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rojasduarte t1_iu94jka wrote

Reply to comment by Stunning-Leek334 in Someone suffers on the other side of your bet by [deleted]

Actually, it is a zero sum game and it does mean precisely that

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Stunning-Leek334 t1_iu95fbz wrote

But it literally isn’t. Assume you bought stock at $10 a share and I bought it from you at $12 a share and sold it to someone at $14 a share. Where is the zero sum?

Or let’s say I sell you a covered option and I make $2 each and you make money on the option? Who lost money? What if I bought the position for my cover at $12 and they bought theirs at $10 and you get it at $14?

Where is the zero sum?

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rojasduarte t1_iu9733n wrote

But it literally isn’t. Assume you bought stock at $10 a share and I bought it from you at $12 a share and sold it to someone at $14 a share. Where is the zero sum?

Very simply, when I sold to you at 12 and later it went to 14 I lost 2 per share. We split the profit, ok, bit I'm trying to say the market isn't collaborative, I'd much rather make 4 per share than 2, isn't that obvious?

Or let’s say I sell you a covered option and I make $2 each and you make money on the option? Who lost money? What if I bought the position for my cover at $12 and they bought theirs at $10 and you get it at $14?

That's even more proof of my point, isn't it? If the market is profitable for an option I bought from you, it's because it's printing, so you're gonna get exercised and lose money, there's no way around it.

If an option isn't printing, then I lost money on the deal and you profit, we're betting in opposite scenarios, don't you agree?

Where is the zero sum?

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Stunning-Leek334 t1_iu97rnm wrote

Your point isn’t zero sum though. Your argument is you should be the only one allowed to make money in the stock market.

I don’t lose money if I have a covered option. I make money and you make money. Your entire argument is based on very flawed logic. Just because I didn’t make as much money as I could doesn’t mean I lost money.

Plus that still disputes the zero sum because in all of these situations money is being made and nobody is losing money to offset that money. So even in your own flawed logic your argument is still wrong.

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rojasduarte t1_iu99e3n wrote

You may have made money on a deal you made before, great for you and too bad for the other side of that deal. But if I buy your covered call and excercise, you lost money on our deal. Between the two of us, it is zero sum.

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Stunning-Leek334 t1_iu99qzy wrote

Lol are you trying to imply that because in a single transaction, I sell you something for the same price you pay me for it, that stocks are somehow zero sum? Lolololol

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minutemiser t1_iu99p3b wrote

So the only way to “win” is to sell the top every time??? Come on…

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SateliteDicPic t1_iu97z3w wrote

Options and stocks trading are different. Options ARE zero sum but the OPs presentation of the situation is an over simplification regardless.

I do agree with the spirit of the post in as much as some human decency isn’t a bad thing I just think the attempt to apply it here isn’t ideal.

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Stunning-Leek334 t1_iu99acb wrote

It literally is not zero sum though? AN ASPECT of options trading can be zero sum. The premium I charge you for an option is a zero sum. I get that and you lose it. If I don’t cover then you could also potentially consider that part of it zero sum. If I do cover it is not zero sum. Also, even if I didn’t cover, if you exercised the option then when the stocks change hands there is a zero sum transaction.

If the stock market was zero sum then the stock market would never go up or down. Companies enter and exit, mergers happen, etc there are so many aspects of the stock market that make it not zero sum.

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