In order to understand the financial crisis, I started reading on the topics about investment. I want to know how those crooks on wall street can wasted all those moneys in one night.
Options, leverages, etc they all seem to be so convoluted. From what I understand, options are simply gambling on stocks. Just like the gambling on sports. Only difference is that there is no one hosting the gambling. I want to sell a call to make a little extra money in case the stock going down, but in the meantime give someone the right to sell my stock in case it shoots high. I don't understand why someone can be so shortsighted.
Synthetic call makes more sense. Buy the stock, then buy a put. Put a upper limit on lost. Just like a insurance.