Thanks Carl
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
New options trader needs help.
- Thread starter sebastionay
- Start date
Quote from sebastionay:
Thanks for all the great advice guys Im glad I found this forum.
Ive just been reading options demystified by thomas mccafferty.
Seemed to be a good choice as there are questions at the end of each section.
What other good options books are there?
be very very slow about options. Options writers (sellers) tend to make some money and them blow up suddenly
Options buyers are purchasing a leaking balloon, hoping to make money.
If you have an edge, buying & holding options is a great way to give up that edge to time decay.
There is nothing inherently "better" about options, especially to someone newer to them. Time decay, the greeks, various strike prices, in/out of the money and other things make them more difficult to fathom.
If you want to trade, it is better just to trade the underlying instrument. If you want leverage, you can get that on stocks or futures. You have more liquidity and less other things complicating your trade.
If you plan to hold very short term (like a couple of hours), then not such a big deal. But it is better only to go into them when you have a LOT of knowledge and a lot more experience.
Unless you a verifiable, tested edge given by something within options themselves, it does not make much sense.
I had been wanting to learn more about options for a while as I noticed how it can give advantages in real estate, work and many other areas of business
To be honest most of my motivation is probably coming from the greed of wanting to earn a lot of money, to have a better standard of living some of you might want to burn me for that but I think its important to be honest with myself about that so that emotions don't build up and take over when watching trades.
And I do genuine enjoy trading and the strategy element behind it so Ill be learning about options either way I guess.
To be honest most of my motivation is probably coming from the greed of wanting to earn a lot of money, to have a better standard of living some of you might want to burn me for that but I think its important to be honest with myself about that so that emotions don't build up and take over when watching trades.
And I do genuine enjoy trading and the strategy element behind it so Ill be learning about options either way I guess.
Quote from TraderZones:
be very very slow about options. Options writers (sellers) tend to make some money and them blow up suddenly
Options buyers are purchasing a leaking balloon, hoping to make money.
If you have an edge, buying & holding options is a great way to give up that edge to time decay.
There is nothing inherently "better" about options, especially to someone newer to them. Time decay, the greeks, various strike prices, in/out of the money and other things make them more difficult to fathom.
If you want to trade, it is better just to trade the underlying instrument. If you want leverage, you can get that on stocks or futures. You have more liquidity and less other things complicating your trade.
If you plan to hold very short term (like a couple of hours), then not such a big deal. But it is better only to go into them when you have a LOT of knowledge and a lot more experience.
Unless you a verifiable, tested edge given by something within options themselves, it does not make much sense.
These are elements I have been thinking about a lot with forex although obviously its more important with options.
I suppose another question of mine though is are options better when you do know about them than other methods of investment.
I thought that people find more success in options vs forex even though they are predominantly used as insurance for other positions.
Am I wrong in thinking that? Ive noticed much talk of options manipulation in the forum so far.
Any recommendations for a free options demo platform?
Ive been rejected by some american ones because the ones ive tried to join only allow US residents or aliens living inside US.
Quote from JohnGreen:
If you see a book or website that promises returns like 10% every month, avoid it like the plague. Getting large returns involves taking large risks.
I would add here: Yes, but.
It is quite possible to make 10% per month with several types of trades. John is saying that such trades are always going to be very risky, and he is absolutely right about that. But, it is fine to participate in these types of trades, once you understand them thoroughly, with a very small portion of your portfolio. You'll need more cash than what you have described to do this. Five to ten percent of $1K is only $50-100. Can't do much with that.
I recommend:
-Options for Rookies by Mark Wolfinger
-Options as a Strategic Investment by Larry McMillan
-Following the markets you want to trade every single day, even if you are not currently in them
Quote from sebastionay:
These are elements I have been thinking about a lot with forex although obviously its more important with options.
I suppose another question of mine though is are options better when you do know about them than other methods of investment.
Forex are a terrible thing to trade for most at-home traders, especially those with only a few years expereince. They are very efficient and highly traded by large institutions. Sort of like stock index futures (DAX, Dow, Nikkei, etc.). I would caution you to stick to trading pure stocks or if you cannot get leverage that way, perhaps non-index futures.
I thought that people find more success in options vs forex even though they are predominantly used as insurance for other positions.
That has little to do with options, it is just that it is hard to make money in forex. There is a general belief that 95% of traders blow out, lose money, break even or make little in trading leveraged. I suspect forex and stock index instrument traders do far worse
These are elements I have been thinking about a lot with forex although obviously its more important with options.
I suppose another question of mine though is are options better when you do know about them than other methods of investment.
Forex are a terrible thing to trade for most at-home traders, especially those with only a few years expereince. They are very efficient and highly traded by large institutions. Sort of like stock index futures (DAX, Dow, Nikkei, etc.). I would caution you to stick to trading pure stocks or if you cannot get leverage that way, perhaps non-index futures.
I thought that people find more success in options vs forex even though they are predominantly used as insurance for other positions.
That has little to do with options, it is just that it is hard to make money in forex. There is a general belief that 95% of traders blow out, lose money, break even or make little in trading leveraged. I suspect forex and stock index instrument traders do far worse
Quote from sebastionay:
Thanks for clearing it up for me I just don't know enough about options yet.
That statement tells you everything you need to know for right now. Take the time to learn what you are doing with options. Do not trade with real money until you have a very good understanding of how options work and what they can do for you.
If you must get bearish, sell stock short.
So I would want to buy puts instead.
An invalid conclusion. There are other choices.
What kind of leverage can I get with options?
Once again, this is an inappropriate question. Leverage works when you know what you are doing. Leverage also increases risk substantially. is that your goal? High risk when you don't know what you are trading?
That is the path to ruin. That's not preaching. That's the truth.
From what I have read so far it seems that around 26% of options traders are profitable and I expect that a lot of the profitable ones have bearish inclinations.
An imaginary statistic. The vast majority of traders lose everything they invest. I'd wager that less than 10% of traders ever earn a dime.
In forex around 97% of the traders loose money according to a friend of mine that's a FX broker.
Forex is hardly the place to be learning about options. I'm not telling you what to trade, but quieter markets make it easier to learn.
So how can I apply the most leverage into these bear market moves with options?
That is a terrible question. It establishes you as a gambler. Gamblers have no edge, no advantage and thus, the super-vast majority go broke. You may get lucky, but you are making a huge error to seek maximum leverage when you don't have any idea how an option works.
There is more to being short than merely buying puts. And you have no clue how much to pay for puts or which puts to choose. Big mistake.
What brokerage will offer me the best deal for a deposit of around $1000 (UK resident)
You need far more money to trade than that. If you buy puts and don't get the market result you anticipate, your entire account (and then some) can be lost in a heartbeat.
Please be careful.
Mark
Quote from dagnyt:
Mark
Thanks for taking the time Mark
Firstly I thought you can pre determine your risk with a stop loss on some options abd aim for a significantly larger reward than what you risked is that right?
If i can shoot for 4 times more reward than risk for instance then with some knowledge of fundamentals,technicals and the underlying asset I don't think it would be unrealistic to have an expected hit rate of 40% then id be profitable.
I know the risk of ruin is pretty high with more than 2% risk per trade. So can't I just buy single options contracts with tight stops on smaller stocks that im watching like DRYS?
Are there live contests with options on demo or real that I can look at?
Quote from sebastionay:
Are there live contests with options on demo or real that I can look at?
take a look at this:
http://www.optionslam.com/challenge.html