The Black Scholes model is known to not be precise, but close enough for the vast majority of participants. In fact, there are several large players with proprietary pricing models that take advantage of many small inefficiencies in the market. There are also some good public papers on alternatives to Black Scholes model. They have their pros or cons depending on various environmental conditions. But the problem for the retail trader is that the inefficiencies are often so small you can't overcome the inherent retail disadvantages in options trading (spread & commissions). Also, some inefficiencies (especially intermarket) require deep pockets in order to exploit.
Still, the retail trader is able to use several well understood methodologies (e.g., spreads, straddles/strangles, butterflies, etc) and target a decent return while risking very little. Not to mention the benefits of (delta/gamma) neutral strategies. Options trading is full of opportunities, for traders with all sizes of trading accounts, if you know how to find them and manage them.
JayK, You quote me out of context. Why not include the first two paragraphs as well? If you read my post carefully you will understand I was referring to Alphe's post where he did "econometric studies on Options" and determined that "price changes...did not approximate the Black Scholes Model exactly." Exploiting the inefficiencies in the Black Scholes model is not possible for the retail trader due to inherent obstacles in retail trading of options. (Not to mention those strategies require deep pockets in order to arb the inefficiencies.) The benefits of the things you described (spreads, straddles/strangles, butterflies) are well known, well understood, well documented strategies.
as long as he dosent read numnut's mistruths bullcrap...if you asked him somthing simple like what happens to a delta as vega increases...he would shit in his pants....but numnuts is an expert ...yes an expert in publishing bad information