Optionality & Asymmetry

Structuring decisions so that losses are small and capped but gains can be large and open-ended. Optionality means maintaining flexible choices — keeping doors open costs little, but walking through the right one can change everything. Convexity describes the shape of outcomes: you want situations where being wrong costs you a little but being right pays off enormously. The opposite — concavity — is where small mistakes lead to catastrophic losses. Most people unknowingly live in concave positions.