Buying options for a living

[chyldom]

Hello, I know there are few traders, who are just buying calls and puts.

I think with selling there is too much risk, you could win 8 times from 10 but that 2 trades will delete your winners. I am sure there are successful traders but this thread is only about buying.

So for buyers, what expiration are you trading, what works for you the best?

How you work with time decay?

What other thinks are you looking for?

What about volatility?

Are you trading stocks which you know?

If you can share your experience, your discoveries it would be great.


I am sure that you need to use technical analysis to decide if you will be call or put or some fundamentals.

Thank you, Dominik

 

[Robert Morse]

Buying options is a stock replacement strategy and we can’t answer any of those questions for you as we do not know any of the assumptions you have made about the stock you have targeted. You’re asking for a simple easy answer, and options are not simple or easy.

 

[qxr1011]

Hello, I know there are few traders, who are just buying calls and puts.

i doubt a lot that they do that for living using their own money

 

[lindq]

If you can share your experience, your discoveries it would be great.
Thank you, Dominik

Because options are derivative of an underlying instrument, you should first be successful in trading the underlying. What happens with the underlying will impact the movement and timing of the option, and often in ways you may not expect. You'll also need to face additional costs of options spreads and commissions, which can be considerable.

 

[beerntrading]

Because options are derivative of an underlying instrument, you should first be successful in trading the underlying. What happens with the underlying will impact the movement and timing of the option, and often in ways you may not expect. You'll also need to face additional costs of options spreads and commissions, which can be considerable.

Not true. Especially if you're small, you can take your liquidity advantage and the disproportionate payoff for long options to make it profitable with relative ease even if you're coin-flip directional on the underlying. The "costs" of BxA spreads on options can actually be payments to you, and I pay less in commission to trade an option position of equal delta to the outright shares. Not that your advice wouldn't be functionally true for most.

So for buyers, what expiration are you trading, what works for you the best?

Whichever best matches with my expectations for a move in the underlying (plus a little room to fudge if I'm mostly right, but not totally).

How you work with time decay?

More, not less...unless I'm looking too far out; then less, not more.

Are you trading stocks which you know?

Sometimes, but not necessarily.

I think with selling there is too much risk, you could win 8 times from 10 but that 2 trades will delete your winners. I am sure there are successful traders but this thread is only about buying.

There's no difference in long-term expectancy. Only going long is forcing trades, because the market will not always favor long positions (and special note for right now, the last 8 months has been phenomenally profitable to long option holders...and would have beaten down writers). But whenever you call it too risky because 2 of 10 will wipe out the other 8, there's someone on the other side of your trade who thinks it's too easy because the 8 in 10 won't be overcome by the 2.

 

[FibonacciNinja]

?

You should be asking yourself all these questions. You already have opinions about selling. Create your own for the rest of your list.

That way your questions won't be super vague like "what about volatility?", you would say "I'm looking to buy XYZ for T days out at this strike because [reasons]. What do you guys think? Is that month better than this? My backtesting shows this" etc. Imagine how much more helpful our answers would be if you did homework!

The people who would answer your questions might be viewing the market differently than you/have a completely different risk mindset. What happens when someone gives you their buying criteria and then when you analyze it, you find out it's mirroring your 8-10 selling nightmare?

 

[chyldom]

You should be asking yourself all these questions. You already have opinions about selling. Create your own for the rest of your list.

That way your questions won't be super vague like "what about volatility?", you would say "I'm looking to buy XYZ for T days out at this strike because [reasons]. What do you guys think? Is that month better than this? My backtesting shows this" etc. Imagine how much more helpful our answers would be if you did homework!

The people who would answer your questions might be viewing the market differently than you/have a completely different risk mindset. What happens when someone gives you their buying criteria and then when you analyze it, you find out it's mirroring your 8-10 selling nightmare?

I am not going to buy anything cause I am still learning.

I am trying to get as many opinions as I can from traders who have more experience and been traders for few years.

Also If my opinion on selling options is wrong, tell me please your opinion or how should I limit my loss or hedge my trades which are going to be a possible loss and avoid deleting my profits.

I can not afford big account so I can do only credit, debit spreads, iron condors or just buying.

Thanks

 

[chyldom]

Not true. Especially if you're small, you can take your liquidity advantage and the disproportionate payoff for long options to make it profitable with relative ease even if you're coin-flip directional on the underlying. The "costs" of BxA spreads on options can actually be payments to you, and I pay less in commission to trade an option position of equal delta to the outright shares. Not that your advice wouldn't be functionally true for most.


Whichever best matches with my expectations for a move in the underlying (plus a little room to fudge if I'm mostly right, but not totally).


More, not less...unless I'm looking too far out; then less, not more.


Sometimes, but not necessarily.


There's no difference in long-term expectancy. Only going long is forcing trades, because the market will not always favor long positions (and special note for right now, the last 8 months has been phenomenally profitable to long option holders...and would have beaten down writers). But whenever you call it too risky because 2 of 10 will wipe out the other 8, there's someone on the other side of your trade who thinks it's too easy because the 8 in 10 won't be overcome by the 2.

Could you please explain me more about a fudge? Sorry I dont really understand I am from Czech Republic.

Also could you explain me more about how you work with expiration time? I am beginner.

Thank you

 

[beerntrading]

Could you please explain me more about a fudge? Sorry I dont really understand I am from Czech Republic.

Also could you explain me more about how you work with expiration time? I am beginner.

Thank you

If you're mostly right, but a little wrong, having a little more time on the option will give you more opportunities to exit for less loss / more profit.

 

[MarkBrown]

if you buy options only the seller will be making a living .... and living well i might add.