Path: csiph.com!au2pb.net!usenet.blueworldhosting.com!feeder01.blueworldhosting.com!peer01.iad.highwinds-media.com!news.highwinds-media.com!feed-me.highwinds-media.com!not-for-mail From: lawrence@cluon.com Newsgroups: alt.folklore.computers Subject: Re: seveneves References: <87a8thl2hh.fsf@bogus.nodomain.nowhere> <20150826093007.2f895d53e1f2c47b12546083@eircom.net> <20150826124248.c626e062e9db87615d07a7ea@eircom.net> Date: Wed, 26 Aug 2015 16:52:06 +0200 Message-ID: <87wpwigl0p.fsf@cluon.com> User-Agent: Gnus/5.13 (Gnus v5.13) Emacs/23.1 (gnu/linux) Cancel-Lock: sha1:aJdhVlOqAaBkzBbZMOqk65rYnl4= MIME-Version: 1.0 Content-Type: text/plain; charset=us-ascii Lines: 30 NNTP-Posting-Host: e6b9379f.nascacom.com X-Trace: DXC=:Qbm9f1C@@gSGd6HEAJ6YhW`f@h307X6ja^32Dd;7V`o8Sfej>GoNLf4]em4>RJ@?c13\3=\jmnFakeHo>lg>>;onl47Z0We@mhQe writes: > On 26 Aug 2015 10:12:44 GMT > Huge wrote: > >> On 2015-08-26, Ahem A Rivet's Shot wrote: >> > On 26 Aug 2015 07:52:07 GMT >> > Greymaus wrote: >> > >> >> Noticing the present Chinese Stock market movements, I remember that >> >> speculators make money, not so much when stocks go up or go down, but >> >> wne they change any way. >> > >> > Only those speculators who guess the direction correctly make >> > money - >> >> Wrong. >> >> https://en.wikipedia.org/wiki/Straddle > > That's twisted - there's a reason I don't play the stock market. Yeah, but the loss exposure is similar -- in a straight option, you're betting on the movement as a vector; in a straddle option, you're betting on the movement as a magnitude. Either way, you only gain if your hunch is right, and you still stand to lose. Further, if you run the numbers, you'll find the NPV of either kind of operation is about the same (a straddle costs twice as much as a simple long/short option, but pays off twice as often)