Is it possible to reduce risk to zero?

Discussion in 'Strategy Building' started by Norm, Jul 25, 2006.

  1. exactly
    #31     Sep 23, 2006
  2. Yup. u can make 5% per annum. put it into bonds.
    #32     Sep 23, 2006
  3. Neet


    Could you please elaborate a bit on this ?

    Thank you
    #33     Sep 23, 2006
  4. Are you referring to No-risk collars?
    #34     Sep 23, 2006
  5. laputa


    Actually sounds like it would work to me. The problem is you need a pretty solid entry strategy. Also, don't go the "extremely" small profit path, retail traders aren't meant for that. You can expect a low winning % for your "zero risk" strategy, and you should really opt for the big runs and trail like hell...


    #35     Sep 23, 2006
  6. Sashe


    Is there such a thing as "no-risk collars"?
    #36     Sep 23, 2006
  7. If you define risk as money you could lose then you can find long-term options on som stocks where the short call and long put combine for a net credit with the put ATM and you get no position risk.

    Of course your capital is tied up earning little better than treasuries in some cases so there is that kind of cost or opportunity loss but no actual risk.

    #37     Sep 23, 2006
  8. still Rho risk , no ?
    #38     Sep 23, 2006
  9. Well that is what I meant in actual risk. You will enter the trade and not have any actual onetary risk. Interest rate risk can erode the worth of your profit (inflation and such) or result in a less than market return, but actual risk (my loss is $0) is removed.

    So it depends on how you define the risk lol..

    #39     Sep 23, 2006
  10. MACD


    Yes, one strategy is "no risk collars".

    OptionCoach is not one to flog his book or boast of his trading acumen.

    But, It is all clearly laid out, in what I believe is the best Trading Book Ever Written -- that is his book: "The Option Trader Handbook" by Phillip Budwick ("OptionCoach here on ET)

    I own over a 100 trading books. The aforementioned book by Budwick and co-author Jabbour is by far the best and most useful -- and that is no doubt because the author DOES trade.

    So the point is if you are looking for low or no risk trades and really want to learn to trade profitably then get the book. Not only important for options traders but provides market insights that apply to all trading and investment styles.

    The OptionCoach stresses that "Trading is a Business" and provides the key to success as a trader -- fire under performing "employees" (positions or strategies) that create losses.

    Of course the real secret is "Don't take any losing trades" :D
    #40     Sep 24, 2006