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To: GraceZ who wrote (36655)	11/12/2000 10:13:45 PM
From: chic_hearne	Respond to of 436258

I didn't say it wasn't possible to have a positive return, just that options trading has a negative expected return. When you take into account all outcomes and their returns, expected return is negative, which means just like in the casino example the house has an advantage. The difference between options trading and the casino is that with options you can "be" the house. I'm sure I've sold into the house, bought from the house, as well as been buying when the house was, and selling when the house was. The spread is the only thing you eat. But even so, it isn't always the "house" that takes this. Many times I've bought on the bid or sold on the ask.

To: GraceZ who wrote (36655)	11/12/2000 10:31:53 PM
From: per strandberg	Read Replies (1) \| Respond to 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