When you combine the bid/ask and the the zero-sum aspect of options trading, it is a bit like the 20% take at the horsetrack. But apparently if only I had the "right attitude" and "worked hard enough" and learned to put on complicated 7-leg positions after buying somebody's 12 month mentoring course, then maybe I could eek out a little premium without blowing up. No thanks.
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options . . . very hard to make money
- Thread starter billyjoerob
- Start date
When you combine the bid/ask and the the zero-sum aspect of options trading, it is a bit like the 20% take at the horsetrack. But apparently if only I had the "right attitude" and "worked hard enough" and learned to put on complicated 7-leg positions after buying somebody's 12 month mentoring course, then maybe I could eek out a little premium without blowing up. No thanks.
most option traders sell premium,either sprds ,covered calls,or out of the moneys,if you are trying to make money being long premium when you know it will eventually go to parity,...ask yourself whyQuote from tradingjournals:
Also those who only buy premium, and have no edge in underlying direction would likely lose. [/B]
Quote from billyjoerob:
When you combine the bid/ask and the the zero-sum aspect of options trading, it is a bit like the 20% take at the horsetrack. But apparently if only I had the "right attitude" and "worked hard enough" and learned to put on complicated 7-leg positions after buying somebody's 12 month mentoring course, then maybe I could eek out a little premium without blowing up. No thanks.
You keep mentioning these website hacks who mentor. Possibly an elaborate and backhand shill? Maybe you and your mentors simply suck at trading?
Quote from billyjoerob:
When you combine the bid/ask and the the zero-sum aspect of options trading, it is a bit like the 20% take at the horsetrack. ...
Correct, except it is not nearly as bad as 20% like the horsetrack but the concept is the same. Whether you are "investing" on horseracing, sporting events or options, you need to find a way to overcome the "take" (spread) that makes random selections a long-term loser.
The problem IMO is that most spend their time hunting for the "perfect" strategy or trying to pick the "winner". It is not that simple. It is about finding a statistically valid method of "investing" that allows you to collect more in total on your winners than you lose on your losers.
Joe.
every trade in options is usually hedged with stock,futures, or another option,or several ..hence a buy orderQuote from tradingjournals:
Who ever convinced you would have to deal with these facts: If it were true that most traders sell, then who buys? Options are contacts.For each seller, there is a buyer. No escape from this fact.
Quote from ammo:
every trade in options is usually hedged with stock,futures, or another option,or several ..hence a buy order
That is actually a valid point, and option instructors usually use that argument when confronted with the negative sum challenge.
Assuming that the insiders use the hedging to make market and make a profit (which I think they do because they are still in business), I think individual traders may benefit by aligning themselves accordingly. So shorting premium and hedging with stock/etc may be another source of success, in addition to lousy opposition which is guaranteed because of new entrants.
Quote from billyjoerob:
When you combine the bid/ask and the the zero-sum aspect of options trading, it is a bit like the 20% take at the horsetrack. But apparently if only I had the "right attitude" and "worked hard enough" and learned to put on complicated 7-leg positions after buying somebody's 12 month mentoring course, then maybe I could eek out a little premium without blowing up. No thanks.
Options are NOT zero-sum. You have no idea what the person on the other side of your trade has done against it. Options are a tool for risk transfer much the way insurance is. I can buy puts to "insure" a long stock position. If the stock goes up, I win on my stock position, and the person that sold me the puts wins on their put position. We both win. While I gave a little of my profits up by purchasing a put, I got the utility of sleeping at night not worried that I could lose everything. It's win-win.