Options : zero sum game

Discussion in 'Options' started by IV_Trader, Mar 2, 2006.

  1. Why would you tell me that when I am not close to a TV?!?!?!!?!?

    I almost grabbed that issue but then I saw that it was just a cover shot and she was not in the magazine lol. I told her last night to just get payment for use of the pic and let it go since it is good publicity ;)

     
    #61     Mar 3, 2006
  2. sle

    sle

    Delta-hedging is a wierd thing. For example, in a range-bound market, both long and short gamma positions can make money. How's that for zero sum game? :D
     
    #62     Mar 5, 2006
  3. Agreed, by hedging delta with the underlying, in which case the final P & L is path dependant.

    Isn't it still zero some, as in the net wealth of all the DN trading (gamma scalping) participants won't change - it merely gets re-distributed ?
     
    #63     Mar 5, 2006
  4. ChrisM

    ChrisM


    I have seen few times comparison to insurance, and have to say I like it.

    Options are financial insurances, aren`t they ? Then someone pays to insure his portfolio and seller must know how to run the business to not go down if he is obliged to pay compensation.
     
    #64     Mar 6, 2006
  5. Very well said ChrisM
     
    #65     Mar 6, 2006
  6. options are zero sum

    period

    within the options universe, the net position is necessarily zero

    it's a matter of math

    one can make great money in options, and they can be used to speculate, hedge, or provide income

    but they are zero sum

    the system is closed, and each position has a corresponding postion that cancels it out

    thus, neutral. thus - zero sum

    stocks of course are not zero sum
     
    #66     Mar 6, 2006
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    #67     Mar 6, 2006
  8. novel20

    novel20

    Wait a sec, is option a zero sum game?

    Can anyone please explain? :D
     
    #68     Mar 6, 2006
  9. the latest verdict : options are , but stocks are not.
    Will check again later.
     
    #69     Mar 6, 2006
  10. novel20

    novel20

    Still don't get it.. :D

    Are options really a zero sum game? :D
     
    #70     Mar 6, 2006