Options or futures?

Folks,

I may have posted in the wrong forum and don't want to re-post. I'm trying to decide whether to trade futures or options. The original thread is below. Any advice?

http://www.elitetrader.com/vb/showthread.php?s=&threadid=80494

Thanks, Joel

 

i'd say- future options

 

The good thing about options is that (unless you sell naked options) you generally can't lose more money than you have in your account.

(But: I do recall an instance described on this forum where a guy went into expiration with 20 barely out of the money GOOG calls in his minuscule account. They moved into the money around 4 PM and he ended up with 2000 shares of GOOG in his account on Monday, which his broker of course automatically liquidated since he only had a couple thousand dollars in his account. Unfortunately GOOG moved down 0.5% that morning and he found his account way in the negative. Ugh...)

The problem with futures is that you can possibly lose more money than you have in your account. There is just no protection like you have if you only buy options.

So to summarize...how quickly do you want to lose your money?

 

Slowly, please! Very slowly!

Is there any sense in backtesting options?

Day-trading them?

Thanks in advance, Joel

 

Hi Joel.

I'll be really honest, that's a really silly question to ask. You're basically asking whats the difference between futures and options, and if you actually don't know each perfectly yourself you shouldn't even be thinking of trading either.

and if you do actually know both products very well, you should know perfectly the ups and downs of each and which suits your trading taste. to ask others what to trade is not only naive but can be very dangerous.

I highly recommend you reading further to understand both products better. and then you may hit a strategy you might like to try out using them.

I agree with the above poster tho that futures are more risky.

 

My original question was in the context of autotrading but it does not look like autotrading options is what people here do.

I'm also learning that backtesting options is useless, most people here use a discretionary approach and that there's not much software to be written to trade options (my skills, my skills!).

Given that I don't have much time to monitor the markets I'm leaning towards options and options on futures.

Is there such a thing as a full-time options trader, though?

Thanks, Joel

 

I'm assuming here that people trading options full-time are not day-trading them, i.e. they don't spend the day in front of their screens.

How is your day split then? How much time do you spend actually entering your trades vs research and preparation?

Thanks, Joel

 

You should give option a try, it is very low risk; you don't have to do any research either, just pick any stock you like and determnine the profit potential based on your prediction of the stock movements. Now just sit back and watch, if it doen'st go side ways on you will likely make some money.

 

I'd stay away from futures if you can't spend alot of time minding your positions. Why not just stick with stocks?

 

why not try both?
...on paper of course and then you can get a better feel of each without getting hurt.