Options vs. Stock Margin

Discussion in 'Options' started by Wait4proof, Dec 22, 2011.

  1. Dollar to dollar, which method of trading will make the most profit with a stock like GOOG for a $5000 account?
    1) Options (broker doesn't let you use margin)
    2) Stocks bought using margin (broker allows 40%)

  2. Options. Buy the right ones and if GOOG moves in your direction that $5000 could be $50,000+ after one trade.
  3. IMO, a $5000 account should never get involved with GOOG stock. If you want to gamble on call option, I guess it's ok. I would probably prefer to put the whole $5,000 on Red or Black on the roulette wheel. At least you have a nearly a 50/50 chance (less the 5% negative edge).

    Just understand, it's a pure gamble... and go for it if you like.

    All the best,

  4. Maverick74


    Don, I thought you were a gambler? :)
  5. You know better. Card counting blackjack and poker are not games of chance when played correctly (however, I can still lose, I just feel much better about it, LOL).

    Merry Christmas my friend,

  6. Maverick74


    Merry Christmas Don.
  7. Try credit spreads or other hedged short option positions. Low margin requirements and limited risk. Speculating with long options isn't a great idea, especially purchasing OTM calls. You'd have to be correct about direction, timing of the move, and volatility assessments. For example, by the time the stock moves in your favor with a long call, time decay and a drop in implied volatility may still make your position unprofitable. At best, you'd probably just nickel and dime yourself to death. At worst, you might load up on cheap OTM calls and blow up your account. Yes, you could hit it big, but the chances of that are slim.
  8. While I have you, just for fun... can you find "the Don" in these recently acquired, sent to me, from about 45 years ago, LOL.



  9. Scratch GOOG then, AAPL instead.
    Point being (stocks with margin vs. call options) to capture movement.
  10. White shirt, black tie?
    #10     Dec 22, 2011