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Still, I don't understand what's the point. Who and why were option invented. Just for speculation? Also who sells this contracts? The brokers?
by samwestdev 5y ago
Still, I don't understand what's the point. Who and why were option invented. Just for speculation? Also who sells this contracts? The brokers?
- Ferrotin 5y agoAs for the origins, I don’t know; you can research it, but the appeal of buying an option is that downside is capped at the price of the option, with unlimited upside, at it lets you make leveraged bets on price movements either to make more money, or as a form of insurance. For example, Mark Cuban famously used options to lock in his Yahoo stock value. Market makers often sell the contracts (or buy them). An example of one is Citadel. Brokers route your orders to exchanges where this happens. Sometimes you might get your order matched with a retail counterparty, especially if you deliberately avoid crossing the spread.