Posted on 01/17/2008 11:35:09 PM PST by TigerLikesRooster
How does an option buyer make money? Who does he buy the option from?
From an institution that is usually not in the possesion of the underlying good.
It’s all on a piece of paper. As money is.
enlighten me ... once in your life :)
So the buyer makes $2 when the underlying goes from $10 to $12 and the seller loses $2.
Ummm no ?! There’s usually a leverage and a spread - isn’t there ?
By selling back and forth the banks ‘earn’ a lot of money.
So the buyer makes maybe 2$ times 4 minus 20% spread.... and because the buyer (as the seller) is most probably an institution that doesn’t work with it’s own capital it’s minus some more percent for interests.
It’s not the 2 dollar back and forth - it’s the interests on captial - the spreads - and all that.
There’s so much capital in these markets that doesn’t really produce a benefit. It’s like the housing bubble - so much economy around a guy that cannot pay for his house. It’s excessively printed money at work.
Watch it collaps as gold goes to 2k$
Don't change the subject.
So the buyer makes maybe 2$ times 4 minus 20% spread.... and because the buyer (as the seller) is most probably an institution that doesn’t work with it’s own capital it’s minus some more percent for interests.
You're funny! $12-$10=$2, $10-$12= -$2.
It’s not the 2 dollar back and forth
LOL!
We're not talking about the banks or the brokers, we're talking about the buyers and sellers of options.
So that’s what you want tot talk about ?
What’s up with them ?
What?
What’s up with them ?
Them?
yup
Try asking your questions again, in English.
There’s nothing wrong with “oil dependency” - why do you think it’s on the planet in the first place? (for us to USE)
The problem is that the enviros won’t let us use our OWN oil, and are basically Luddites who want everyone (except themselves) to have a reduced lifestyle.
lol yeah that’s correct - and they don’t want nuclear energy either.
But isn’t it a good strategy to suck the middle east dry and THEN go to domestic resources ?
Or safe them for the chemical industry - if economically feasable ?
I understood that taking the oil out of the sand in saudi arabia is much cheaper as it was with US domestic resources.
Tell me again how people make money trading options, that was funny!
This is a good point. Is that the strategy? Maybe, and good. We ARE enriching the Islamists by doing this, though. But, like any stupid businessmen (dot com bubble anyone?), they aren't protecting their cashflow. Once the oil is gone, so is their wealth - back to wandering the desert on camels. Seriously, the Islamists are the biggest threat to civilization. They want their "peace", which consists of a Global Islamist caliphate in which all people are either Muslim, Dhimmi, or DEAD.
Oh for crying out loud - you know all that.
If you are in desperate need of soy beans - you would like to buy some. You can buy the beans - the transport of the beans, the packaging of the beans, the handling of the beans, fees for this and that inbetween - but you are not finished with that - you also have to purchase a certain amount of options in advance - because if you don’t maybe the chineese come along and buy them on the day you need them for a really ridiculous high price - that’s because they got to get rid of their greenback (see the actions of the fed today to know why)
So you have to buy options because you do want to tell those who give you the money to opperate your business how you manage your risks - otherwise they go elsewhere.
So these options are ment as an insurance. Only this insurance is traded on high volume in a highly inflational way by hedgefonds and institutions who don’t need the beans as such nor do they need a beanpriceinsurance (please forgive me my german tendcy to merge words)
So each and everyone in the soy bean dealing business is certianly not dealing with your 2 dollars back and forth - to purchase beans you got to pay more then the beans.
Of course your national monkey for calculating a fake but accurate rate of inflation will only account for the price of soy as such. But that’s not relevant anymore for business. It’s the TOC of the bean that matters :)
But hey - you DO know that. How’s your BOA stocks today ?
(Sorry I was in that mood)
ahh for pete’s sake the TCO not the TOC - but hey I am taking away your fun - so you go on...
In the moment they are helping to hold up your banks.
Their money works in the US since always. It’s like in the old times of slave trade - they sell out their assets (like african chiefs sold their own people) and you (like the portuguese then) take the future benefits.
And certainly you protect them from each other (no they are not all the same). Protection is quite expensive if it has to come from the outside (classical italian business)
How’s your BOA stocks today ?
It's up.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.