Options traders or spread traders.

R

Rumblefish

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I don't get it.

Why do traders even bother with spread trading options?

Who would in their right ming be buying out the money call options out the money puts??? now other than spread traders or options strategis.

It seems like 99% of the options volume is by options traders doing these neutral spread trading crap.

Why waste capital trading options. The volume in options in many stocks is like who is on the other side of the trade?

It seems like options market makers act like sport betting bookies.
and CFD bookies and futures market makers are no different from horse race or sport betting. but in the financial markets it's a rigged and it's not illegal to rigged the underlying instrumetns to profit from the options game. I may be wrong about options and stocks rigged but my negativity is always right, the options and futures pits are rigged and manipulated. Who wouldn't make money if you can rig the casino. And options and futures speculation is legalized gambling anyways which doesn't pay gambling tax.

And the derivative market is just one big casino playing with clients money and losing clients money.
 
what's your preferred trading vehicle then? I do the spreadbetting thing because I dont think I can go make successful directional bets on forex/e-mini and other highly volatile and exuberantly leveraged markets.
 
Quote from thkang:

what's your preferred trading vehicle then? I do the spreadbetting thing because I dont think I can go make successful directional bets on forex/e-mini and other highly volatile and exuberantly leveraged markets.
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Ditto...I sucked it up as a directional trader.

With spreads it is easier for me.
 
You're bearish XYZ at 270 and short 100 shares to hold overnight. $13,500 req under regT. I buy a 5 lot fly at -100 deltas that runs me $3,500 in req. One week hence and XYZ is trading at 265... the stock trader is up $500 and the fly-trader is up $1,000. Twice the gain at 1/4 the haircut. Also, no variation margin. You can substitute long gamma as well. You may not beat the return but the R/R will be better than the share-trade.

One week hence and XYZ is at 271... stock trader is out $100 and fly-trader is up $300.

Lots of variables in play, but I can always outperform a stock trade with options, provided we're talking >5 day holds.
 
Buying out of the money spreads??? Who the hell does that?

SELL. Sell those out of the money credit spreads...

MONEY... MONEY... MONEY....

3% a month.
 
Quote from Rumblefish:

I don't get it. Why waste capital trading options.
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Because fortunately there is so much more flexibility and dimensionality to it than selling covered premium and calling one's self an options expert.
 
Quote from bone:

Because fortunately there is so much more flexibility and dimensionality to it than selling covered premium and calling one's self an options expert.
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^this^
 
Let me guess......

You did a magic of covered calls course or the incredible iron condor webinar and lost money in the current market?
 
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