Are options a waste of time and money? (pun intended)

[Jack1960]

If you are serious about making money, first trade the underlying stocks or futures successfully. Then add options. If you do not know how to trade the underlying successfully, you will likely lose money in options.

 

[FTDK]

That's easy.
@destriero

It seems like Dest isn't active here anymore.
This was his last post from June 3rd.

This is how I account for it. $424K day.

Retiring due to life events. GL to all.

 

[taowave]

101 percent agree if long gamma..

Short vol,not as much,and I am simplifying..

With that said,you are spot on regarding the directional component..But easier said than done

If you are serious about making money, first trade the underlying stocks or futures successfully. Then add options. If you do not know how to trade the underlying successfully, you will likely lose money in options.

 

[Sergio123]

Here is a pointer: I never allow my long options to expire to $0. From experience, that is the #1 killer. I simply roll it and then sell against it for a credit.

Eventually you should be able to make profits through collecting cash flows all the way into perpetuity. You also need to manage your liquidity and risk and your deltas and gamma to give you a directional and volatility bias.

But allowing long contracts to expire worthless is a cardinal sin in my book.

But if you started by simply using a delta/gamma neutral strategy and adjusted along the way then you will eventually be profitable.

 

[taowave]

Does not compute

Long the 6 month ATM call,goes against you,I'm assuming you roll out and quite pissibly up?

Then you turn a naked long into a vert/ ratio??

P.s. I see you edited

Here is a pointer: I never allow my long options to expire to $0. From experience, that is the #1 killer. I simply roll it and then sell against it for a credit.

Eventually you should be able to make profits through collecting cash flows all the way into perpetuity. You also need to manage your liquidity and risk and your deltas and gamma to give you a directional and volatility bias.

But allowing long contracts to expire worthless is a cardinal sin in my book.

 

[ironchef]

Here is a pointer: I never allow my long options to expire to $0. From experience, that is the #1 killer. I simply roll it and then sell against it for a credit.

Eventually you should be able to make profits through collecting cash flows all the way into perpetuity. You also need to manage your liquidity and risk and your deltas and gamma to give you a directional and volatility bias.

But allowing long contracts to expire worthless is a cardinal sin in my book.

But if you started by simply using a delta/gamma neutral strategy and adjusted along the way then you will eventually be profitable.

Been there done that back in 2013 when I first started trading options. Maybe I didn't do it right, but the bottom line is it didn't beat buy and hold the underlying.

 

[Sergio123]

Does not compute

Long the 6 month ATM call,goes against you,I'm assuming you roll out and quite pissibly up?

Then you turn a naked long into a vert/ ratio??

P.s. I see you edited

You have to trade in the context of your overall position and what you are trying to accomplish as well as the purpose of each contract. How did it go against you: Theta decay? Price fell? Volatility crush?

If I am bullish then I am short puts to expense the long calls and if I am bearish then and I am short calls to fund the long puts.

I don't do simple long calls(or puts) as my only position.

You can use these like shares (its called synthetics). If you are correct then your short premium expires to $0. You could profit without paying any money down or even receive an upfront credit.

 

[Sergio123]

Been there done that back in 2013 when I first started trading options. Maybe I didn't do it right, but the bottom line is it didn't beat buy and hold the underlying.

If you don't want to manage all of these contracts on a daily basis (and I don't fault anyone who doesn't want to) then a buy and hold of shares will be better, IMO.

 

[maxinger]

Not that hard at all if you don't take away your best weapon...TIME. Probably 99% or all trades that have ever been closed at a loss could have later been closed at a profit. With futures you are faced with carry over fees, interest with forex etc. Options you have an expiry and time decay. I doubt even 10% of options traders actually make more money than a regular minimum wage job trading purely options. I would go so far to say that less than 1% of traders can eek out a living purely on options. Bottom line if you don't have enough capital to manipulate price action to your favor (market makers) then you are along for the ride. This is fine if you are buying stocks with cash, you just wait it out, or even average down, but if you are on margin, or playing options then you are an easy target.

Rule number one of trading. "Know who you are trading against".

So again I am waiting. Prove me wrong.

I already proved you are correct.

STOP WAITING!!!
Give up trading !!!!!

 

[El OchoCinco]

Didn't take long for the house "pro" to make an appearance. You are missing my point entirely because you were so eager to pounce. We all understand this...my reasoning is that option strategies are a fools errand.

To use your analogy against you. Options are like getting all the tools needed to build a house, but then the prices of materials sky rocket and you lose, or you run out of time on your permits so you lose, or housing prices plummet so you lose...oh but 3/10 times things work out ok so you recover some of your losses.



Unless you have read this and understand it cover to cover then I would be pretty comfortable in assuming I understand more about options than you do. Also, you prove my entire point because if you are not using options as a tool to compliment the underlying then it is a fools errand. IE the stock repair strategy is a good example of using options and the underylying in tandem.

So again, prove me wrong.



As an EW trader one does have an edge of statistically getting directional bias correct in the time frame of the option, but even then the pricing makes it more than likely you will end up at break even or slightly better most of the time because of the premium you pay. Basically the problem with options is having to over come the premium.

I dont get your point.....options are an investment tool, they dont make money on their own. If you have no undersanding of how options move and cannot analyze the underlying correctly theny you will constantly lose money. The premium is simply the cost of the strategy but who cares if you buy an option at $1.20 and sell it at $3.00 and make money.

If you run out of time then you chose incorrectly..

It is a poor trader who blames the tool when they dont know how to use it.

Also to say something fucktarded like you need to use the underlying... no shit sherock.... google what a derivative is haha