collar prices on S&P 500 ... signaling a downturn?

Discussion in 'Options' started by stockmarketbeginner, Jan 20, 2018.

  1. That's very interesting. So if a lot of people start buying the same option... it will drive the price up?

    If so, it reminds me more of a sports betting environment. My understanding of that environment is that the "bookie" wants an even amount of betters on either side of the bet. The bookies want to make money off of the spread, not who wins. In fact, if there are too many bets on one side, that represents financial risk to the bookie. The ideal case is the bets on either side cancel each other out. So if it starts getting lopsided (too many bets on one side), the bookie will update the odds to encourage people to bet on the other side to restore the betting balance.

    It that how the options market works?
     
    #11     Jan 22, 2018