Stocks are Easy

[stocktrader3429]

Are stocks easier to make money in than options, futures etc.?

 

[cscott]

Yes. Futures and options are much riskier.

 

[stock_trad3r]

futures are how those guys go form 1000 to millionaire in a year

 

[cashmoney69]

Quote from stock_trad3r:

futures are how those guys go form 1000 to millionaire in a year

Where do I sign up?

 

[cscott]

Futures are also how those guys go from 1 billion dollars to ZERO!

 

[Comanche]

if you can make $$ picking individual stocks, you can make more $$ playing the options on them and ultimately have less risk doing so.

 

[stevegee58]

Quote from Comanche:

if you can make $$ picking individual stocks, you can make more $$ playing the options on them and ultimately have less risk doing so.

I agree. If you're a long-only investor, using options instead of buying shares is less risky. Why? Because your risk is *exactly* limited to the purchase price of the option (call in this case). If you're long a stock with a, say, 10% stop what if the stock gaps down 20% pre-open. You're screwed then. If you buy the right call (i.e. strike, expiration) on the same stock, you're protected from downside risk.

One downside is you pay a premium for that protection. Also, you might be tempted to over-leverage if you don't know what you're doing.

 

[Comanche]

don't have to be long only, can play either side with the same risk/reward profile. i have made all my $$ this year in puts actually, only have bot 2 dif calls this year.

 

[stevegee58]

I know, that's just the line of reasoning that my family and friends understand. Anything about making money when stocks go down or sideways sounds unfair/illogical to them.

 

[Hydroblunt]

Quote from Comanche:

if you can make $$ picking individual stocks, you can make more $$ playing the options on them and ultimately have less risk doing so.

Where do you "elite" traders come up with this stuff.

Options significantly deteriorate with time, it's not just being right on direction, your timing has to be good too. Also, you do not even have to be on the right side if the stock with normally low volatility goes into craziness for a few days.

And certainly there is more risk with options unless you are way overleveraged with equities.