If you bought NFLX at $50 and it goes to $80, who lost the $30 and is paying it to you?
However, if you bought a $50 call and the stock went to $80, someone *is* responsible for paying you that $30. Each $1 you gain comes directly out of someone else's pocket.
In the first case, it is the expectation of higher earnings that drives up the stock price -- a CREATION of wealth. In the second case, no wealth is created, it is merely EXCHANGED.
The reason it's important is that you have to realize that the only way you're going to make money in the options game is if you can get other players to pay it to you -- just like betting on a horse at the race track. The track isn't giving you a prize because you picked the winner. They're giving you money that other players bet on the same race, but they picked the wrong horse. Wealth is merely being exchanged among the players. You only win if you are better (or luckier) than the other players. But in the stock market, all shareholders of the company can make money -- it comes from the customers of the company, profits from the product or service the company provides.
Note that a zero sum game is not necessarily a bad thing for everyone involved. For example, suppose you and I bet on coin flips. If a head comes up, I'll pay you $2. If a tail comes up, you pay me $1. It's a zero-sum game. Every dollar I lose, you win. Every dollar I win, you lose. But, assuming a fair coin, you'd LOVE to play, right? However, in a "fair" game, you and I would be exchanging $1 on each flip, heads or tails -- in the long run, neither of us would get too far ahead, especially if someone else is charging us $0.05 per flip to facilitate the game. But, as long as you can find someone WILLING to pay you more than $1 per win, the zero sum game is to your advantage.
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