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Adjusted for probability, upside and downside are theoretically the same with options. > Unlike when purchasing long positions in stocks, when trading options
by brockwhittaker 6y ago
Adjusted for probability, upside and downside are theoretically the same with options.
> Unlike when purchasing long positions in stocks, when trading options it's possible to lose many times more money than you initially put in.
The converse is also true. It’s entirely possible to almost guarantee yourself a tiny profit and almost no downside risk as it is to create infinite risk.
So EMH definitely maps to the options market.
- AlchemistCamp 6y agoThe market is (mostly) efficient but that doesn't mean that the same number of people end up ahead a certain number of dollars as behind. In a zero-sum game, it's entirely possible and common to have a small number of comparatively large winners and a large number of losers.