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Derivatives have underlyings. An option is the right to purchase or sell a stock (or something else); a future is the right/obligation to accept delivery of som
by potatoyogurt 4y ago
Derivatives have underlyings. An option is the right to purchase or sell a stock (or something else); a future is the right/obligation to accept delivery of something at a future time. While the payout curve is more complicated than straightforward ownership, they derive their value from their relation to some underlying assets.
- TedDoesntTalk 4y agoI thought the underlying of a crypto coin ledger entry is the heat generated from the electricity consumed to calculate the hash of a meaningless number?
- tsimionescu 4y agoThat's not an asset that anyone wants (or can have in any meaningful sense).
- jacquesm 4y agoI see them as side bets on the stock market.
- potatototoo99 4y agoWhat about the AMC ou GME stocks? And if as you seem to imply, crypto is useless, then why isn't everyone shorting it to 0? Obviously you'll concede the stock market is not solely rooted on the underlying assets or dividend, but also on hype and future promise. Same thing for cryptocurrencies, only less utility and more speculation.
- lxgr 4y ago> if as you seem to imply, crypto is useless, then why isn't everyone shorting it to 0? Because shorting isn‘t free, and as the old saying goes, the market can remain irrational longer than you can remain solvent.