book --> get rich with options 4th edition

K

konviction

I've been reading this, and as a new trader of options, I find the author does a great job explaining things, and would recommend this book to others.

question though. I read, I think it was Elder, but he said that professional traders rarely trade options, while newbs flock to them by the boat loads. Is this true?

For you option traders, are options your 2nd form of trading income, and how often do you trade them?

Also I trade stocks, so does it make sense to trade options with every stock trade to boost gains? or should I just pick one or the other?

thanks

kon
 
Well if you identify an opportunity with a return where the payoff via options is much greater than it would be with the equivalent amount of risk in the underlying, buy it!

Thats the only rule that separates real trading the underlying with option trading.

As well, there are certain views you can have about the underlying that you cannot express without options - i.e volatility, binary events, etc....but in general, only buy options when the expected reward is a lot more than you could do via the underlying...

I'd say their are about 5-10 times more small underlying trades that can be made versus option trades... they are rarer because you have time decay working against you...
 
Quote from konviction:

Also I trade stocks, so does it make sense to trade options with every stock trade to boost gains? or should I just pick one or the other?
More...

Options were designed to control risk in the market. Stocks can't.
They can be a substitute for stock, but with more leverage.
They can be used to Hedge a position.
They offer greater Reward to Risk than stocks.
They can get you stocks at a lower cost.

A good options book would not mention Get Rich with Options.
A good options book would teach you the Risk you take.

Carl
 
Quote from konviction:

I've been reading this, and as a new trader of options, I find the author does a great job explaining things, and would recommend this book to others.

question though. I read, I think it was Elder, but he said that professional traders rarely trade options, while newbs flock to them by the boat loads. Is this true?

For you option traders, are options your 2nd form of trading income, and how often do you trade them?

Also I trade stocks, so does it make sense to trade options with every stock trade to boost gains? or should I just pick one or the other?

thanks

kon
More...

His "all-star" strategy is vertical spreads, but if you consider it carefully, vertical spreads have negative expectancy. All option strategies are well known to traders. A strategy, like a piece of chess, gives you no inherent advantage; when used appropriately, a pawn can checkmate your opponent just as a queen can.
 
Allexander Elder. Who better to write about the psychology of trading than a psychiatrist? :)

As others mentioned, options are far more versatile than stocks but they are also far more complicated. In return for the advantages, you also get time decay and a lower delta so essentially, you have to be more right.

After many years of trading options, I've come full circle. Outside of earnings plays and special events, I primarily trade stocks. That's what works for me. It's not right. It's not wrong. You have to trade what you feel comfortable with and what you succeed with.
 
Quote from Carl K:


A good options book would not mention Get Rich with Options.
A good options book would teach you the Risk you take.

Carl
More...

You are describing my book.
Thanks

Mark Wolfinger (better to give my name than the book title)
 
Quote from dagnyt:

You are describing my book.
Thanks

Mark Wolfinger (better to give my name than the book title)
More...
nice, I am reading your ETF book 'Create Your Own Hedge Fund', Mrs Taggart
 
Seems that credit spreads are one of the best pieces, if we wanted to use the chess analogy, because not only do you recieve the premium up-front, and risk is also capped (so is upside, but so what?) For this reason, spread-based trades could be used in any market condition, no?

thanks
kon
 
Quote from dagnyt:

You are describing my book.
Thanks

Mark Wolfinger (better to give my name than the book title)
More...

Well, I'll mention it: Options for Rookies. An excellent book for new options traders. Covers risk and how to think about options and does not make pie-in-the-sky promises.
 
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