For speculative trading, are there any real advantages to trading ETF's vs ETF options?

[FXbeachbum]

As a long time swing trader I trade only ETF's & stocks. The time decay, expiration, lack of liquidity, & high trading cost are why I never have, or never would use options - to many things working against me.

Options.. less risk? This study shows the risk in options was nearly two-fold higher compared to stocks. Derivatives transfer $ from the many to the few.

"The most comprehensive study looked at 68,000 Dutch retail investors. It found that from 2000 to 2006, retail options traders lost an average of 4.5 percent each month, while people who just traded stocks lost 1.6 percent.”

http://sjoptions.com/portfolios/option-traders-lose-money/

These are indeed some of the downfalls to options but on the most traded ETFs options should have enough liquidity until you start to get into multi leg strategies you’ll notice less liquidity.

As far as less risk, depends how you use them. I didn’t read the article but in studies I’ve seen the average option buyer uses OTM short term options because they’re cheap and holds them like an investment. That’s why they lose more. If someone were to fully understand them I feel it’s truly possible to use options to limit risk.

 

[Jakobsberg]

Nothing against options, in the right hands anyway - for the general mugs they just blow up faster. Options just won't work for momo/swing trading, I have to have no limits on my profits since a small # of my trades nets the bulk of my profits.

Now i use options now for swing trading indexes. Bit larger spread than futures but less cash at risk and also dont get whipsawed out of trade (dont need to watch as much if full time job). Can make unlimited profit profile if you want but yeah like most of this game all comes down to knowing what your doing and predicting the future........

 

[sss12]

Nothing against options, in the right hands anyway - for the general mugs they just blow up faster. Options just won't work for momo/swing trading, I have to have no limits on my profits since a small # of my trades nets the bulk of my profits.

actually..."if a small # of your trades nets bulk of profits" is the profile of your portfolio, a long gamma option portfolio may really help your returns.

 

[FXbeachbum]

I’d truly suggest OP to practice both at the same time on the same set up and exit and see witch nets OP better. Take a position in outright shares and an options contract out and see witch performs better.

 

[murray t turtle]

I'm mostly referencing ETF's because they protect on short trading against company buyouts/ a good amount of liquidity and volatility depending on the given ETF. So my question is, for speculative trading purposes, not investing, are there any real advantages to trading an ETF's option vs the underlying ETF itself if I had no desire to ever own it at expiration. nor write any naked contracts? Just referring specifically to 'buying to open' and 'selling to close' trades. Seems there are more disadvantages with time constraints/ decay. Would appreciate any insight others might offer thank you.

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One advantage of options, mr Bugsy,=lower cost. Thats why Mr Hunt+ many the TX wildcatters/big oil used /use them. Many ETFs pay a dividend even on a stock trade; which why i use ETFs more.Believe it or not leverage ETFs decay , but some pay a real, real small dividend...........................................................................................