Futures or Options

Discussion in 'Trading' started by Chris Paciello, Jan 13, 2019.

  1. This is just a general question to get some personal thoughts/opinions/feedback from people.

    If you were to start a journey to focus on ONE - Futures or Options - Which one do you think would be more realistic and "easier" to "master"? I know they are different to one another and all of that - Just looking for general info/feedback. Don't get all crazy with thoughts or my question.

    Basically... It can be something like - "I like Futures over Options because..."
  2. fan27


    Futures because strategies are easier to test and automate.
    schweiz, Chris Paciello and MarkBrown like this.
  3. destriero



    I trade both every day, but mastering delta1 take years/decades. Profitable systems (target as a multiple of the stop or >50% hit rate at 1:1 risk) requires mastery. Every D1 trader that I know personally has blown-up while trading futures.
    birdman, MACD and Chris Paciello like this.
  4. MarkBrown


    futures = real deal, is what it is, leveraged, actual, factual, liquid, trading not investing, sleep with closed positions.

    options = not real deal, still have to be correct, subject to bullshit con artist trying to suck you in. in spite of this warning you will go with options because. it's easy , it's risk free, it's leveraged, everyone is doing it, there are you tube video's of successful people, all the brokers say it's the way to go, resources flying out the ass everywhere.

    do i hate options? no i hate people who are dumb enough to think it's easy when it's a "professional" game ONLY!
    Chris Paciello likes this.
  5. Robert Morse

    Robert Morse Sponsor

    I would say Future’s. Options require more knowledge and take longer, but options on future’s would be next, after you have a process for the future’s.
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  6. gaussian


    I think this is true for any leveraged instrument. I've paid for a few classes on trading I later realized were just scammy. They all revolved around getting people to imagine owning a Ferrari by levering up their neck using options, futures, or options on futures.

    I'm not sure what you mean by delta 1? Are you claiming to run a delta 1 trading desk that hedges huge equity swaps with options or something?


    My personally opinion is as follows:

    It comes down to taste. What do you like doing. Neither is safer than the other. For futures:

    1. High leverage
    2. Approximately the same liquidity
    3. Regulated Markets
    4. 24 hours
    5. Algorithmic strategies are easy to automate
    6. Margins are actually "performance bonds" so you're not paying interest to borrow
    7. Favorable tax treatment
    8. Commissions are usually dirt cheap

    (4) is big because after hours can really hurt you in options trading. Especially with the chop in today's market.

    Options have the following benefits:

    1. Extremely dynamic positioning ability
    2. High leverage (purchasing long calls on SPY for example could yield leverage similar to futures given enough of them)
    3. Large number of assets to choose from - you can write an option on anything that moves
    4. Regulated Market

    Both have a few similarities:

    1. Pricing is a derivative of an underlying
    2. Scammers and get rich quick schemes exploit them
    3. They both expire eventually and require rolling
    4. Both require a lot of liquid capital to stay within good risk tolerance

    To me, options are very complicated. A winner can turn into a loser for a lot of reasons. Imagine trading weeklies where you're essentially trading pure vega if you hold to expiration. Sometimes it's difficult to explain why a winner turned into a loser. Additionally, unless you're trading really tight straddles and other delta-neutral type strategies you have to be right on direction and time. In many underlyings a trend takes a while to establish. I feel like the options market is a MM's game, and retails have no place in it.

    Futures are far simpler. You have exposure to global markets, they trade "like stocks" (in the loosest sense), and there's a ton of liquidity. Strategies are easier to test because you're not working with the derivatives of a stochastic calculus equation.

    I think below around 15k capital options are probably your only choice if you're going to manage risk effectively and you desire derivatives. Anything above that and you're better off trading futures. If I had less than 15k, I'd probably trade ETFs on margin and then switch over to futures when I had saved enough money.
    heispark, positive etc, MACD and 8 others like this.
  7. cafeole


    Futures, hands down.
  8. destriero


    Yeah, I trade delta1 for SocGen. I have Kerviel’s job. I am using the term to refer to futures, shares, etc.
  9. I think options specifically for this reason. If you can figure out how to test and automate, you have an edge. Maybe not.
    fan27 likes this.
  10. Overnight


    Technically, they aren't 24 hours. Only 23/5. And some are less, like some ags and softs, 5/5 and stuff. :) Sorry, sorry, carry on.
    #10     Jan 13, 2019