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> small-time investors are being systematically fleeced Anyone buying options in the hope of getting rich is a speculator, not an investor. While they might lo

by unmole 4y ago

> small-time investors are being systematically fleeced Anyone buying options in the hope of getting rich is a speculator, not an investor. While they might lose money, they aren't being fleeced. > And if adjustable-rate subprime mortgages were the oppressive product of the Great Recession, options trading might’ve filled their shoes for the current downturn. This makes no sense to me whatsoever. > wide bid-ask spreads that incur immediate losses for options traders. A wide bid-ask spread might give you bad fills but that doesn't mean you incur an immediate losses. You might even turn a profit! > To be clear: losing in the market is one thing, but managing to be systematically fleeced at a time when all boats were rising Again, claims of people being fleeced proffered without any evidence. Buying options has a different payoff compared to buying stock. News at 11. > Within that machine, encouraging or allowing leveraged options trading on short contracts among retail investors should be considered nothing less than criminal. I'm not seeing what is supposed to be criminal here. There's no attempt to explain how options actually work or why people lose money trading them. All we have is handwaving and conspiracy mongering. But I guess that's totally on brand for Jacobin.

benj111 4y ago
I think the issue is it's investing adjacent so theres the risk of people seeing it as an investment, or at least > a zero sum game, where I fact it's < a zero sum game. It's also an open question whether non sophisticated traders / investors should be allowed access to more complicated investments. For me leveraging falls on the wrong side of the line. We saw what happened in 1929.
Adrox 4y ago
You didn’t read the articke, did you? According to the study cited in thr articlr People on average loose 4.5% a month: > one longitudinal study of nearly seventy thousand Dutch retail investors. The findings back up the story of the current wasteland of retail traders over the last two years. Over six years, researchers found that retail investors who participated in options trading lost, on average, 4.5 percent monthly, more than halving their accounts within a year.
- unmole 4y ago
  > You didn’t read the articke, did you? Right, I quoted multiple sections from the article without reading it. Options trading is zero sum. Add in costs and for a retail trader (not investor) it becomes negative sum. It's not surprising that retail traders consistently lose money. I'm still not seeing the systematic fleecing.

by unmole 4y ago

benj111 4y ago

I think the issue is it's investing adjacent so theres the risk of people seeing it as an investment, or at least > a zero sum game, where I fact it's < a zero sum game. It's also an open question whether non sophisticated traders / investors should be allowed access to more complicated investments. For me leveraging falls on the wrong side of the line. We saw what happened in 1929.

Adrox 4y ago

You didn’t read the articke, did you? According to the study cited in thr articlr People on average loose 4.5% a month: > one longitudinal study of nearly seventy thousand Dutch retail investors. The findings back up the story of the current wasteland of retail traders over the last two years. Over six years, researchers found that retail investors who participated in options trading lost, on average, 4.5 percent monthly, more than halving their accounts within a year.

unmole 4y ago
> You didn’t read the articke, did you? Right, I quoted multiple sections from the article without reading it. Options trading is zero sum. Add in costs and for a retail trader (not investor) it becomes negative sum. It's not surprising that retail traders consistently lose money. I'm still not seeing the systematic fleecing.