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They're a lot cheaper than buying the actual stock, because there's every chance they'll expire worthless- and when you're hedging, you think they will probably
by roywiggins 3y ago
They're a lot cheaper than buying the actual stock, because there's every chance they'll expire worthless- and when you're hedging, you think they will probably expire worthless, too.
- whatever1 3y agoProblem is that the person who sells the option to you literally cannot guarantee that they can pay you because there is an infinite downside to them.
- jojobas 3y agoA "person" can't sell a naked option, this can only be done by bigger companies with a margin account, and will be margin-called when the price approaches the strike price. The point is, should call options used for hedging regulated as insurance?
- whatever1 3y agoIn any system you aim to stabilize you don’t want unregulated factors with exponential effects.
- jojobas 3y agoThere's a balance between stability and progress, and we seem to be at about the right spot. Anyway your argument to regulate hedge trading as insurance is lacking.
- wesapien 3y agoMargin accounts aren't that exclusive. I opened a margin account just because but I've never dipped into it. It's just a tool and if you know how to use it, good for you.
- jojobas 3y agoMargin accounts may not be, naked options seem to be.