Re:How the Stock Market Works
by MacroAffairs on Monday August 05, 2019 @02:10AM
(#20611669)
Even for options it doesn't have to be zero sum.
E.g. you could give someone insurance on their stock position if you can take the risk. This allows them to participate in the game so you both benefit.
Another is that you might be able to lend more cheaply than the other can loan but they want to leverage up their portfolio. With options you can effectively make a cheaper loan to them to purchase a specific product. They lend more cheaply, you make part of the spread.
E.g. you could give someone insurance on their stock position if you can take the risk. This allows them to participate in the game so you both benefit.
Another is that you might be able to lend more cheaply than the other can loan but they want to leverage up their portfolio. With options you can effectively make a cheaper loan to them to purchase a specific product. They lend more cheaply, you make part of the spread.