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What I mean is that there are times when options can act so fast to
arbitrage such large values of price change<br>
that they can act not as a risk managment tool but push the market to
extremes of high or low.<br>
<br>
The beef market experienced this at the time of BSE announcements.<br>
<br>
I have not checked the exact timing of options moves in relation to the
combination of rigs offline, refinery shutdown and<br>
general chaos surrounding the New Orleans hurricane but that case would
be a good test to see if these risk management <br>
tools manage risk in a responsible way or act to gouge value from the
market.<br>
<br>
I can tell you the telemarketers for brokers who market the options
sure sell them as ambulance chasing moneymakers<br>
even at the best of times.<br>
<br>
<br>
<br>
<br>
Technotranscendence wrote:
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<div><font size="2">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.)</font></div>
<div> </div>
<div><font size="2">Regards,</font></div>
<div> </div>
<div><font size="2">Dan</font></div>
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<div
style="font-family: arial; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; line-height: normal; font-size-adjust: none; font-stretch: normal;"><b>From:</b>
<a title="megao@sasktel.net" href="mailto:megao@sasktel.net">Lifespan
Pharma Inc.</a> </div>
<div
style="font-family: arial; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; line-height: normal; font-size-adjust: none; font-stretch: normal;"><b>To:</b>
<a title="extropy-chat@lists.extropy.org"
href="mailto:extropy-chat@lists.extropy.org">ExI chat list</a></div>
<div
style="font-family: arial; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; line-height: normal; font-size-adjust: none; font-stretch: normal;"><b>Sent:</b>
Sunday, September 04, 2005 9:51 PM</div>
<div
style="font-family: arial; font-style: normal; font-variant: normal; font-weight: normal; font-size: 10pt; line-height: normal; font-size-adjust: none; font-stretch: normal;"><b>Subject:</b>
[extropy-chat] Re: Ethics of contrarianism</div>
<div><br>
</div>
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).</blockquote>
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