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Again, all options are a zero sum game. No value is created or destroyed (outside of trading fees), just transferred between parties. I think you might be conf

Again, all options are a zero sum game. No value is created or destroyed (outside of trading fees), just transferred between parties. I think you might be confused by the name "binary options." The word "binary" doesn't refer to the fact that they are specifically zero sum. This doesn't need to be called out, because again, all options and futures are zero sum. The "binary" qualifier refers to the fact that they result in "yes/no" outcome. Did the thing you bet on happen? Yes? You win. No? you lose everything.

emteycz 6y ago
I know what options are, and I know what binary options are. It's not true that no value is created or destroyed on transfer. Transferring or obtaining the asset might be extremely valuable to someone. Market conditions change. And so on.
pgwhalen 6y ago
I’m not the first person on HN to say it, but I’ll say it here - by this definition of zero sum, are not all economic transactions zero sum?
- pembrook 6y ago
  No. The simple fact that you can create value for others without stealing that value from someone else means the economy is positive sum. If all economic transactions were zero sum, then growth would be impossible. Things like GDP, the stock market, etc grow every single year on average because they are positive sum. That’s why it’s most smart to just buy-and-hold boring index funds. You’re taking advantage of the positive sum nature of all business in aggregate, instead of playing the zero-sum game of short term trading against other market participants.
  - pgwhalen 6y ago
    I'm not suggesting that all economic transactions are zero sum. I'm just using that idea to expose what value really is. > No value is created or destroyed (outside of trading fees), just transferred between parties. That transfer is the value. In fact, that's pretty much the point of finance in its entirety - moving around capital/risk is valuable in and of itself.

emteycz 6y ago

I know what options are, and I know what binary options are. It's not true that no value is created or destroyed on transfer. Transferring or obtaining the asset might be extremely valuable to someone. Market conditions change. And so on.

pgwhalen 6y ago

I’m not the first person on HN to say it, but I’ll say it here - by this definition of zero sum, are not all economic transactions zero sum?

pembrook 6y ago
No. The simple fact that you can create value for others without stealing that value from someone else means the economy is positive sum. If all economic transactions were zero sum, then growth would be impossible. Things like GDP, the stock market, etc grow every single year on average because they are positive sum. That’s why it’s most smart to just buy-and-hold boring index funds. You’re taking advantage of the positive sum nature of all business in aggregate, instead of playing the zero-sum game of short term trading against other market participants.
- pgwhalen 6y ago
  I'm not suggesting that all economic transactions are zero sum. I'm just using that idea to expose what value really is. > No value is created or destroyed (outside of trading fees), just transferred between parties. That transfer is the value. In fact, that's pretty much the point of finance in its entirety - moving around capital/risk is valuable in and of itself.