+1
Oh, and ftw.
Stocks are Easy
- Thread starter stocktrader3429
- Start date
+1
Oh, and ftw.
Yup, you can make good dollars with options. Unfortunately, I pick the right ones and sell it for a loss.
eg. I picked up WYNN calls 2 weeks ago when it was for 4.10 and sold it for 3.20 - now it's going for 6-7 dollars
I got Citi calls 2 weeks ago @ 1.10 now sold it for 1.3 and now it's 3+
I picked up some CIEN calls to sell it for a .20 gain and now it's up over $1.
However, I did make $1400 on Oracle options in half hour.
eg. I picked up WYNN calls 2 weeks ago when it was for 4.10 and sold it for 3.20 - now it's going for 6-7 dollars
I got Citi calls 2 weeks ago @ 1.10 now sold it for 1.3 and now it's 3+
I picked up some CIEN calls to sell it for a .20 gain and now it's up over $1.
However, I did make $1400 on Oracle options in half hour.
Everything has risk. However if used correctly you can reduce your risk by using options in certain scenarios. For example, one can use DITM LEAPs and replicate a stock portfolio at half the cost going out about 2 years.
Also, you can use options to profit in sideways markets or take non-directional biases or even simply trade off of extremes in volatility. You can adjust bearish or bullish positions to lock in profits and still profit from expected directional moves. Options have a lot of flexibility. Time decay does not have to be a negative but can be a positive factor in calendar spreads or diagonal spreads.
Options do require more sophistication than stock investing and most people do not take the time to learn abot options properly and jump in without a solid foundation and lose money. There is plenty of misinformation on options in addition to the fact that many people invest without understanding the the greeks such as volatility, delta and theta.
So I will not make a blanket statement that options are less riskier than options just as many make a blanket statement that options are riskier. Just that if used correctly you can certainly expose yourself to less risk than in stocks.
Whether options are easier depends on the person investing. "Easy" is a subjective word. Options take more effort to learn but just like anything else, invest using what you know and feel most comfortable with.
Also, you can use options to profit in sideways markets or take non-directional biases or even simply trade off of extremes in volatility. You can adjust bearish or bullish positions to lock in profits and still profit from expected directional moves. Options have a lot of flexibility. Time decay does not have to be a negative but can be a positive factor in calendar spreads or diagonal spreads.
Options do require more sophistication than stock investing and most people do not take the time to learn abot options properly and jump in without a solid foundation and lose money. There is plenty of misinformation on options in addition to the fact that many people invest without understanding the the greeks such as volatility, delta and theta.
So I will not make a blanket statement that options are less riskier than options just as many make a blanket statement that options are riskier. Just that if used correctly you can certainly expose yourself to less risk than in stocks.
Whether options are easier depends on the person investing. "Easy" is a subjective word. Options take more effort to learn but just like anything else, invest using what you know and feel most comfortable with.
The people that make the OVERWHELMING majority of the money are those write puts and calls.
80% of all option contracts expire worthless.
If you want to make a nice, steady income stream, write put and call option contracts, as long as you yourself are hedged appropriately against the risks of the inevitable occassional blowup.
80% of all option contracts expire worthless.
If you want to make a nice, steady income stream, write put and call option contracts, as long as you yourself are hedged appropriately against the risks of the inevitable occassional blowup.
This actually is not entirely true. A significant amount of option positions are opened and closed before expiration and are not counted. Most studies look at expiration day only and it makes sense that most of the open interest on expiration day are OTM worthless contracts since there is no bid to close them.
LOL! Well put.
The thought that a successful equities trader will do better with options can only come from someone who has never traded either successfully.
And I always get a kick out of this idea that you can "only" lose the cost of your premium, like you have some kind of safety factor.
A 100% loss is a 100% loss, no matter how you want to spin it.
Is getting sliced to death and bleeding slowly better than getting wacked all at once? Some obviously think so!
There is no bigger sucker's game that paying spreads and time decay on long puts and calls so that you can feel better that you "only" lost your premium.
If someone wants leverage in their equities trading, then the better bet is either trading SSFs or simply using margin.
I looked this up and found that options for majority of stocks have HUGE spreads, something like bid 0.05 ask 0.20. Decent spreads exist only on few very popular stocks like MSFT and ORCL.
But these stocks are like forex or futures - everyone plays them, therefore harder to find an edge there.
Options ARE the superior way to trade with less risk fellas, all you have to do is take the time to learn them and use them properly. One of the biggest mistakes I see is people buying options that are out of the money and too near of a term timewise. I can't peak for other options guys but I buy puts and calls that are at the money or just slightly in the money, and go out in time several months.
The last play I made was buying 20 Valero $62.50 June calls on 3/20, paying $2.90. I sold them yesterday; 5 at $4.10, 5 at $4.17, and 10 at $4.40. Now lets take a look at my risk, I was able to control 2,000 shares of valero for a total risk and investment of $5,800.
It would have cost you $125,000 unmargined to control the same position, with a total risk of $125,000 (the extreme event, not gonna happen). What would be more likely is that some kind of internal event would cause the share price to drop $5 or $10. Those holding the shares are now out the actual magnitude of the move, my options are out less than the $2.90 I payed for them because they will still carry some time premium of roughly $1 in this time and instance, making my loss $1.90.
Now to make a successful trade in either method, you have to make the right directional bet, options won't do that for you, but you can dial down your risk profile with them and get great leverage when you make correct directional bets.
Anyone that thinks options are riskier than shares just doesn't understand options and would do themselves a great service to fully learn them.
The last play I made was buying 20 Valero $62.50 June calls on 3/20, paying $2.90. I sold them yesterday; 5 at $4.10, 5 at $4.17, and 10 at $4.40. Now lets take a look at my risk, I was able to control 2,000 shares of valero for a total risk and investment of $5,800.
It would have cost you $125,000 unmargined to control the same position, with a total risk of $125,000 (the extreme event, not gonna happen). What would be more likely is that some kind of internal event would cause the share price to drop $5 or $10. Those holding the shares are now out the actual magnitude of the move, my options are out less than the $2.90 I payed for them because they will still carry some time premium of roughly $1 in this time and instance, making my loss $1.90.
Now to make a successful trade in either method, you have to make the right directional bet, options won't do that for you, but you can dial down your risk profile with them and get great leverage when you make correct directional bets.
Anyone that thinks options are riskier than shares just doesn't understand options and would do themselves a great service to fully learn them.
I really want to earn options a lot better. Thanks for your input.
'Options Made Easy' by Guy Cohen is a great book for anyone wanting to learn the pros and cons of options trading.