Serious question bros - Is options trading/futures glorified gambling?
I know a dozen people who have lost serious sums of cash in options trading (One guy lost something like 40k, which was all he had). To those dozen guys who have lost significant sums of money, I know one guy who makes maybe 4% or 5% per month off options trading and he says it's impossible to do much more than that.
I think you answered your own question as it relates to those whom you're envisioning will do the trading - but you're veering away from a central element of capital markets.
The function of the marketplace is provide liquidity. There's so much liquidity, in fact, that it creates position taking opportunities to trade off of relative values - so think of the activity of trading as a by-product of a larger game.
The business of Wall Street is to sell. Ideas are sold ("You gotta get paid, your company needs to go public. Let's stay in touch.") and functionality is sold ("Your retirement fund needs to diversify, what happens if the yen crashes? Lemme manage that shit for you."); ideally a trading desk of a big investment bank like Morgan Stanley's complements services provided large institutional customers, which are treated by the bank as clients. If a big mutual fund wants to get out of one name ("Want to unwind this position 600,000 shares of Pfizer") or into another (A fund might acquire a significant position in AAPL by buying chunks every day, entrusting a MSCO trader, a "sell side" trader, to do so price effectively and on the sly) ... that big fund (Fidelity) also wants relationships and information that can flow from Morgan Stanley's investment bankers and research ('institutional research' departments ... hello?) - thus these big market operations share the same universe as the technical traders who plop down a few grand to take on all comers. Not competing per se, but one's activities can have serious impact on the other. Martin, win or lose, like any other retail trader is a guppy in a whale tank - and I'm probably overstating the guppy's presence here.
And of what we saw that happened in this thread - the same shit can happen to seasoned institutional pros (trading other people's money, of course -
maybe a year end bonus takes a hit) trading names they know like the back of their hand.
So, yeah, it's gambling, but unlike a poker game or a casino - the very existence of these markets is not to provide gambling opportunities for those seeking some quick money. I'm in no way saying that quick money isn't possible to come by, but it's an important concept to remember.
The game is too big for me. I don't want to play. I have no idea what the greek talk is, or the chartist stuff (and I actually sell technical/fundamental alert software product to institutional traders) - all I know is that on Wall St. relationships matter and that closing a deal is about a thousand times more valuable than winning a trade.
OPM.
