if everyone's expecting a market crash and prepared for it (that means it should already be priced in), how can there still end up being a crash? seems counter intuitive.
Yes and no. If everyone who expects a crash has sold already, and there wasn't a crash yet, how could it trigger one?
The stock market has been found to behave completely randomly, even when taking into account all available information.
Yes, there was a crash at the beginning of COVID-19, and the market recovered disproportionately to the amount of pandemic-related destruction. There are also many really bad things that happened and did not cause crashes. And there are crashes that happen out of nowhere.
They say that esteemed economists have predicted 92 of the last 5 recessions.
Not everyone. The options markets are much thinner than the stock market as a whole; it takes fewer people to move them.
Also, it costs much less to buy an out-of-the-money option than the value of the option. You can buy cheap insurance against catastrophe, and not unwind your main position. This leaves you protected against a crash while still able to make money on the upside.
You know how risk is "priced in" right? It's an art, not a science. They buy/sell financial instruments to hedge that risk, like collateralized bonds or credit default swaps. Plenty of people lose big money when these bets don't work out.
I will respond to this by posting a shitpost from reddit. In reality the market can never be perfectly efficient or their would be no room for profit.
Don't even ask the question. The answer is yes, it's priced in. Think Amazon will beat the next earnings? That's already been priced in. You work at the drive thru for Mickey D's and found out that the burgers are made of human meat? Priced in. You think insiders don't already know that? The market is an all powerful, all encompassing being that knows the very inner workings of your subconscious before you were even born. Your very existence was priced in decades ago when the market was valuing Standard Oil's expected future earnings based on population growth that would lead to your birth, what age you would get a car, how many times you would drive your car every week, how many times you take the bus/train, etc. Anything you can think of has already been priced in, even the things you aren't thinking of. You have no original thoughts. Your consciousness is just an illusion, a product of the omniscent market. Free will is a myth. The market sees all, knows all and will be there from the beginning of time until the end of the universe (the market has already priced in the heat death of the universe). So please, before you make a post on wsb asking whether AAPL has priced in earpods 11 sales or whatever, know that it has already been priced in and don't ask such a dumb fucking question again.
