Re: [TheOptionClub.com] Re: are options a zero sum game?

I think the point is this:

 

There are two camps of thought in options trading.. there are those that think that because options are a zero-sum game then over the long term you can not make money.  The only people that can are the brokers and market makers that take a slice of the transaction through commissions and spread.  Then there are those that think that it does not really matter that options are a zero sum game if you properly manage your account.  Who is correct?  Only time will tell :-)

 

Also, not all financial transactions are a zero sum game.  Equity shares represent a growing and on going concern (a successful company)...  It is true that when a company goes bankrupt and the equity shares cease to exist then yes that becomes a zero sum... but there are also companies that are disproving this because they have been around for hundreds of years.... so how long do you want to wait to prove a point? :-)

 

If you narrow your time line the zero sum theory then focuses on "instruments" that have an expiration date.... options, bonds, futures, etc.

 

Joey

 

 

On April 20, 2010 at 5:53 PM Jeremy Gish <gishfarm@yahoo.com> wrote:

 

 

I am still a beginner at option trading (still doing papaer and virtual trading) so that may be why I feel like I am missing something, but it seems like we are having a great discussion and I am missing the point...   It seems to me that by definition ALL FINANCIAL transactions are a zero sum game.  The amount I lose in trading EXACTLY MATCHES the amount other people gain (whoever held the other side of my trade + the broker comissions).    I think I understand that much, but I am missing why it is important whether or not trading options is a zero sum game or not.  Please help...