http://www.optionsmart.com/ the link above is for a group of individuals who claimed to have earned over 300% in the year 2002 trading options... does anyone have any experience with them or know anything about them??? i for one do not have any faith or belief in them, and feel that they are posting ridiculous returns, and its just another scam to get hard earned money into their hands...
True Story: In 2000 I made over 900% trading options. Also True: I dont know a damn thing about them and anyone who would listen to me about options is a fool. I made the money by doing things I would have never dreamed of it stocks. I could have just as easily gone broke, and I got very lucky catching a few tops in big name stocks. In the end options trading is a losing game for traders off the floor. Brandon
Options are for smart gamblers and hedgers. Once in a while you'll have the big blowup cause the guy was over confident and over leveraged. He'll bring down the house with him and hurt the image of derivatives. It's happened before, it'll happen again. 300% trading derivatives is not hard, what's hard is to make 300% consistently with the lowest risk possible.
I would have to see a 5 to 10 year record trading options with real money....not paper tading them before I would take it seriously, and also trading with sufficient funds to make it accurate and suggestive of returns going forward if the system is implemented.
This has likely changed as a lot of the volume has gone off the floor to the ISE, but in general people who are buying options (which is what most people try to do) are not going to win. Those who write options are assuming a large risk (unless they are hedging or using some market neutral system). I recall some time ago Baron's had issued a challange that if anyone reading it could prove they trade off the floor and buy options only and had made money over a 3 year period they would give them some amount of money (don't remember how much). Only two people managed to win the prize. Brandon
Why would it be true that no strategy could be profitable using options over time? If options are universally overpriced, then you could make money selling them. If options are universally underpriced, then you could make money buying them. If they are all priced to perfection with the spread being the MM's take, then you can't beat them. All this assumes there is some intrinsic difference between a stock buying/selling program, and an options one. Since time value can be bought or sold, that should not make a difference. Seems to me it's all about execution, opinion and spread. PS I do very little with options as I don't see a huge *short term* edge using them vs. trading the underlying.