Saturday, March 13, 2010

When wishes became options!

An innocent trader after a streak of losses went to a place of worship and started complaining to God.

"O My Greatest Grandpaa!

Your world is so full of injustice.

Even stock trading is not fair!

I have three complaints.

1. You created 'futures' but kept the margin so high that we small but talented traders can't even think of participating!

2. You showed us unlimited profit opportunities in 'futures' but also created the dungeons of unlimited losses!

3. You should have permitted only the downtrodden and exploited people like me to trade big in stock market to take the sweet revenge from the haughty rich, but you have done the exact opposite! You have made it easier for them and difficult for us!"

The God appeared and said

"My Dear not-so-innocent son,

Thank you for your feedback.

Though I don't agree with you but since you are my favourite son I will help you.

But since others are also my sons, I will not grant you wishes

I, hereby, grant you "options"! "

So, that day the God created a committee

that created "Options"

wherein

The small "innocent" trader was allowed three benefits

1) he was allowed to trade big with less money

2) he was allowed access to unlimited (?) profit but limited (?) loss

3) Options were made complicated so to make it difficult for the haughty rich to understand it.

The first was exploited. The "innocent" trader started gambling!

The second turned out to be a trap!!

The third one turned out to be the other way round!!!

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