# Tag Archives: penguins

## Optionality

There is a joke that illustrates the value of optionality

An investment banker and carpenter are sitting next to each other on a long flight. The investment banker asks the carpenter if she would like to play a fun game. The carpenter is tired and just wants to have a nap, so she politely declines and tries to sleep. The investment banker loudly insists that the game is a lot of fun and says, “I will ask you a question, and if you don’t know the answer you must pay me only \$5. Then you ask me one question, and if I don’t know the answer, I will pay you \$500.” To keep him quiet, she agrees to play the game.

The investment banker asks the first question: “What’s the distance from the earth to the Saturn?” The carpenter doesn’t say a word, pulls out \$5, and hands it to the investment banker.

The carpenter then asks the investment banker, “What goes up a hill with three legs and comes down with four?” She then closes her eyes again to rest.

The investment banker immediately opens his laptop computer, connects to the in-flight Wi-Fi, and searches the Internet for an answer without success. He then sends emails to all of his smart friends, who also have no answer. After two hours of searching, he finally gives up. The investment banker wakes up the carpenter and hands her \$500. The carpenter takes the \$500 and goes back to sleep. The investment banker is going crazy from not knowing the answer. So he wakes her up and asks, “What does go up a hill with three legs and comes down with four?”

The carpenter hands the investment banker \$5 and goes back to sleep.

Go find bets like that!