Trading stocks vs options. Which would you choose?

tonyf said:
The cold truth is that options are to american investors what CFDs are to the rest of the world.

Convexity, stochastics, arbitrage, IV, etc.... are all for the birds really.
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We love convexity and early birds do get the worms. :D
 
Direction in its purest form is "simpler",not easier..Big difference..

If you choose to trade options as opposed to the underlying directionally,and you are bullish,
is your go to trade selling puts and what strike,are you a call buyer and what strike,or a spreader...

And why..










ironchef said:
Why?

For me directional is easier, less parameters to consider/calculate.
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ironchef said:
Why?

For me directional is easier, less parameters to consider/calculate.
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taowave said:
Direction in its purest form is "simpler",not easier..Big difference..

If you choose to trade options as opposed to the underlying directionally,and you are bullish,
is your go to trade selling puts and what strike,are you a call buyer and what strike,or a spreader...

And why..
More...
Mainly bullish bets since 2013. Depends on how bullish I think the underlying would behave in the time frame I trade. No spreads.
 
stepandfetchit said:
Advantage to trading stocks: (All these assuming your bullish entry will wise and profitable)
1) You do not have to nail down the time frame to meet your target price.
2) You may ignore implied volatility.
3) You may set very loose price targets and still do OK.

However, when trading Options, you need to understand your time frame, as you need to chose options which will not expire before meeting your exit target. If your time frame is not very clear, you may be forced to pick an expiration much longer to give some wiggle room for your trade to work.
You need to consider what the implied volatility may be at the time of your target exit. This can influence the option strategy and may impact the strike choice.

Regarding liquidity... Consider the expected liquidity at the time you would want to exit the trade as a filter to your choices. IE at exit target, if your options will be DIM, you may want to consider an alternate choice. On entry, insure the OI is > your proposed position (some desire this to be 20 X their size). For entry, volume is preferred, but not necessary. Also, get familiar with each products options to better understand their liquidity.

If you have an example of underlying, expected price movement, and time frame, post here or privately and it could percolate some ideas.
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Exactly; stocks/etfs , some pay dividends also...………………………………………………………………………..
 
If we are talking about trading, I would go with options. I like selling put options. I have a lot of room for error and am assigned a stock only at a price I am willing to pay (but usually I'll roll my put before getting assigned-- options give so much flexibility!)

Now, when it comes to investing, stocks and options are both good. Lately, I have been buying long term call options on indexes as my main investments. I could do the same with stocks/ETFs, but the call options lower my risk substantially. This allows me to acquire leverage without the risk of a margin call.

So if we are talking about trading, I recommend options. If we are talking about investing, it's closer but I still give the edge to options, unless you are looking for a completely passive approach. It's also worth noting that you can create a synthetic stock position with options, so options have you covered if you want to just trade stocks!
 
Bekim said:
Options all day long
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Like Don Bright Daytrading founder noted [+ he was an option market maker]
options are made to be sold...…………………………………………………………………….IBD newspaper still puts a put call ratio under S&P 500 chart--if you like rube Goldberg stuff
 
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