| > Feels like the stock market is just a bunch of jargon, subterfuge and financial sleight of hand. Here, what they're doing is establishing a position which will make money if the stock moves either direction out of a narrow band. If you believe there's going to be a big industry upset, but don't know whether it will hurt or harm a specific player, you might enter this position. In turn, the overall market volatility is reduced and liquidity is added by your information being added to the market. > Stock shorting has got to be one of the most pants-on-head stupid things I've ever heard. All kinds of simple, legitimate reasons to short stocks. E.g. you are excessively exposed to that company's welfare for some reason (stock options, they're an important vendor, they're a big component in a mutual fund you own but you'd rather not own their stock, etc)-- you can take an opposite position by shorting. Or, here, you can use it to offset an option that moves in the opposite direction. > Like we learned nothing from 2008, and just created financial 'products' mechanisms and gambits out of thin air. This isn't too much like the house of cards from 2008. These types of strategies are not new; offsetting short positions by writing or buying options was in frequent use in the 1970s, if not before. Option use to profit from volatility (or hedge volatility) dates back more than 2000 years. I'm not a big fan of esoteric, complicated financial schemes, or in creating options and financialized products for everything (e.g. cap and trade)... or situations where market players profit from privileged access to marketplaces (e.g. HFT). But the things you name are not any of these. |