Why you do not sell them then? There is a reason they call them wings. If there is wind, they can make you fly.
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- Thread starter tradingjournals
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Why you do not sell them then? There is a reason they call them wings. If there is wind, they can make you fly.
Well, you can win in Vegas too. it doesn't make any less gambling.Why you do not sell them then? There is a reason they call them wings. If there is wind, they can make you fly.
I like to trade solid options strategies that can make me money consistently with low risk. Not looking for homeruns, but 15-20% steady and consistent gains. I'm talking about trades where you can allocate 10-12% of your portfolio per trade and still risk only 2-3% of the total account.
Not saying you cannot gamble with maybe 1% of the portfolio. Just don't call it trading.
Well, you can win in Vegas too. it doesn't make any less gambling.
I like to trade solid options strategies that can make me money consistently with low risk. Not looking for homeruns, but 15-20% steady and consistent gains. I'm talking about trades where you can allocate 10-12% of your portfolio per trade and still risk only 2-3% of the total account.
Not saying you cannot gamble with maybe 1% of the portfolio. Just don't call it trading.
Please do not put words in my mouth. I never wrote that one should or should not trade those options, but the fact that very high returns on options exist can be proved by looking at the % returns on the option chains on expiration day. Since those returns exist, someone must pay for them.
And how could one profit off this fact that options sometime increase 54x? This is useless without any strategy, which I think we all know there is none......because you have to account for all the times you buy those 0.02 options and make nothing. Which would probably happen around 54 times, if not more, so your total gain is zero.
I never understood people pointing to single occurances to "prove" their case. Such methodology has terrible sample size and selection bias. Yes we can all point to those people making millions in the market, however if you look at 10-20 year scale, what would those continous bets cost them over time before they finally hit that jackpot?
But overally it's proven time and time again that those who sell lottery tickets tend to be profitable and those who buy them tend to lose over time. This is true not only in financial mkts...long shot odds tend to be overpriced everywhere. For instance I read somewhere that London bookmakers offer 'only' 250-1 odds a perpetual motion machine will not be discovered....there's probably some simple human psychology behind it all. Humans have problems rationally pricing lots of stuff (behavioral economics), including the uttermost "extremes" on the risk curve..
I never understood people pointing to single occurances to "prove" their case. Such methodology has terrible sample size and selection bias. Yes we can all point to those people making millions in the market, however if you look at 10-20 year scale, what would those continous bets cost them over time before they finally hit that jackpot?
But overally it's proven time and time again that those who sell lottery tickets tend to be profitable and those who buy them tend to lose over time. This is true not only in financial mkts...long shot odds tend to be overpriced everywhere. For instance I read somewhere that London bookmakers offer 'only' 250-1 odds a perpetual motion machine will not be discovered....there's probably some simple human psychology behind it all. Humans have problems rationally pricing lots of stuff (behavioral economics), including the uttermost "extremes" on the risk curve..
Please do not put words in my mouth. I never wrote that one should or should not trade those options, but the fact that very high returns on options exist can be proved by looking at the % returns on the option chains on expiration day. Since those returns exist, someone must pay for them.
Of course they exist.. theoretically. The real questions you need to ask yourself:
1. How often do you hit those 1,000% returns?
2. How many times those cheap options lose 100%?
3. When you buy those 0.10 options and they start rising, how do you know when to take profits? Is it at 0.50? Or 1.00? What if it increased to 0.50 and then pulled back to zero?
Reminds me one of the options trading services that report gains based on "The highest price the option achieves is recorded as the result since this was historically what the option price reached." No wonder they can report 100-300% gains.. People see those returns and think it can be done on consistent basis.
As far as these options are concerned, the rule is that, in the overwhelming majority of cases, if you pay peanuts, you get monkeys.
Today, the 86-strike qqq put went from $0.04 to $1.25 in one trading session. RR was 31.
Today, the 86-strike qqq put went from $0.04 to $1.25 in one trading session. RR was 31.
Did you buy at 0.04 and sell at 1.25?
Bought some AAPL April 25 522.5 puts for $5/each and I'll see what happens if AAPL breaks lower. Obvioulsy if AAPL stay up or trends higher, these will expire worthless.
Last trade at $5 and bid/ask $3/$4.