Are option trades a zero-sum game?

Discussion in 'Options' started by earth_imperator, Aug 23, 2022.

  1. Gambit

    Gambit

    Volatility risk premium when it is there.
     
    #11     Aug 23, 2022
  2. newwurldmn

    newwurldmn

    actually equity risk premium.
     
    #12     Aug 23, 2022
    Gambit likes this.
  3. bln

    bln

    Both yes an no. Option trades in it self is transfer of money out of someones pocket into an others pocket. But in general market sense, an option trade that captures a company's or a basket of companies sales and earnings you will get the same part of productivity output as owning a share.
     
    #13     Aug 23, 2022
  4. tomkat22

    tomkat22

    Nah,there's plenty enough money to go around. Obviously though the experienced,veteran traders will take money away from newbies. They need the liquidity the newbies provide as well as their money. Lord knows I made my "donations" to the market my first couple years of trading. Plenty enough money to go around,it's there for the taking.
     
    #14     Aug 23, 2022
  5. none of these answers are right

    par for the curse
     
    #15     Aug 23, 2022
    KCalhoun likes this.
  6. TheDawn

    TheDawn

    Every single investment is a zero-sum game, not just options. Stocks, bonds, futures, forex...everything even including mutual funds. You cannot win without the other person, somewhere, somehow, at some time losing the same amount to you. That's the nature of the game.
     
    #16     Aug 23, 2022
  7. MACD

    MACD

    Thank you, @MacBookProHo
     
    #17     Aug 23, 2022
  8. DaveV

    DaveV

    Unlike the options and futures markets, the stock market is not a zero sum game. It is very possible for all investors in the stock market to make money, or for all to lose money. On fact, over the long term the majority of investors in the stock market make money. Note that I said INVESTORS not TRADERS.
     
    #18     Aug 23, 2022
  9. newwurldmn

    newwurldmn

    if you do T-accounting for the entire universe you are correct.

    But otherwise wealth is created. When I buy Exxon and they pump oil out of the ground and pay me a dividend from those revenues, who has lost?
     
    #19     Aug 23, 2022
    earth_imperator and Gambit like this.
  10. Yes, it's true. Options are a side bet. When you create an options contract you did not also create a physical asset, productive business, etc.
     
    #20     Aug 23, 2022
    Gambit likes this.