3 ms·
Are shorts a derivative? Futures are derivatives and seem obviously useful.
by kevinmchugh 6y ago
Are shorts a derivative?
Futures are derivatives and seem obviously useful.
- fastball 6y agoTechnically no, but shorts serve the same purpose as put options, just without the intermediary piece of paper. You're betting on future value without actually possessing the thing that may (or may not) be valuable in the future. I would argue this is a meaningless distinction in context. And I wouldn't say futures are "obviously useful". They are "useful" in the sense that if you bet on the future and bet correctly, you win, but does the overall economy win? Or is it just a layer that creates more winners and losers without those winners actually providing more value than they otherwise would've? Futures are effectively a zero sum game, and I don't think we should in general encourage those. Futures and shorts are basically just gambling. Would you say gambling (when applied to sports / etc) is economically useful? What we should be encouraging is positive sum games / win-wins.