Long term market rate of return is positive (extremely positive of late), where as casino gambling is EV negative.
But options and futures exist as a short term hedge on equity investment. Combine that with the vig Robinhood takes on the front end in the form of higher contract prices, and you end up with an EV negative return - more consistent with high stakes gambling than equity investing.
The way I explain it is it’s like a casino, where the market makers play and also take the rake/odds.
Stock trading is like playing blackjack, it’s hard to win or lose money quickly. Options are like slot machines or roulette, you can win or lose very quickly. But at the end of the day the people who control the casino will come out ahead of you.
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Long term market rate of return is positive (extremely positive of late), where as casino gambling is EV negative.
But options and futures exist as a short term hedge on equity investment. Combine that with the vig Robinhood takes on the front end in the form of higher contract prices, and you end up with an EV negative return - more consistent with high stakes gambling than equity investing.
The way I explain it is it’s like a casino, where the market makers play and also take the rake/odds.
Stock trading is like playing blackjack, it’s hard to win or lose money quickly. Options are like slot machines or roulette, you can win or lose very quickly. But at the end of the day the people who control the casino will come out ahead of you.