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It's a 50/50 bet if you pick sides at random. You may have a loss in expectation but it will be because of spreads, transaction costs, taxes, etc. (Only half-j
by kgwgk 6y ago
It's a 50/50 bet if you pick sides at random. You may have a loss in expectation but it will be because of spreads, transaction costs, taxes, etc.
(Only half-joking.)
- anupamchugh 6y agoWell, it can’t be 50-50 bet ever since there’s the time decay. 33 percent is the best bet to win!
- deleted 6y ago[deleted]
- kgwgk 6y agoI'm not sure how that is relevant. The price of the option will decay to zero or to its intrinsic value and if it ends in the money one side will give $X to the other at the end. Someone also paid a premium to the other (ignoring the bid-ask spread and transaction costs). Peter's gain is Paul's loss. You have 50/50 probability of being Peter or Paul.