Lost (MORE!?!?) in options?

Discussion in 'Options' started by natedaag, Apr 3, 2020.

  1. trdes

    trdes

    I've never understood options. Particularly if your primary income is going to be made by trading. Why would you want to add so many additional variables?

    If you're good enough to get options right most of the time, than you're good enough to trade the underlining directly. If you're so bad you have to trade options to mitigate risk you're unlikely to be successful long term.

    Probably going to be an unpopular post, but I've just never met one trader who uses options successful as their primary source of income. I am not doubting the y exist, but I'd be highly suspect that they have other advantages or income streams and that they don't just primarily trade options (or they are so financially set they can be very choosy and don't have to actively trade them).
     
    #21     Apr 4, 2020
  2. ironchef

    ironchef

    Convexity. If you trade the underlying and bat 50:50 you probably lose money. If you trade options and bat 50:50 you could make money if you let convexity works for you.
     
    #22     Apr 4, 2020
  3. FrankInLa

    FrankInLa

    There are very few niche areas where one can excel trading options. For example an edge in predicting future realized volatility may favor expressing such edge through options rather than the underlying. Some developed an edge in trading vega against gamma.

    But I agree with you, for most everyone here options are not the right instrument. Most don't understand options dynamics remotely enough to make a living out of such pursuit. The worst argument in my opinion for trading options is to want to hedge. And often an excuse, introduced, is tax implications and the preference for options vs the underlying. This is an incredibly poor argument for traders, perhaps more relevant to investors.

    I have seen successful options traders at many of my previous jobs. They make 5mil, sometimes 25mil a year. But they also spectacularly blow out at times. What they never were part of was the group of large producers that really could generate incredible chunks of profit contribution to the bottom line.

    Back to the basics, if someone can't handle the underlying then for God's sake, don't trade the option. If options are appealing because of leverage then too small account sizes are the problem nothing else.

    But what am I talking, can't change the mind of those who are lured to this profession for all the wrong reasons. To all the cowboys, lottery players, and gamblers I can only recommend to rather work on a crab fishing boat and fish off the Eastern Canadian coast. Much higher chance for a large payoff when lucky and definitely an experience. Chances of success in options for beginners are way slimmer than catching a world record breaking lobster or crab.

     
    #23     Apr 4, 2020
    taowave and ironchef like this.
  4. FrankInLa

    FrankInLa

    Bollocks, that just means you took exposure to an additional risk and get either rewarded or kicked in the behind for taking such additional risk.

     
    #24     Apr 4, 2020
    ironchef likes this.
  5. ironchef

    ironchef

    :thumbsup::thumbsup::thumbsup: Can't fool you.

    You are absolutely correct, I took tremendous risks. Since 2009, it have been a raging bull market, under estimated by the professionals and market makers, as a result long calls at time were way underpriced. I have been very lucky to ride this trend starting in 2013. All good things must come to an end and it did, this year. So maybe I should retire?

    Noticed you are a fellow Southern Californian. Take care and be safe. Make sure you wear your mask in public.
     
    #25     Apr 5, 2020
  6. ironchef

    ironchef

    You must be a professional. I am just an amateur retail.
     
    #26     Apr 5, 2020
  7. taowave

    taowave

    If I may,what was the price of the underlying and the bid ask spread?


     
    #27     Apr 6, 2020
  8. taowave

    taowave

    Chef,if you are a trend trader and bat .500 with decent risk management,you will be a winner

     
    #28     Apr 6, 2020