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Idbuytht4adollar t1_j2c1zfn wrote

Reply to comment by lispyfriend in US Stock Options Smash Record - The number of traded contracts surpassed the 10-billion mark in 2022 or the first time ever by Ok_Significance_4008

No because that's priced into to the option. Your logic works with a lottery ticket as well or a low probability sports bet. Even if the upside potential is huge the odds would still be in mm side in the long run their side will profit

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lispyfriend t1_j2c52be wrote

Understood. I just wonder if that pricing accurately measures probability of these events. Of course the market encouraged it to, but people also still measure stock risk as standard deviation of price, so idk.

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[deleted] t1_j2d9ace wrote

[deleted]

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lispyfriend t1_j2e5xcu wrote

> Supposed to.

Well stddev is nice for their mathematical model. The critique is that the model is not really measuring risk in the business. It sounds more plausible for options though.

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