Everyone seems convinced that there are none, I guess I want someone to step up and prove otherwise.
Are There Any Successful Option Buyers ?
- Thread starter Fundlord
- Start date
Everyone seems convinced that there are none, I guess I want someone to step up and prove otherwise.
Can ITM's appreciate the way OTM's do ?
You can risk X to return 4x with an OTM something you can't really do while buying the underlying. Those are the types of trades I am looking for otherwise I can just trade the underlying.
However, traders of the underlying don't usually have a 100% loss on their individual positions. Net long options positions like you are talking about are frequently a 100% loss.
Your question, "are there any successful option buyers?" The answer is of course yes. There's also some lottery winners, but does that mean it's because playing the lottery can be done "correctly?" No of course not.
Anybody who has made money solely from buying options is just lucky. There's no math or probabilities to support a long-term strategy, but of course some people do get lucky so it happens from time to time.
The thing is though, these people always fall victim to self attribution bias, meaning they always think they made money because of their own skill. They are never willing to admit that it was pure luck, which is why they usually end up giving it back, and then some...
So no, there are no long only strategies with a long-term positive expectancy. But that doesn't mean you can't make a wack of money trading long only options
If someone sits on their hands and takes a 100% loss on their long option position, that person is not a trader. They are an idiot.
You don't understand R:R.
I buyer of options will consider the risk to be the stop and adjust size to their risk tolerance. The Reward for long options is much higher than the Risk.
Exactly...It's possible to have a major loss playing weeklies, holding overnight and anticipating a gap in one's favor that doesn't materialize...but again that has to be anticipated...
One advantage of options over outrights is the ability to dynamically manage multiple contracts with varying profit targets that many under capitalized futures traders are unable to do with 1 contract...