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Problem 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 ago
  A "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 ago
    In any system you aim to stabilize you don’t want unregulated factors with exponential effects.
    • jojobas 3y ago
      There'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 ago
    Margin 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 ago
      Margin accounts may not be, naked options seem to be.