ddunbar... Options expiring worthless is the exact point/goal of many strategies. If options aren't your gig, nothing wrong with that. But to start throwing statements around that are often quoted, often out of context is a little misleading. Options are too often given a bad rap or overlooked due to simple ignorance (not meant as a slam for ignorance simply means lack of knowledge. Personally, I am a pretty ignorant on many things). You also stated that from your experience options traders blow out quicker than futures traders. That's not surprising since probably most of those options traders probably had no reason to be trading options in the first place. Like I've said, its pretty hard to just come into options cold turkey without have some experience (the more extensive the better) first with stocks or markets in general. Not trying to be argumentative, just don't like it when options are constantly beat down by the same old myths.
Actually there is a pretty good fundamental reason to say that options are more risky than stocks or futures. That is options are a zero sum game, for you to win another player must lose. While futures or stocks are like a pyramid scheme where everyone can win. I think this is a pretty strong argument against options. There was a thread to this effect a while ago. Don
I understand where you are coming from. I don't want to make it sound like I'm slamming options. But like you, I know many are ignorant of the true nature of options. There has to be balance between praising options and warning about their inherent risk. Options can be the most profitable of all security types. They are the most flexible of all derivatives. But most don't take the time to really understand them. They're mostly attracted to the low cost and high potential reward. That should be tempered wouldn't you agree? I googled a handful of websites that are pro-options and they usually have a page which attempts to debunk what they consider "myths." The problem is, at the same time they over emphasize the benefits and potential of options. Where's the balance? Let's just face it as a trading community; Options are at the top of risk scale. That doesn't mean the risk can't be managed. But it serves no one to deny that the potential high risk is above all other investment types. And that's essentially my overall point. (aside from offering the starter of this thread an investment that perhaps better suited for his style, risk tolerance, and goals.)
this is what I'm talking about ... everything is down,down,down OSTK is rallying!!!!! They missed their earnings by HUGE numbers, SEC supeona, some pulled a 1,000,000 share order, their CEO is a nut-job, etc,etc ... Crazy people by this stock. Never bet on crazy people..
Ya'know there is an argument that says people who buy any stock are crazy. After all why buy something that has no practical value? Oh yeah, somebody whose crazier might pay you more for the same worthless piece of paper. Does this sound like sane behavior? Now you know the real reason why stocks go up and down, it's not what the talking heads tell you. Don P.S. Okay if the stock pays a decent dividend maybe the above does not fully apply.
Thanks, bought more today 30 May 32 for 1.10 Just sold out @ 1.65 .... I think I'll daytrade. My problem is I grow to attached to my positions. Hoping for that "Big Move". Considering they temporary, they can hardly be considered an "invesment" Considering by calls, at the next low ...
Okay, Im not going to fret about leaving $$ on the table ... I projected SPY down to 129.25 .... but it looked like a triple bottom ... so, had to pull the trigger oh wait, its beginning to pop ... buying calls baby!!!! well, considering it anyways ... 15 May 130 Calls @ .75 Less confident about this one ... Forgot it was Friday 3:30 EST... got out ... @ .70 Not interested in holding over the weekend.
FullyArticulate ... what do you make of the 10k LEA June calls bought on Friday? This might fit the profile of interesting volume/open interest you described. I was looking at June 25 Puts on LEA if it breaks 26, It fits my profile. Trending down, in its upper range, but the huge volume gives me pause.
False. index futures do have time decay. going long, You would lose about 120 points on the mini-dow, if the DJIA is unchanged in price 3 months latter.