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Technology Stocks : Dell Technologies Inc.
DELL 133.35+0.1%Nov 28 9:30 AM EST
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To: freeus who wrote (81367)11/19/1998 4:31:00 PM
From: BGR  Read Replies (2) of 176387
 
Freeus,

In the short term, derivative prices do influence the underlying asset, mostly because they often get used as a proxy for the underlying. But in the long run, asset prices follow fundamentals and are independent of derivative prices. So keep in mind that following derivative prices to determine probable asset prices is like following TA and is very dangerous to anyone's financial health IMO.

This is not to say that one may not make money trading derivatives. Assuming interest rates to be constant, the two other factors influencing derivative prices are asset volatility and time. One may make money (over time and on average) selling either or both as insurers do. But that is a *very risky* game.

-Apratim.
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