AExplain Why Futures Trading Is a Zero-Sum Game

question 53

Essay

a.Explain why futures trading is a zero-sum game.Are options also a zero-sum game? What about buying warrants?
b.Suppose you are long 100 shares of XYZ stock at 50 and you have written a December 50 call option against your long position.Do you want the stock price to go up or down tomorrow? Explain.
c.Answer part b if you have written a December 50 put option instead of the call option.

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Definitions:

Horizontal Analysis

A financial analysis technique that compares historical data or ratios across different periods to identify trends and growth.

Income Statement

A financial statement that shows a company's revenues, expenses, and net income over a specific period of time.

Sales

The total amount of revenue generated by a company from the sale of goods or services before any expenses are deducted.

Percent Change

A mathematical calculation that indicates the degree of change over time, expressed as a percentage.