Author Topic: What shorting adds to the economy?  (Read 804 times)

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Offline tonyk

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What shorting adds to the economy?
« on: June 25, 2014, 03:13:21 pm »
[Admins Feel free to move appropriate sub forum]

Maybe I will answer this question (short version)

Some market simply cannot exist without one side being short and the other being long.

Examples include futures, options, bitAssets on BTS X.

Those markets provide valuable products:

-BTS X with its bitUSD will provide the advantages of the crypto currencies with the price stability of the dollar.

-Futures – One Important segment of the economy (the one that feed is all literally) - the farmers, also struggle with big movements in the price of their product. Even worst, all of their product comes at the same time. We have all the supply in one month and the demand spread throughout the year. Guess what will happens with the price when for example all the corns come to the market at the same time. Future allow the farmers to fix and hedge their price at a (profitable) chosen by them level and secure that they will get no more no less than that price. They achieve that by going short the required number of futures contract equal to the amount of product they expect to produce.
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.