InvestorQ : Is trading in call and put options a zero sum game?
Siya Saran made post

Is trading in call and put options a zero sum game?

Answer
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krithika Saxena answered.
2 years ago


In case of equities and futures, they are symmetrical products but the trade becomes asymmetrical because of the different investment needs of the two parties. In case of options, the product itself is asymmetrical by default. Here is why! When a trader buys an option, the loss is limited to the premium paid while the profits are unlimited. On the contrary, the trader who sells the same option has an upside limited to the extent of premium but downside risks are unlimited. Since the option, by default, is an asymmetric product it is never a zero sum game in case of options.