How has options-trading affected the workings of a stock-only market?
Posted by admin
Has (Does?) options-trading (futures) affected the stock market? Is there any positive or negative impact of trading options directly or indirectly on the trading of stocks?
Not that I’m not trying to understand what is Options Trading – I am trying to find out if there has been any study on the impact of Futures Trading on a stock market on a general scale.
Options trading reduces volatility in the price of the underlying stock. Since traders can take long or short positions or buy puts and calls, some of the risk is taken by those traders. This tends to reduce the risk taken by the actual owners of the stock, reducing price movements.
2 Responses to “How has options-trading affected the workings of a stock-only market?”
Leave a Reply
November 28th, 2009 at 2:33 pm
Great question, I trade stocks. I was just thinking, this AM, about the silver market, again.
And for the millionth time, I wondered the same things.
LOL, this isn’t an answer, really, but I do share your interest in the system effects on each other.
I personally, don’t think it really makes a difference. If anything, I lean toward liking the system this way. I like separation, it offers a better chance of keeping it "legal", it seems.
References :
November 28th, 2009 at 2:45 pm
Options trading reduces volatility in the price of the underlying stock. Since traders can take long or short positions or buy puts and calls, some of the risk is taken by those traders. This tends to reduce the risk taken by the actual owners of the stock, reducing price movements.
References :