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I'm generally sympathetic to the idea that financial derivatives are a great evil, and a huge part of what feels "broken" about the current system. However, co
by jacksnipe 6y ago
I'm generally sympathetic to the idea that financial derivatives are a great evil, and a huge part of what feels "broken" about the current system.
However, consider futures, which are very similar to options. Futures were, as I understand it, popularized in Chicago as a way for farmers to be able to get money for their crop right now, at a fixed price. In this way, they could pass the risk -- and a little bit of the profit -- off to people with more capital, who were better able to weather all possible outcomes.
- croon 6y agoAnd in practice, how would that be different from incorporating and selling stocks to those investors, thus raising money now, and then growing in value as the crops are reaped?
- deleted 6y ago[deleted]
- xmprt 6y agoEven futures markets aren't protected from this manipulation. The Onion Futures Act has an interesting story.
- smabie 6y agoI wouldn't call futures as very similar to options. The mathematical profiles of the two are very different, though a far ITM option is basically a future