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This is amazing! Two of the most ridiculous threads in the Options forum have been the most active ones in the past week.:confused:

I assume you're talking about this: Options: Not a Zero-Sum Game With the possible exception of futures contracts, trading is not a zero-sum game. In other words, for every winner there doesn't have to be a loser. Therefore, because there are so many different combinations and ways options...

How can it not be a zero sum game!? I buy a 3-month call from you for $4. I pay $4, you receive $4. 1 month later the stock hasn't moved, volatility hasn't changed, in fact the only thing that has changed is that this call now has only 2 months to expiration and, thus, is worth only $3. So I...

Derivman, I'm sorry, mate, but after reading this it just makes me wanna give up on trying to help you understand these concepts.

All derivatives, futures, options, swaps, and etc, are CONTRACTS between 2 parties, which means that what one party gains the other one loses. Simple as that. If those 2 parties have other contracts with each other or someone else then it has no bearing on that intial contract. Sure one party...

Options as all other derivatives markets are a zero sum game, period. Every tick you lose someone else wins it. It doesn't matter what spread the other party holds. He/she may not win based on the total net position, but for that particular contract it's the same as futures. Also, if your...

Derivman, The statistic that 90% of options expire worthless is always used by "hype people" as a reason why people should sell options rather than buy them as this somehow presents an edge. Firstly, this is simply not true. There's no edge in selling options vs. buying them. We had...

Sleeping usually breaks the boredom.

You do realize that pros pay a lot less in interest, don't you!? A good proxy for what they pay is the fed funds not some retail margin rate. And don't use the statement you don't understand! 90% of options that are HELD TO EXPIRY expire worthless, not 90% of all options that existed at some...

You can read about TOS in the broker reviews section. I think there's more than enough comments about it. You can also use the search button to find past threads about TOS and comparison of TOS to IB and/or OX. TOS does NOT offer options on futures, just futures, for now!

Maybe, maybe not. It's hard to say without the actual event taking place, but it's worth a try.

The first flaw is that the ES can gap thru your stop. The second flaw is getting wipsawed. Let's say the market sells off, your ES stop is hit and you enter a short on ES, then the market rallies back 2 points to stop you out and then sells off again. To sum up, you've just made a 2 pt loss on...

Derivman, You seem to be lost in all these different concepts. I'm not going to answer your original question about the coffee speculation as the discussion has kinda moved on to other, albeit related, things. First of all, move on from zero sum game concept. It's the feature of all...

Of course you can hedge by selling USD/buying JPY forward, but the forward rate includes the difference in interest rates, it's called interest rate parity.

You don't hedge otherwise you give up the difference. That is, the hedge has the interest rate difference priced in so if you borrow JPY, convert to USD and hedge the FX exposure then you would earn the same return as if you simply invest in JPY.

Derivman, Your question is a bit too general to give you any specific advice. You haven't specified the time frame, goals or you level of experience. For the most basic info regarding coffee futures and options visit the respective exchange.

Here's another highly leveraged idea. Put the cash into t-bills and then use them as performance bonds (i.e. margin) to load up on the index futures. Unfortunately, this is also very high risk.

I try to keep some balance between short and long positions. However, if I'm really feeling bullish then I may lean on the long side and keep shorts to a minimum, just as a partial hedge and vice versa.

You cannot achieve that, higher return means higher risk, there's no way around this! Leverage is a double-edged sword!

Market makers have been using portfolio margining forever and they are so far ahead of retail traders in terms of interest they receive/pay and the amount of leverage they can use that there's no way you can outplay them in their own game.