New To Options: Why Would Anyone Day/Swing Trade Stocks Over Options?

[zghorner]

Do this exercise - in excel price a liquid option over time (if you day trade, use minutes to hours) and see how much the underlying would have to move to make the same profit as you would with the underlying itself. Don't forget the spread.

the money made on the option would be higher if based on a % return due to less capital being used to enter your position though correct?

 

[cafeole]

I never use % return, since that does not go into my bank account.

 

[gaussian]

I never use % return, since that does not go into my bank account.

How do I unread something? I think my IQ fell by 30 points reading this.

You don't use percent return?? How do you compare strategies?

 

[cafeole]

I don't.

 

[zghorner]

Well alrighty then.

 

[Amahrix]

i am a new trader, dabbled for a few years in equities but have only been day trading since this may. I have looked into options off and on but recently have been spending a lot of time educating myself on them. Even made my first options trade yesterday just to get my feet wet, (HAL Sep 6, 19 call 10 contracts bought then sold for $100 profit). My question is why would people choose to trade stock over options? The only reason i can think of is maybe they are intimidated by the greeks and consider them too complicated? The expiration date shouldnt be a big deal i would think if you are good at cutting your losses. To me the capital risk per trade is so much in favor of options that it seems like a no brainer but i would like the opinions of some "elite traders".

They're 2 different things that shouldn't be compared, even though options derive from underlying, that is only part of what an option really is.

Options are multidimensional and nonlinear unlike options. Some people don't want that, some do.

 

[Robert Morse]

They're 2 different things that shouldn't be compared, even though options derive from underlying, that is only part of what an option really is.

Options are multidimensional and nonlinear unlike options. Some people don't want that, some do.

When you say "nonlinear", can you expand on that? I'm not sure what you are referring to.

 

[Amahrix]

When you say "nonlinear", can you expand on that? I'm not sure what you are referring to.

The returns can be nonlinear, in other words, multiplicative. Nonlinear has a payoff function that is convex. Linear has a payoff that is.. linear.

 

[Robert Morse]

The returns can be nonlinear, in other words, multiplicative. Nonlinear has a payoff function that is convex. Linear has a payoff that is.. linear.

thx

 

[ironchef]

Options are multidimensional and nonlinear unlike options.

???? options are unlike options?