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I don't know if I would use that term to describe them. They're investments like gambling is an investment.
by doubleunplussed 7y ago
I don't know if I would use that term to describe them. They're investments like gambling is an investment.
- SEJeff 7y agoAll investment is gambling. You’re betting that the stock will go up if you’re long and that you can sell it for more in the future than when you bought it. Call options just allow you to leverage more as do put options. Your own statement just agrees with me. Investing and trading is gambling, but if you hedge properly you’re able to control the odds of success a bit better than you can at say a craps table.
- dangravell 7y agoErm, capital growth is one way of making money with an asset. It depends on the asset but there are other ways, e.g. dividends.
- mumblemumble 7y agoIt's true that you can use put options for purely speculative purposes, but that's not their only use, and that's not what they're supposed to be for. The more official purpose of a put option is to control your risk profile. That is a perfectly reasonable thing for an investor to do, and is something more like the opposite of gambling.
- doubleunplussed 7y agoRight, but purchasing insurance isn't usually considered an investment either. It makes you negative money on average, it buys you more certainty.
- mumblemumble 7y agoWell, an e-trade account isn't typically considered an investment in and of itself, either, but that doesn't mean it isn't a reasonable thing for an investor to have.