ET members tend to play options rather than stocks?

Discussion in 'Trading' started by innovest_11, Nov 13, 2007.

  1. I saw number of posting here, talking most of time about puts, seems that options more popular than stocks?

    But i always thinking options more risky than stocks...

    People tend to lose more money playing options than stocks
  2. Options can never be more risky than a position in the underlying, assuming you trade them on the same size. 1 Call or 1 Put, whether long or short, is always less risky than the equivalent size in shares, whether long or short.

    Also if you are long an option, you have an absolutely guaranteed downside. Being long or short a stock has unlimited risk.
  3. Puts make more sense than stock for shorting, especially when you factor in the easier ability to sit through spikes. For me, that psychological aspect negates any mathematical advantage stock may (may) have if you were to factor out unlimited losses due to ability to close. If the price of an option is up to 2x of what your stop would be on a stock an option makes more sense to me. It is much easier to do a countertrend entry (and this benefit from it) with puts.
  4. jgalt7


    I fully agree.

    You also get the benefit of going long volatility.
  5. Be careful about generalizations, stocks and options are quiet different and can be used in different ways. Options are riskier if you have no idea what you are doing but you can make money in both as long as you stick with one you know well. I certainly can think of many more situations where stock holders get wiped out and long options holders live to trade another day. Of course it goes both ways to.
  6. Another post of ignorance on options...

    Tough bad call on Monday in your blog.... hope you were not too short the market