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The interesting thing about the markets is that if you had a strategy that consistently lost money, oftentimes you can use the “opposite“ of that strategy, so t
by tyree731 5y ago
The interesting thing about the markets is that if you had a strategy that consistently lost money, oftentimes you can use the “opposite“ of that strategy, so to speak, to make money. This is one reason why it’s difficult to find these losing strategies.
- JumpCrisscross 5y ago> oftentimes you can use the “opposite“ of that strategy, so to speak, to make money The opposite of Robinhooding might be buying a smattering of stocks and holding until infinity. It’s better than constantly trading options, a consistently losing strategy. But I wouldn’t call it a winner.
- unmole 5y agoIf buuying OTM options is a consistently losing strategy, the opposite would be selling OTM options. And that's a reasonable way to make money.
- JumpCrisscross 5y ago> the opposite would be selling OTM options. And that's a reasonable way to make money. It's the original "vacuuming up nickels in front of a steamroller" trade. It looks like it works well for a while until it doesn't. Option pricing has many degrees of freedom. Most result in value frittering away. As a result, most options trade participants lose money. (By design. It's a hedging tool.) The alpha bleeds into the underlying market through market makers' hedging.