Trading with a Casino’s Edge
Active investing isn’t gambling for traders who know the odds
When someone’s interested in options trading but doesn’t know quite how to approach it, ask a question that provides context just about everyone understands. “Who makes more money, the casino or the gambler?” They always get the answer right.
Casinos make more money than the players. Even though a skilled blackjack player who counts cards might make money over time, those winnings are dwarfed by the profits of a casino.
Why? Casinos are probability-based businesses. They determine game payouts by calculating the probability of a gambler winning and then paying out smaller amounts to winning gamblers than they theoretically should.
The difference between what...
