Registered: Dec 2004
04-10-05 09:08 PM
In my opinion, whether or not trading = gambling, depends largely upon the potential for loss on the trade.
Gambling and trading both rely on a legal contract that basically says, "In exchange for my wager of $X, you will pay me $Y, if I guess correctly on the agreed upon subject of the wager. Otherwise, I lose $X."
If I am trading long on a stock that pays a 5% annual dividend, then while I may lose my initial trade, I may get all my money back, and more, over the long run. This is not gambling, in my opinion, because, if I stretch the wager out long enough, I will eventually win (unless the corporation terminates its dividend).
If I am trading an option, however, and I remain "out of the money" until expiration, then I lose $X, and there is no hope of ever recovering. This exactly satisfies the conditions of the legal definition of a gambling contract, as described above, therefore it "is" gambling.
The "odds" may be superior in the "market" as compared to the casino, but the character of the game is exactly the same.