futures_Act" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Onion_Futures_Act

   (which also banned box office receipt futures)

   A fun thing is to go on FRED and make a graph with prices from onions and, say, corn to see the differences in volatility.

   1. chirau · 1789812062 · focus · HN ↗

      I looked up onions, lettuce and tomatoes (because burgers), and the volatility actually looks very similar. Am I missing something or looking at the wrong things?

      Tomato: <a href="https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;WPU01130217" rel="nofollow">https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;WPU01130217 Onion: <a href="https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;WPU01130216" rel="nofollow">https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;WPU01130216 Lettuce: <a href="https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;WPU01130215" rel="nofollow">https:&#x2F;&#x2F;fred.stlouisfed.org&#x2F;series&#x2F;WPU01130215

      1. gradus_ad · 1789818672 · focus · HN ↗

         The weather affects all crops

         1. brookst · 1789824972 · focus · HN ↗

            But isn’t the point that futures trading reduces volatility from things like weather?

            1. hyperhello · 1789825381 · focus · HN ↗

               “Absorbs” volatility might be more accurate.

               1. brookst · 1789832613 · focus · HN ↗

                  I will resist the urge to inquire about the difference between reducing and absorbing.

                  1. collingreen · 1789835609 · focus · HN ↗

                     I won&#x27;t. What&#x27;s the difference here between resisting and absorbing volatility?

                     1. kennywinker · 1789836496 · focus · HN ↗

                        Not a financial expert, but i think reduce implies it goes away, and absorb implies it’s still there but someone is taking it up.

                        Like reducing the amount of water on the floor would be turning off the tap. Absorbing the amount of water on the floor is when you mop it up.

                        1. hyperhello · 1789836626 · focus · HN ↗

                           That’s exactly what I meant. I was only replying to the question as posed.
                        2. harpiaharpyja · 1789843899 · focus · HN ↗

                           Or to bring it back to the original context... Reducing volatility would be reducing the impact of bad weather on your harvest, absorbing volatility is finding someone to cover your losses. (presumably by giving up some profits on the good years. It&#x27;s like a financial low pass filter)

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