Quote from chrismontez:
"Without the childish insults, can you tell us how you concluded that sellers have the edge?"
The market can only move in 5 directions and in 4 of those directions sellers make money, buyers in 1. Does winning in 4 out of 5 times give you an edge? I think it does.
Quote from chrismontez:
"Without the childish insults, can you tell us how you concluded that sellers have the edge?"
The market can only move in 5 directions and in 4 of those directions sellers make money, buyers in 1. Does winning in 4 out of 5 times give you an edge? I think it does.
Quote from heiasafari:
I disagree, it doesn't matter how many time you are right or wrong, the only thing that matters is the bottom-line. Its a given that a seller will win much more often but small amounts everytime but the buyer on the other hand...
I still think there are no inherent hedge, only a poorly evaluated premium can give hedge but its not inherent.
Quote from Dackster:
If you can't handle market direction, don't play options as a second guess!
Dackster.
Quote from heiasafari:
That is no argument. Obviously if a trade occurs, the buyer and the seller have different view on market direction. Since neither of them is reading into the future, it is only an estimation. That does not give either of them an inherent hedge. Now you are right, if one has a time machine then yes he has an hedge to begin with
Quote from chrismontez:
"Without the childish insults, can you tell us how you concluded that sellers have the edge?"
The market can only move in 5 directions and in 4 of those directions sellers make money, buyers in 1. Does winning in 4 out of 5 times give you an edge? I think it does.
Quote from OddTrader:
On page 109 of his book, Gallacher has produced a table of values mathematically derived from 15 commodities (financial, resources and food) individually.
Surprisingly, the overall average of this ratio turns out to be almost exactly 1.0 (a statistical flute), indicating a fairly priced overall market ."
"This rather surprisingl conclusion can be sumarrised as folllows:
The conventional wisdom that indiscriminate option buying is a losing play is incorrect. At the most general level, the option market is remarkably efficient, neither favoring the buyer nor the writer, and equalising their expectations at zero.
Quote from OddTrader:
On page 109 of his book, Gallacher has produced a table of values mathematically derived from 15 commodities (financial, resources and food) individually.
"Average premiums received and average payouts made during calender yesar 1996 have been calculated for straddle positions on 15 actively traded commodities - from a total of 3781 independent observations.
To make the results directly comparable and to accord the same weighting to each commodity in the overall result, the ratio of average payout to average premium has benn calculated for each commodity, with a ratio of 1.0 indicating the break-even condition.
Surprisingly, the overall average of this ratio turns out to be almost exactly 1.0 (a statistical flute), indicating a fairly priced overall market ."
"This rather surprisingl conclusion can be sumarrised as folllows:
The conventional wisdom that indiscriminate option buying is a losing play is incorrect. At the most general level, the option market is remarkably efficient, neither favoring the buyer nor the writer, and equalising their expectations at zero.