[extropy-chat] Re: Ethics of contrarianism

[Lifespan Pharma Inc.]

What I mean is that there are times when options can act so fast to 
arbitrage such large values of price change
that they can act not as a risk managment tool but push the market to 
extremes of high or low.

The beef market experienced  this at the time of BSE announcements.

I have not checked the exact timing of options moves in relation to the 
combination of rigs offline, refinery shutdown and
general chaos surrounding the New Orleans hurricane but that case would 
be a good test to see if these risk management
tools manage risk in a responsible way  or act to gouge value from the 
market.

I can tell you the telemarketers for brokers who market the options sure 
sell them as ambulance chasing moneymakers
even at the best of times.




Technotranscendence wrote:

> I disagree.  I see derivatives, including options, as ways of dealing 
> with risk and there's nothing parasitic about that in my eyes.  Yes, 
> some people are deluded and are basically giving their money away, 
> but, used correctly, I see nothing unethical about them.  In fact, in 
> a sense, this is no different from how many people accept a job as an 
> employee for a salary versus going into business for themselves.  The 
> latter involves much more risk, but the rewards are often much 
> higher.  The former involves much less risk, but at the cost of lower 
> pay.  (Perhaps what's being left out here is ex ante psychic profit -- 
> using "psychic" to mean "of the mind" rather than some spooky mumbo 
> jumbo.  People who take the lower risk when they know they'll get less 
> pay are still obtaining a psychic profit in terms of lowered risk.)
>  
> Regards,
>  
> Dan
>
>     From: Lifespan Pharma Inc. <mailto:megao at sasktel.net>
>     To: ExI chat list <mailto:extropy-chat at lists.extropy.org>
>     Sent: Sunday, September 04, 2005 9:51 PM
>     Subject: [extropy-chat] Re: Ethics of contrarianism
>
>     I still see options and derivatives markets as more parasitic (in
>     their everyday use)  than enhancing the true market valuation of
>     goods(as is the commonly purported purpose for their existance).
>
>------------------------------------------------------------------------
>
>
>  
>

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