For the Wallstreet haters.

Quote from atticus:

You're an idiot.
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Comment like this is just infantile and not constructive to the discussion.

If you take the most simplistic view and focus on an option trade on its own, I agree it's a zero-sum game (ignoring other fritional costs). But participants trade for different reasons, and that's why I think you need to look at the bigger picture. For instance, you could have an arbitrageur on one side of a trade, and he could be losing on this trade but overrall making money.

Same with futures btw. Futures markets on their own are zero-sum, but hedgers are better off because they are able to off load unwanted risks.
 
Quote from screw_jack:

Comment like this is just infantile and not constructive to the discussion.

If you take the most simplistic view and focus on an option trade on its own, I agree it's a zero-sum game (ignoring other fritional costs). But participants trade for different reasons, and that's why I think you need to look at the bigger picture. For instance, you could have an arbitrageur on one side of a trade, and he could be losing on this trade but overrall making money.

Same with futures btw. Futures markets on their own are zero-sum, but hedgers are better off because they are able to off load unwanted risks.
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There is no discussion. He's intent on being right, even after conceding that the option market is zero-sum. The point is that there is no capital-creation any more so than there is in the futures markets.

"Trading for other reasons" is another BS generalization. Sure, capital can be created though the use of options, but that's not the point.

Let's assume that we're all painfully aware that options, when combined with other assets, can be +sum. None of us would likely trade the asset if that weren't the case.

No shit.
 
You are missing the point. I never said or argued that the options market alone isn't zero sum. The statement was made when someone makes money in options, another person is losing money and this is the point. The CBOE website even states this is false and the example I made of a covered call clearly presents a situation where this is not always true. The statement was not "in options if you are making money, someone else is losing it on the opposing options position". It was "in options if you are making money someone else is losing it" so you must consider their entire position in that trade. In the case of a covered call, this includes the stock.

Options and futures transactions can lead to capital creation because they are closely arbitraged to the underlying stock. This is even simpler to see in the futures market. Lets say I take a very large long position in S&P futures and increase its trading price. What happens? In fractions of a second computer arbitrage algorithms will buy up shares of stock in all the companies in the S&P contract while simultaneous selling the futures contract to bring the two prices back in line. So buying a futures has the same end result on capital creation as does buying the underlying stock or stocks that the futures contract is derived.
 
Quote from Matt8200:

You are missing the point. I never said or argued that the options market alone isn't zero sum. The statement was made when someone makes money in options, another person is losing money and this is the point. The CBOE website even states this is false and the example I made of a covered call clearly presents a situation where this is not always true. The statement was not "in options if you are making money, someone else is losing it on the opposing options position". It was "in options if you are making money someone else is losing it" so you must consider their entire position in that trade. In the case of a covered call, this includes the stock.

Options and futures transactions can lead to capital creation because they are closely arbitraged to the underlying stock. This is even simpler to see in the futures market. Lets say I take a very large long position in S&P futures and increase its trading price. What happens? In fractions of a second computer arbitrage algorithms will buy up shares of stock in all the companies in the S&P contract while simultaneous selling the futures contract to bring the two prices back in line. So buying a futures has the same end result on capital creation as does buying the underlying stock or stocks that the futures contract is derived.
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I guarantee you're not profitable. You're too stubborn to be anything but a net-loser.
 
Quote from Matt8200:

So buying a futures has the same end result on capital creation as does buying the underlying stock or stocks that the futures contract is derived.
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no it does not. options and futures contracts are created on the spot. someone has to be on the opposite side to create that contract. if the buyer of that contract is profitable the seller has to lose..
the covered call concept is clouding your mind. covered calls are in reality two positions. long stock and short calls.
 
I present a detailed analysis of my argument the responses I get are "you are a net loser". Come on, if you think something is wrong with my argument lets be a little more specific here. Now I remember why I stopped posting on ET for several years.
 
Quote from Matt8200:

I present a detailed analysis of my argument the responses I get are "you are a net loser" and "no it doesn't". Come on guys, if you think something is wrong with my argument lets be a little more specific here. Now
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Nobody disputes that you can "make money" with options, or options and spot, etc. It's simply a literal definition if trading is isolated to the option-markets. In situ they are zero capital creation (negative w/comms).

Yes, you can make money with options. Wheeeeeee!
 
Quote from JuniorCTA:

for a guy that supposdly manages $10M++, atticus sure has a lot of time on his hands.
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CTA, don't you have some NFA stuff to report? You familiar with irony?
 
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