Fine you don't want to compare it with roulette which I believe you agree it's 0 sum game I invite you to compare with any other 0 sum game you know(which by definition has 0 expectancy in the long run meaning the outcome of this game over time will be 0 no matter how you play it). If looking at slightly different angle in 0 some game no one can either win or lose in the long run ( by repeatedly playing it). I am sure you will not able to find any game in 0 sum game that you can compare trading options with. Because as I explained above options are not always a 0 sum game.
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Options : zero sum game
- Thread starter IV_Trader
- Start date
Look, suppose you are really good at guessing where S&P futures are going. You buy them when their going up and sell them when their going down. You're making money left and right. That doesn't mean that it is a positive-sum game. Sure, you are making money, but the people that are taking the other side of your position are losing money left and right. It has nothing to do with whether YOU make money. It has to do with whether the system as a whole creates money. It doesn't.
Quote from DynamicReplic8r:
Look, suppose you are really good at guessing where S&P futures are going. You buy them when their going up and sell them when their going down. You're making money left and right. That doesn't mean that it is a positive-sum game. Sure, you are making money, but the people that are taking the other side of your position are losing money left and right. It has nothing to do with whether YOU make money. It has to do with whether the system as a whole creates money. It doesn't.
If you can make money by repeatedly playing the game it can't be a 0 sum game by definition.
You can't beat roulette by betting interchangebly on black or read because it's a 0 sum game. So how come you can guess in S&P the direction but you can't guess it in a 0 sum game like roulette by definition?
Quote from MTE:
oh boy, this discussion is really going nowhere.
Pure and simple, each contract in isolation is a zero sum game, end of story!
A stock is not a zero sum game because the company can create or destroy wealth, end of story!
Exactly, but game is not determined by the outcome of one play. The expectancy of the game is determined by repeatedly playing it over long time. If I placed my bet on black in roulette and I guessed it right it does not make a roulette a positive expectation game.
Quote from MTE:
oh boy, this discussion is really going nowhere.
Pure and simple, each contract in isolation is a zero sum game, end of story!
A stock is not a zero sum game because the company can create or destroy wealth, end of story!
you see what I meant , MTE ?
They spending time on bs instead of putting effort how NOT to be on the losing end.
That's not the same......why are you comparing with roulette....can you do technical analysis with roulette? Nothing to do but just spin the wheel, so it's pure probability only and since the probability is fixed at 50%, assuming no greens, of course over long term it's break even. What can any roulette player do? Collectively net 0 and individually also net 0.
But derivative market is not roulette, collectively net 0 but why someone as individual cant make positive net? It's not roulette with limited fixed probability and such.
I think you are confusing yourself with the roulette example.
But derivative market is not roulette, collectively net 0 but why someone as individual cant make positive net? It's not roulette with limited fixed probability and such.
I think you are confusing yourself with the roulette example.
Quote from gkishot:
Exactly, but game is not determined by the outcome of one play. The expectancy of the game is determined by repeatedly playing it over long time. If I placed my bet on black in roulette and I guessed it right it does not make a rouletter a positive expectation game.
OK, let's take this one step further, options are a negative sum game for retail traders because of commissions and bid-ask spread.
I challenge you to compare it with something else beyond financial markets which is in your mind a 0 sum game. One more thing - how do you personally define a "0 sum game"?Quote from Li Ka Shing:
That's not the same......why are you comparing with roulette....can you do technical analysis with roulette? Nothing to do but just spin the wheel, so it's pure probability only and since the probability is fixed at 50%, assuming no greens, of course over long term it's break even. What can any roulette player do? Collectively net 0 and individually also net 0.
But derivative market is not roulette, collectively net 0 but why someone as individual cant make positive net? It's not roulette with limited fixed probability and such.
I think you are confusing yourself with the roulette example.