tasty Extras

Stock or Options | Existence of Edge

tasty Extras

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

In this latest episode of our multi-part compare and contrast series between stocks and options, we take a look at the ‘edge’ that might exist with these two products. When it comes to stock, proponents of technical analysis believe an edge exists inside of a stock’s chart, and proponents of fundamental analysis believe an edge exists inside of a company’s financial health. Given market randomness, we believe that there is no edge to be gleaned with pure stock. However, with the market’s natural tendency to produce actual moves that underwhelm expected moves, there does exist an edge to selling OTM options.

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