Stalla keeps saying this about derivatives!

I really liked the “stupid banks” comment.
1. Try buying options and see if commissions are lower than buying stocks, or if the spread is in your favor.
2. Try to get rid of a position you have and see if liquidity is better than that of the underlying.
3. Options market is more efficient than stock?
1. They were talking about all derivatives, of which, options are a very small part. Try buying 100 bushels of wheat, storing such wheat, paying for transport costs and everything else. What about oil? How about a pile of money for FX? Interest rates?
The derivatives market notional value and contracts count is orders of magnitude higher than equities.
2. How easy is it to offset derivatives contracts? pretty damn easy.
3. Derivatives markets are more efficient than stock in general
Quit looking at the world in tunnel vision and blasting them from only that tunnel vision.
It’s akin to you asking your stupid question about the largest company, but then constraining that question down to companies with the letter “C” in their name because that’s the first letter of your last name.
How stupid and arbitrary is that? Because *YOU* don’t think that anything else but equity derivatives is “interesting” means their points are less valid?
Who the hell are you?
 
Dreary Wrote:
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> Wow, I’m impressed.
Glad somebody is, because little baby jesus was crying due to disappointment re: this whole thread.
 
Gee Spierce, if it’s so liquid & efficient how come the price of oil can be so distorted & manipulated?
 
spierce Wrote:
——————————————————-
> I really liked the “stupid banks” comment.
>
> 1. Try buying options and see if commissions are
> lower than buying stocks, or if the spread is in
> your favor.
> 2. Try to get rid of a position you have and see
> if liquidity is better than that of the
> underlying.
> 3. Options market is more efficient than stock?
>
>
> 1. They were talking about all derivatives, of
> which, options are a very small part. Try buying
> 100 bushels of wheat, storing such wheat, paying
> for transport costs and everything else. What
> about oil? How about a pile of money for FX?
> Interest rates?
>
> The derivatives market notional value and
> contracts count is orders of magnitude higher than
> equities.
>
> 2. How easy is it to offset derivatives
> contracts? pretty damn easy.
>
> 3. Derivatives markets are more efficient than
> stock in general
>
> Quit looking at the world in tunnel vision and
> blasting them from only that tunnel vision.
>
> It’s akin to you asking your stupid question about
> the largest company, but then constraining that
> question down to companies with the letter “C” in
> their name because that’s the first letter of your
> last name.
>
Cisco? Coca-Cola? Citigroup? I give up, what?
 
virginCFAhooker Wrote:
——————————————————-
> Gee Spierce, if it’s so liquid & efficient how
> come the price of oil can be so distorted &
> manipulated?
Since when did liquid or efficient equate to perfection?
Recent history has taught us that even the most efficient and liquid markets can be prone to breakign down.
 
“efficient” = reflects pure mkt expectations/ supply&demand unbiased by taxes/transaction costs/etc right? Expectations can still be WRONG. I would argue that prices falling and the market valuation readjusting is an example of efficiency.
 
virginCFAhooker Wrote:
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> Call it what you want… in my book, you can’t
> “manipulate” an efficient market.
by that definition then no markets are pefectly efficient, since all can be manipulated one way or another.
I never said the oil futures were being manipulated, since that implies some sort of influence by a minority of people or a premeditated exercize.
I do think that they aren’t pricing in all information and are irrational at this point.
The market is being no more or less “manipulated” than the equities market during the .bombs or the housing market of the last 7 years.
All markets are prone to human irrationality, regardless of efficiency. This is a basic tenant to behavioral finance and one I believe very strongly in.
 
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