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> the way the rewards are allocated for playing... don’t matter too much. Of course they matter. If they didn't matter, then participants wouldn't participate
by koheripbal 6y ago
> the way the rewards are allocated for playing... don’t matter too much.
Of course they matter. If they didn't matter, then participants wouldn't participate. ...and if they didn't participate then the market would have less liquidity. ...and higher liquidity is ALWAYS a good thing.
The health of a market can be characterized by the persistence of liquidity.
- jameshart 6y agoIf a bunch of options traders provide liquidity services which the market values at $1m, the market will pay the options traders $1m. If the options traders decide to armwrestle to decide which of them gets to keep the $1m, the market doesn’t care.
- koheripbal 6y agoIf there are only two traders trading against one another, you are correct. ...but there is an ecosystem of traders intertwined and many of them are primary market participants, so the market does care, because the "gamblers" are providing liquidity to the legitimate participants.