How in the Hell can these MULTI-BILLION DOLLAR HEDGE FUNDS GET OFF SCOTT FREE FOR MAKING A BAD BET!
THIS IS GOING TO BE 2009 ALL OVER AGAIN!!!!!
These are suppose to be the most sophisticated and smartest investors in the world and they have one bad week and lose everything and they claim they need help because the small guy just out smarted them?
AMERICA IS SO FUCKING DONE WITH THIS SHIT!
Options are merely gambling. They are a scourge on the market and the economy. You shouldn't be able to short stocks period especially during a financial crises.
Options are actually meant to be used as insurance contracts. If you have a position in company XYZ of 100 shares and the economy is tanking then you would normally Buy an Options contract for an "Insurance" Premium to secure your shares from a downtrend. You could also short shares to receive Credit and protect yourself from a downtrend. I really hope MSM doesn't paint this as Wall street needing more regulation for small traders. It really is a good "market" where you could buy and sell goods in various ways. They already fuck us enough, say no to regulation.
But that's not the nature of options or credit default swaps. I can't insure a house I don't own. I cannot insure it for more than it is worth. In particular, I cannot insure your house 100 times over and come around and play with matches.
I'm not saying you can't gamble with them, I'm just saying they aren't for "merely gambling". You can use a car as a weapon, it doesn't mean it's a weapon.
And markets are different than home insurance. I really don't see why you can't buy insurance contracts from an open market to hold in case someone wants to buy. You're basically playing broker.
Remember credit default swaps? That's the purest "insurance" style instrument. Not only could you (and still can) sell more CDS than you can back with anything (if the insurance policy happens, it is impossible to claim it because the counter-party is dead); you can also buy insurance for things you don't own. There was 60 trillion of this garbage in 2008, more now. It nearly imploded the world economy and you the tax payer were on the hook for trillions to prevent the nuke from going off.
This is the PERFECT analogy.
Can you gamble on options? Yes. But to say they are a scourge on the market and economy is just wrong. They are a great tool to hedge risk and minimize losses when used properly.
Naked shorting is criminal.
Options and naked shorting are 2 very different things.
Can't have one without the other.
options are great investment tools for hedging market risk for people dealing in commodities like farmers/oil well owners/etc. an options contract is not the same as staking a short position (or long for that matter). While both are levered, they function much differently. An options contract is paying upfront for "the right to buy" usually 100 shares at a predetermined price. If the stock moves in your favor the value of your contract increases. opposite for if it moves against you. The worst that can happen here is the contract "right to buy" expires worthless and you lose a your money. Taking a short position is going to the broker and "borrowing" shares that YOU DONT own from the brokerage house and dumping them into the market to create downward presssure on the stock. They then go back in and buy the shares back that they sold that weren't theirs to sell at a cheaper price, return them to the broker and profit the margin. When they get squeezed out and the plan doesn't work, like with gamestop, there are no shares to buy back which puts even more unusual upward pressure on the stock price and the pump is primed for massive massive losses.