The important distinction between gambling and options is that there are many additional information sources available to bias the outcome.
Options are a Bayesian game. Jane Street is much more likely to win than I am, but there are still rare cases where I could come out ahead with very high certainty (I know something they don't).
Card counting and being escorted out of the casino aside, there aren't any ways to acquire private information in a gambling context.
On a per transaction level, for every dollar someone makes on a put/call option, the other person has to lose equivalent. Even more when you factor in exchange fees
Hedging is just an additional transaction that limits the damage if the bet doesn't pay off. You can do the same thing in gambling.
The important distinction between gambling and options is that there are many additional information sources available to bias the outcome.
Options are a Bayesian game. Jane Street is much more likely to win than I am, but there are still rare cases where I could come out ahead with very high certainty (I know something they don't).
Card counting and being escorted out of the casino aside, there aren't any ways to acquire private information in a gambling context.
Why? Both sides could use hedging, both sides could derive economic benefits, etc.
On a per transaction level, for every dollar someone makes on a put/call option, the other person has to lose equivalent. Even more when you factor in exchange fees
Hedging is just an additional transaction that limits the damage if the bet doesn't pay off. You can do the same thing in gambling.