Options Trading: The House Always Wins
Options Trading and Casino Gambling have a lot more in common than you think
If you're thinking about trading options, you might have heard that there are lots of ways to make money. This is true! There are lots of ways to lose money too, however—and many of them involve buying call options. We're not saying that call options are bad investments; in fact, if you know what you're doing and don't trade with any emotion whatsoever (which is impossible), then they can be a great way to earn profits from stocks without owning any shares at all.
But if you don't know what you're doing or get emotional about things like me losing money on something I thought was going to be free money? Then no matter how much money they tell you they'll give back later on down the line when it's not actually free anymore...
They will still end up taking advantage of your ignorance because that's what people do in this world: take advantage of other people whenever possible because it makes them feel better about themselves.
The house always wins
If you've ever played the game of poker, then you know what it's like to play against the house. The house always wins because they're the ones who set the rules and odds—and they always win, too. It's frustrating as a player when that happens, but it also makes sense that this would be how things work in most scenarios.
In fact, if you think about it for a moment, there's really no other way for things to go down in life: if everyone had equal odds at all times and everyone played by just one set of rules (even if those rules were completely fair), then eventually one person would dominate everything else and win every time!
The same thing goes for options trading; if anyone could trade at any time with any stock on any exchange using any strategy—and if everyone only had an equal chance at success—then over time only one person would become successful while all others fail miserably!
Fortunately though this isn't how things actually work; instead we have expiry dates on contracts as well as brokers who do their best to make sure trades are fairly matched up so that players don't get ripped off by other traders or markets themselves!
Why do you need to lose money if everyone is buying call options?
Most people don't realize that selling call options is a risky business. Let's say you decide to buy a call option on IBM stock for $0.25, betting that the price will go up before the expiration date of the contract—in this case, March 21st. You buy the option at 10:00 am (Eastern time).
An hour later, you notice that IBM stock has gone up by 5%. You're feeling pretty good about your decision now! But if you look at your brokerage account again and see that your broker has sold 20 of these calls in order to hedge their own bet against any losses they might incur when buying them back from you later—and because they think IBM stock won't go down during those six months after all—they may have lost money overall despite having made some profit from selling those options.
So what does this mean? It means that brokers can lose money on trades even when their customers win big!
The brokerage firms are shorting this stock
If you’re planning on buying options, keep in mind that the brokerage firm is betting against you. They are shorting (i.e., selling) shares of stock in order to pay for your purchase and make a profit when the stock goes down. For example, let’s say that XYZ stock is trading at 75 dollars per share and it has an option contract with a strike price of 80 dollars expiring next week.
You decide that XYZ is going to rise over 80 dollars before the contract expires so you buy one option contract (which controls 100 shares). This means that if your bet pays off, you will make $500 on each share or $5,000 total ($5 per share x 100 shares = 500). The brokerage firm gets paid 2% commission by selling you this option and makes sure they have enough cash on hand by shorting 1% of the shares themselves so that their risk equals zero but their potential return is infinite if their prediction comes true because they win regardless if XYZ goes up or down when expiration occurs next week!
Options trading is one of the most profitable business models out there
One of the most profitable business models out there is to pay clients to take on risk. The brokerage makes money off of the spread, which is the difference between what they pay you for a call option and what they sell it for. That sounds like a ripoff, but it's not! You can make money too if you're smart about your trades.
The reason why this type of transaction seems like such an unfair deal at first glance is because we're conditioned by movies and TV shows to assume that betting against an investment is bad news—and we're right! But when it comes down to options trading, being on both ends of the deal can work wonders for your portfolio.
The brokerages have figured out how to game the system
The brokerages are using their own money to short the stock.
This means that when you buy a call option, you are betting on the price of the underlying security going up. The brokerage will be betting that it does not go up and is therefore long on the security. They make money by buying low and selling high just like any other investor would do—but they want to make sure they profit even if an investor loses on his or her bet!
The brokerage has figured out how to game the system so that they always win in this scenario. In order to ensure they always win, they have set up trading systems that automatically sell short stocks when an investor buys a call option or buy puts at random times throughout each day (though there will be more activity around open).
How do they convince people to buy call options?
They use social media.
They use celebrities.
They use celebrities to sell you on the idea that you can make money quickly and easily through options trading,
They don't tell you how likely it is that they will lose their money if they buy an option contract.
They don't care about you and your money
The first thing to understand is that the brokerage industry wants you to make money, not lose it. They care about your money because it means more business for them and more revenue for their company. They are not interested in your retirement or whether or not you can pay for food during a month when you’re out of work.
If you're looking for help with your finances, don't go to a stockbroker. Instead, find an unbiased financial advisor who will give you sound advice without trying to sell anything at all.
They tell you this is free money
They tell you this is free money. The brokerage firm will make money, and you get to keep all of your returns.
The truth is that the brokerage firm will make money at your expense.
They have an edge in the market that lets them always make money, and they are not on your side.
They act like they are on your side
In this example, the broker is acting like he is on your side. The broker wants you to believe that he cares about your financial goals and will help you accomplish them. But really, he is only looking out for his own interests: making money by selling unneeded products (i.e., the strategy or signal) in order to earn commissions or kickbacks.
This is how brokers are able to sell their strategies so easily: they tell you it’s all about making money while never mentioning anything about risk management or downside protection! They want their clients focused solely on potential profits rather than potential losses because losses don't make any money for them—only gains do!
Be careful when buying call options and never trust Robinhood or any other brokerage firm
Call options are risky. You could lose a lot of money in the short term. Brokerages are not on your side and are selling you something that is good for them. They make money by selling you call options, which is basically gambling with your money.
The Robinhood App is not actually free to use, so don't listen to them when they say it's free! They will make a profit off of you by selling you things that aren't good for your investment strategy, but good for their company profits instead!
Options trading is a great way to make some money, but it’s not a get rich quick scheme. You need to do your research and be prepared for the ups and downs of this volatile market. You can get our course 100% free today as well where we teach you the ins and outs in depth.