Monday, April 19, 2010

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

 

The difference between options and poker is that there is a definite
beginning and end of a poker game and that beginning and end applies
to all players so it is easy to total the profits and loses for the
individual players at the end of the game and get zero. There might
be a precise analogy for options but I have never seen it written
down.

By the way Jack, you can exercise a call you own but you certainly
can't specify that the person who sold you the call is also the one
who sells you the stock.

On Mon, 19 Apr 2010 16:28:10 -0500, "Jack" <jack@jackcpa.com> wrote:

>It's like a poker game. If you win, someone has to lose (and the house takes a cut).
>
>
>
>Look at an individual option. If I buy a call for $1, the seller gets $1 (plus/minus our commissions). If the stock drops, he gets to keep the $1 and I am out $1. If it goes up and expires $2 ITM, I'd make $2 ($1 profit) either by closing before expiration OR calling his stock and selling it for a $2 more than the strike price. Now, I make a $1 profit and the seller loses a $1.
>
>
>
>From: OptionClub@yahoogroups.com [mailto:OptionClub@yahoogroups.com] On Behalf Of praesto12
>Sent: Monday, April 19, 2010 1:49 PM
>To: OptionClub@yahoogroups.com
>Subject: Re: [TheOptionClub.com] Re: are options a zero sum game?
>
>
>
>
>
>Options do seem like a very fuzzy-logic sort of situation. I really dont' know specifically what one means by the term "zero-sum game" ? I generally have an idea, but perhaps some one can give a clearer meaning. Ha. I'll just go to dictionary.com . Take care guys.
>
>
>Richard
>
>
>
>
>
> _____
>
>From: Ricky Jimenez <rickyjim@bestweb.net>
>To: OptionClub@yahoogroups.com
>Sent: Mon, April 19, 2010 8:37:10 AM
>Subject: Re: [TheOptionClub.com] Re: are options a zero sum game?
>
>
>
>The trouble I have with this question is that I have never seen a
>precise specification of what the numbers are that have to add up to
>zero. And I have looked in books on mathematical finance for it.
>People who insist on the affirmative answer to the question say things
>like, "Look, I am a trader, not a mathematician and you know what I
>mean". :-)
>
>
>
>

__._,_.___
Recent Activity:
The goal of TheOptionClub is to provide a forum for members to work together for the purpose of furthering our individual understanding option trading.  All messages and postings, and any materials circulated are provided for discussion and educational purposes only.  No statement contained in any materials from TheOptionClub should be considered a recommendation to buy or sell a security or to provide investment, legal or tax advice.  All investors are encouraged to consult a qualified professional before trading in any security.  Stock and option trading involves risk and is not suitable for most people.  There is no guarantee that any information provided is accurate and, may in fact, be wrong.  It is understood that the participants in TheOptionClub have varying backgrounds and degrees of experience in option trading, and that regardless of experience each member is considered a student.  As such, any information distributed through TheOptionClub should be considered with a critical mind and not relied upon as an authoritative source.

To unsubscribe from TheOptionClub, send an email to:
OptionClub-unsubscribe@yahoogroups.com
MARKETPLACE

Stay on top of your group activity without leaving the page you're on - Get the Yahoo! Toolbar now.

Welcome to Mom Connection! Share stories, news and more with moms like you.

Hobbies & Activities Zone: Find others who share your passions! Explore new interests.

.

__,_._,___
at

No comments:

Post a Comment