When people don’t understand something, they tend to cast aspersions, and investing in options certainly fits that bill.
Options are incredibly misunderstood by both traders and non-traders so it makes sense that many people liken it to gambling with outcomes no different than sporting events.
The differences are so much easy to define.
As we know, investing responsibly means, you are taking an educated risk based on an analyzed process with an expected outcome.
Gambling refers to the act of randomly risking money on an outcome.
Gamblers have no idea what that outcome will be.
So put even more simply, investors can rightly “expect” to come out on top based on their analysis; while gamblers “hope” to win.
Despite this clear distinction, however, options are still treated by many as a form of gambling.
This could be in part because of a misunderstanding that options trading are anything like binary options trading.
Binary options are a form of investing that actually does closely resemble regular, chance-based gambling. That why it has been in the crosshairs of virtually every oversight organization.
Binary option trades are determined by outcomes that can easily be manipulated by trading firms.
Those binary options are dying out, and numerous firms either being shut down or subjected to strict regulations and penalties.
Most of my readers have never heard of binary options and they also know that options trading works very differently.
But it’s also important to understand if you’re just now entering the world of options trading, how and why it is nothing like gambling.
When trading options, it is our goal, to target consistent winners. We are essentially creating a diversified portfolio of strategies in order to generate income.
Traditional options trading is more about having a strategic outlook and playing different investments against one another to increase the likelihood of a net gain.
That’s not to say there are ever guarantees, nor that there is never risk.
Options trading is nothing like gambling specifically because with this type of investment you will do a great deal of strategic thinking.
— The Option Specialist