True or false? I want to get into trading options but I'm only so so in stock trading? Options is a whole different world over stocks?
I think if you start trading options, it makes it easier to trade stocks. The thing is that if you get profitable in options you probably wont want to play shares. I'm so so trading options, nothing special yet, but also no great losses. But trading shares I am much more profitable on the practice account...the only problem is you need 30k+ to daytrade effectively with shares, with options u can daytrade your cash account pretty well. For the reason above Im thinking about signing up in a offshore broker to trade shares more. With a 10k account u can get 100k buying power, making 1k a day is not out of question. after 10 days you have doubled your account...then you size up and try to make 1500 a day...after 10 more days you could have 25k in profits. lets say u add in some losing days, as long as u dont take big losses....you could double your account in a month if you know what your doing, and much easier then trying to time the options correctly. although it might take you a year to make the same profits that an option trader makes in a day , Sang lucci is up 400k already this month on options, although I guess its possible to make 400k on shares if you had his 8 million of buying power too. at the moment Im in MCD 100 calls for next week at .567....its trading at .46 now, you lose 20 cents on the stock, and the options is down .10 cents. with my 400 dollar position is down 61 bucks already. this is how options will kill you
this in my experience is absolutely true, if you dont know how to trade the underlining you will be ruin trading options. losses will be magnified with options in terms of % invested.
It depends on how you trade the options. A monkey can trade options as a market-maker. It is very simple stuff. I think stock trading and futures trading is much harder than options trading, in general. Take it from someone who started his trading career in options and in 5 years was heading the derivatives operations of one of the largest banks in the world in Asia. There are many ways to be "right" trading options. Stocks don't afford you that luxury.
Nope you can be a terrible stock trader and still be a good options trader. Two totally different animals. That being said having decent stock analysis skills helps in option trading.
Thanks for that info cmb. It is always good to hear about people doing well trading options. Hopefully that will be people talking about us one day. I started trading options and only ever traded options so jump straight in op.
As most options strategies are in some form a directional bet on the underlying, yes, it helps to have a successful background in trading equities. If, as you say, you are not making money now trading stocks, then you'll be likely to accelerate your losses in options as you encounter spreads, decay, transaction costs and leverage.
Most options traders I know aren't good stock pickers. Good stock pickers generally rely on fundamental research to determine that companies are being unfairly priced. Options traders tend to be focused on quantitative strategies to determine options are unfairly priced.