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

[El OchoCinco]

I just had to come back to this. Why are you so antagonistic? All I did was say I was analyzing some options strategies that to me didn't look like they would be profitable even if I was correct directionally. It's like you treat this forum as your own personal sandbox and feel you have earned authority by your post count lol. Trust me I wouldn't trade my knowledge or my account size with you.

The more productive response would have been to ask for an example of one of the positions so we could dissect it.

Nobody wants your knowledge or account size, this is not a swinging dick contest...

But those of us that have been here for years have seen plenty of these "Options suck" posts from people who don't know how to use them. Ask any one here who has been here for years and participates in options discussions....

It is the same thing again... my post count us useless, you should stop being distracted by it,,, been here since 2005 so my post count should be quite high by now...so are a lot of long timers...I am probably not even in the top 10%

 

[El OchoCinco]

That's the point. It IS a rabbit hole if you are not using them as intended originally to compliment a stock position. I am still waiting to be proven otherwise.

Prove to us why we need to prove to you anything.... our bank accounts don't need your pat on the back...

Most of the experienced option traders here simply trade the options or futures and don't touch the stock except in rare cases to delta hedge.

There are investors who only do covered calls or protective puts but many of us use the options in calendars or butterflys to trade vols for example... no stock ownership needed. I will add options to stock positions but it is cheaper to trade the options then load up on stocks. Also stocks are binary....up or down. Options are chess while stocks are playing tic tac toe.

Also the fact that you cite Larry McMillian's book as the bible says a lot too... his books are for people who want a basic understanding of options. I would have given you more credit if you cited a book by Natenberg, Cottle or even Sinclair which focus on vols.

 

[taowave]

Risk reversal/collar,a bit of initial skew risk, probably flat vega to start,flat theta..

Still don't get your infinite roll scenario,and have a hard time believing that strategy outperforms the underlying except in a down market..

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.

 

[wxytrader]

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.

Exactly...you end up paying to keep a position alive that you could have just waited out for free with the underlying.

 

[wxytrader]

Nobody wants your knowledge or account size, this is not a swinging dick contest...

But those of us that have been here for years have seen plenty of these "Options suck" posts from people who don't know how to use them. Ask any one here who has been here for years and participates in options discussions....

It is the same thing again... my post count us useless, you should stop being distracted by it,,, been here since 2005 so my post count should be quite high by now...so are a lot of long timers...I am probably not even in the top 10%

I didn't say options suck, there is a function for them but earning a consistent income with only option strategies is more work than just holding the stock.

 

[wxytrader]

Prove to us why we need to prove to you anything.... our bank accounts don't need your pat on the back...

Most of the experienced option traders here simply trade the options or futures and don't touch the stock except in rare cases to delta hedge.

There are investors who only do covered calls or protective puts but many of us use the options in calendars or butterflys to trade vols for example... no stock ownership needed. I will add options to stock positions but it is cheaper to trade the options then load up on stocks. Also stocks are binary....up or down. Options are chess while stocks are playing tic tac toe.

Also the fact that you cite Larry McMillian's book as the bible says a lot too... his books are for people who want a basic understanding of options. I would have given you more credit if you cited a book by Natenberg, Cottle or even Sinclair which focus on vols.

I find it highly unlikely that any of you are making consistent profits especially trading vols.

 

[wxytrader]

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.

Yeah good luck when the market rips you a new one while holding a naked call.

 

[taowave]

LOL@ "Especially trading vols"..

I find it highly unlikely that any of you are making consistent profits especially trading vols.

 

[Sergio123]

Still don't get your infinite roll scenario,and have a hard time believing that strategy outperforms the underlying except in a down market..

You would need to time the selling of the underlying before the down market, otherwise you could have held on to all of that risk without any profits to show for it. If you at least keep rolling covered calls while holding the underlying then you at least made cash flows along the way while holding and not have to worry about timing the selling of the underlying.

What is it that you don't understand about rolling to perpetuity?

I don't ever sell shares unless they have been taken via covered calls or I need to exercise a long put. Both of these scenarios are very rare. I usually try to roll out and extend the trade either bearish, bullish, or neutral. It has to be one of the three.

 

[Sergio123]

Yeah good luck when the market rips you a new one while holding a naked call.

It's usually done with a defined risk call credit spread. The market could also rip 'you a new one' while you are short the shares in the underlying. Without long calls you theoretically have infinite risk.