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re: Wanna yolo? Buy some calls on volatility.
Posted on 3/15/24 at 2:56 pm to Jag_Warrior
Posted on 3/15/24 at 2:56 pm to Jag_Warrior
How is it a myth?
Someone sells the call or put. Someone buys it. It may be sold many more times until expiration but when it expires someone is holding it. Either it expires worthless and the holder is out of money or it is assigned and the seller takes a loss (from its current stock value). Unless I’m misunderstanding how options work.
Someone sells the call or put. Someone buys it. It may be sold many more times until expiration but when it expires someone is holding it. Either it expires worthless and the holder is out of money or it is assigned and the seller takes a loss (from its current stock value). Unless I’m misunderstanding how options work.
1
Posted on 3/15/24 at 3:10 pm to GAFF
Yes you do misunderstand options badly. 95%+ of volume isn’t between you and another person like me. It between you and a dealer who uses a hedging algo to buy and sell the underlying asset such that he has zero directional risk and simply collects the premium. Something Jag and I do. One side almost always wins (the dealer/market maker) but that doesn’t mean it’s a zero sum game either.
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