A(nother) Nobel Prize Winning Collapse

This collapse will be compliments of the same geniuses who brought us the 1998 LTCM debacle - Myron Scholes and Robert Merton. The gambling alchemists who assume that PhD math can eliminate real world risk. Their Nobel Prize winning Black-Scholes (B.S.) option mis-pricing model systematically prices risk the lowest before a collapse and highest after collapse. It only does the exact opposite of what it should do if markets were "rational" and "efficient".

Sadly and ironically, it's their option pricing model which has been exploited by Skynet to fund human history's largest short squeeze via volatility arbitrage (actual versus implied). The mis-pricing model somehow construes "risk" to be 30 days historical asset volatility, thereby clairvoyantly predicting  the future by looking at the recent past. To say that the model - which is baked into all options prices, is prone to manipulation would be an asinine understatement. All of which means that risk has been MASSIVELY under-priced risk throughout this entire cycle.

The makings of a collapse:
Skynet has been busily monetizing the hedgers, who have now capitulated into the top. Meaning there will be no options support below the markets (and of course no short covering). Far less support than was in place during Lehman (to the left):

Index Put/Call Ratio:

Mis-pricing of risk visualized:

In Ponzi World, "risk" is binary