The illegal part in this equation comes from the asymmetric nature of the bet. Not many sane people play naked way out of money options. 99% of the time it is a

The illegal part in this equation comes from the asymmetric nature of the bet. Not many sane people play naked way out of money options. 99% of the time it is a losing trade. It is like playing the lottery. Perfectly legal. But being suspicious when someone who doesn’t play lottery buys one and wins next day. While a hedged out of money option is commonplace. various payoffs you can create with options is mind boggling.