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Ubiquitous derivatives

Having spent a large part of my life working on options and volatility, I tend to see options everywhere. In my forthcoming book I write about Spinoza, a deep theorizer (and not a? modeler), who regarded all emotions as derivatives of the underliers pain, pleasure and desire, just as financial options are derivatives of the underliers of equity, fixed income and credit.

Spinoza spelled this the dependency of the higher order emotions on their underliers. Here below is a color diagram that illustrates his theory. I parsed all his definitions and converted them into this chart. It’s similar to what people do for setting up structured products in their trading systems. I originally drew it in color:

My publisher Free Press, suitably frugal in these hard times for publishers, won’t print it in color and so I had to convert it to b&w, also reproduced below:

Doing the conversion was quite an interesting if time-consuming job, because in b&w you have to use shape and font to convey the similarities and dissimilarities that can be more easily transmitted with color. (Cancers tend to gravitate to obsessive tasks that require never giving up.)

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