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Playing & Trading Strategy

Traders could make too much money too fast - or lose it

Posted by: OriginalFund on Dec 01, 22:44 in response to jtempkin's post Why are the derivative limits so low?

Derivatives are much more volatile than stocks or bonds. Say a movie is an unexpected hit, and opens at H$10 above the strike price, so the call cashes out at H$10. Everyone who bought at the IPO price makes 5x their initial investment, in just a week and a half. Or they could lose an insane amount, if they shorted it. That makes the market that much more volatile. And it's already plenty volatile.





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