[Vintage Racer]

I didn't know there was a market for shorting options.

I thought a call option buyer paid a premium to the option writer. The buyer is betting that the stock (or commodity) was going to increase in value.

I also thought that a put option buyer paid a premium to buy a put on a stock (or commodity) from the writer. The buyer is betting the security will fall in value.

An option also involves leverage. A simple purchase of a 40-contract is a bet on 4,000 shares of stock. The writer can be covered if they own the shares or naked if they don't.

I've know a very few traders that make money by using straddles and spreads. I have never meet a person that had a vocation that wasn't trading options that ever made any money over a long period of time. After all, that person is competing in a zero sum game (for every winner there is a loser) with a professional that sits in front of a Bloomberg all day. That professional may be a quant expert with a degree from MIT. He probably has 12 computers calculating up to date information, and a staff with degrees from Wharton.

I also remember several years ago when a few mutual funds blew up trading options. I don't now know of a single mutual fund that does anything but use options occasionally (buying out-of-the-money protective puts on held stock positions). Anyone know of a pure option mutual fund?

The derivative trading business is profitable for the exchanges. I recently went long on NDAQ and NYX (they were down ~70% from their highs).