http://www.bloomberg.com/news/2010-...-amateur-investors-embrace-iron-condors-.html Amazing how this article title states that "Amateur Investors Embrace `Iron Condors'" but it does not interview a single person that has made money on them and also quotes a hedge fund manager saying that "Trading options is one of the all-time suckersâ bets" . . . This is why options are perceived in such poor light
I would add to this comedy the fact that the manager cited in this article who called options a sucker's bet manages the Tilson Focus fund which in the past 5-yrs has returned to investors 3.77%. In the meantime a passive Vanguard Total Bond market index fund returned 5.48%. Even a more passive buy-write strategy (for those who don't know includes options) would have outperformed this bozo manager in the past 5-years. For instance, the Tax-Managed Buy-Write Opportunities Fund from Eaton Vance has returned 6.13% to its investors in the past 5-years. But you know how this game is played in Wall Street. You have to blab something to make it sound that you're control of things and to hide the pathetic track record.
It's strange to say that options a sucker's bet without even specifying which types of trades are sucker's bets. If I sell a covered call on stocks I own the worse that happens is that I lose some upside when the stock goes up and gets called away. I made 45% with a 6 month option trade on Smith & Wesson. The trade involved buying ITM calls, selling OTM calls, and selling OTM puts. People who bought the stock when I entered the trade and sold at its peak made 22%. People who bought the stock when I entered the trade and held to the present have made 2%. Who was the sucker? The real sucker's bet: Buying and holding stocks for the past 10 years.
1) Most experienced professionals lose money doing it 2) Itâs virtually certain that inexperienced, individual retail investors will lose money doing this OK, it's a zero sum game. Who took da money??? Tilson = Idiot
----------------------------------------------------------------------- Quote from spindr0:OK, it's a zero sum game. Who took da money??? ----------------------------------------------------------------------- Maybe I was too subtle. Tilson said that most experienced professionals lose money doing it (using options) and implied that all inexperienced, individual retail investors will also lose. While slippage and commissions eat up a piece of change, it's small compared to the 1,000s made/lost on trades. Since options is a zero sum game, someone is winning. It's not like equities where capitalization can disappear. So maybe one should attempt to be a successful inexperienced trader???
Hate to say it, but that statement is in itself an example of why options are (usually) a sucker's bet. Losing some upside is not the worst that can happen. Not by a long shot.