Are Derivatives Dangerous? A Literature Survey

Capelle-Blancard, Gunther

doi:10.1016/s2110-7017(13)60014-1

Cited by 15 publications

(1 citation statement)

References 71 publications

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“…For example, a wheat farmer can use a future on the price of wheat to guarantee a given income from their end-of-year harvest. However, if traded separately from their underlying financial asset (i.e., without the purpose of hedging), these products can also be used speculatively as risky bets with small chances of winning large amounts of money [67]. Options can be used to magnify the wins from a stock's price increase compared to the gain from buying the stock, or can even be used to profit from a fall in the price (i.e.," short selling"), such as by "buying a put option" [68].…”

Section: Why Investing In High-risk Derivatives Is a Losing Strategymentioning

confidence: 99%

The Gamblification of Investing: How a New Generation of Investors Is Being Born to Lose

Newall

Weiss‐Cohen

2022

IJERPH

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Investing and gambling share key features, in that both involve risk the coming together of two or more people, and both are voluntary activities. However, investing is generally a much better way than gambling for the average person to make long-run profits. This paper reviews evidence on two types of “gamblified” investment products where this advantage does not hold for investing: high-frequency stock trading and high-risk derivatives. This review defines a gamblified investment product as one that leads most investors to lose, that attracts people at risk of experiencing gambling-related harm, and that utilizes product design principles from gambling (either by encouraging a high frequency of use or by providing the allure of big lottery-like wins). The gamblification of investing produces novel challenges for the regulation of both financial markets and gambling.

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Section: Why Investing In High-risk Derivatives Is a Losing Strategymentioning

confidence: 99%

The Gamblification of Investing: How a New Generation of Investors Is Being Born to Lose

Newall

Weiss‐Cohen

2022

IJERPH

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Why the Subprime Financial Crash Should Have Been Prevented and Implications for Current Macroeconomic and Regulatory Policy

McCombie

Spreafico

2019

Frontiers of Heterodox Macroeconomics

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How using derivatives affects bank stability in emerging countries? Evidence from the recent financial crisis

Keffala

2015

Research in International Business and Finance

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Are Derivatives Dangerous? A Literature Survey

Abstract: strengthening internal control, putting clearinghouses into general use and limiting nakedtransactions seem to be the most promising avenues.

Cited by 15 publications

References 71 publications

The Gamblification of Investing: How a New Generation of Investors Is Being Born to Lose

The Gamblification of Investing: How a New Generation of Investors Is Being Born to Lose

Why the Subprime Financial Crash Should Have Been Prevented and Implications for Current Macroeconomic and Regulatory Policy

How using derivatives affects bank stability in emerging countries? Evidence from the recent financial crisis

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