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To: GraceZ who wrote (36655)11/12/2000 10:31:53 PM
From: per strandberg  Read Replies (1) of 436258
 
options trading has a negative expected return

The theoretical expected return is zero, otherwise you could not make a balanced market.

For the individual, there are spreads and commissions that will cause the EV to be negative, as is the case for all casinos.

EV is not always all that counts:

Consider these two cases:

1. You pay $1 to select one of two boxes, one empty and the other containing $1.99
EV negative

2. You pay $1 to select one of one billion boxes,one containing one billion and one dollars, all others empty.
EV positive.

If you have to bet your last dollar, would you go for EV positive or negative?

Regards
Per S
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