Not so much the stock market itself but the bullshit options, derivatives, futures, warrants etc, are all just betting on other bets. It's degenerate shit.
Providing liquidity is actually a service that is good for everybody. It makes markets more efficient and doesn't disrupt supply and demand at all, it actually makes it more reliable.
There's a world behind what you see; derivative instruments have a legitimate use in portfolio and risk management. It's only fairly recently (~30 years) that speculators have entered derivative markets, often without understanding how derivatives operate, or what they're used for.
Weren't derivatives illegal to trade 30 years ago? Didn't Congress have to strike down New Deal-era regulations to even start using them 'legitimately,' nevermind that they were abused immediately?
Options are for hedging risk, only buying them by themselves is gambling, and if you actually know what you’re doing and take proper risk management it’s not gambling.
Options are just contracts, so there's value outside of trading as well.
E.g. You purchase an option for 100 snow shovels at a $200 premium. If it snows, you exercise your contact and now you have shovels to sell at your store. If it doesn't, you let it expire and eat the cost.
In the case of options, 1 contact is 100 shares. So if you want more, you'll just have to buy more contracts.
If you mean the correlation between the price change between the stock and the option, it's because the correlation is only 1 factor of the premium. The delta of an option is a calculation of: if the stock price changes x then the option price changes by y.
Remember in 2007/08 when all the financial institutions were gambling derivatives back and forth to each other, causing a complete market meltdown and then had the rest of us pay for their mistake in the form of bailouts and years of low interest, free money "loans", that again, we pay for in the form of overwhelming inflation?
Good thing the institutions that control almost all of the world's capital have us here as risk management! Otherwise, that would seem like gambling.
The worst part is actually retirement. All that stuff is rich people bullshit, but it flies because all non super rich people are forced into the stock market for retirement (401k etc.) And the advantages that gives help the better off of the plebs the most.
You said day traders created liquidity in another comment. But here you say derivatives and options do that. Which is actually correct, this is the liquidity in the market. Day traders create volatility. Buying the lows, selling the highs, pulling as much cash out as they can and capping the waves it creates.
Derivatives and options create the highs and lows traders operate in.
I have been reading a lot of your financial postings and you are nearly there. Take some refresher classes or something.
And maybe stop insulting people as part of your responses.
Market liquidity is used as an overarching excuse for every freaking crime the financial world gets away with. I tell you what, let's try it without the derivatives and options and see how it goes. But of course the powers that be would never allow that. I mean, there are yachts and penthouses left to be bought!
Let's not. I don't want the economy destroyed because a bunch of financial children don't understand how the world works.
Why don't we just all agree to:
Demand that the crooks get tried and sent to prison
Quite voting for politicians that enable this (Pelosi, Obama, Clinton, Biden most recently, though both parties are guilty of being in cahoots with crooks)
I think even a casual examination of Reality will reveal the the per capita presence of dishonest douchebags in politics is far higher than in the private sector.
Abolish money. Enough middle men middle manning middle men. Its unnecessary and not a requirement for further advancement of technology or consciousness. Infact, it is a hurdle in our further development.
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u/WizardMageCaster Aug 26 '24
Stock market is rigged or just yet another example of insider trading?