I'd like to hear people's opinions on whey they play options. Other than the fact that it's cheaper since you dont have to put down as much capital to play the game, what are some other pros and cons of options that you guys see in this. I would imagine if you want to invest in something, buying/selling options would probably be safer since if you're wrong, you're only paying the premium. But the reason peple dont use it to do LONG term investing is because of the expiration time on these options right? so let's say if someone wants to do a long term investment of maybe 1-2 years...the options he buy may expire before the price really appreciates in value? So do people use options more an insurance, kinda like a position to hedge their equities positions? for example, if someone is long however much in the equities, he then sell the call options as an insurance so he doesn't lose too much altogether.... so they two balance each other a little bit. I'm sure there are people who scalp the options by playing the spread, selling and buying to capture the little fluctuation in price... but how profitable is this strategy in regards to the risks involved.. lastly, how do one pick which option to get into? do more people concentrate on index options or options of a certain company...
I dont play...... its called investing. Stocks, options, futures, bonds, etc... are not for playing. This is a serious business. If you want to play go to Vegas.
oh come on... you know what i meant do you invest in options or do you trade options i guess would fit better.
because investing in options on these fundamentally sound companies are less risky than buying a certain amount of shares of equities..... but what's the longest time frame options you can buy? how long can you hold a LEAP?
so i guess the only con to options when it comes to investing is that... if you do find the next google..... the most you can hold is 2 years and then you are forced to exit the trade and take profits but i guess options is still pretty damn attractive because of its lower risk and lower capital requirement. I'm guessing options is a favorite for a lot of the swing/position trader and investors (especially those who uses a lot of fundamental analysis) who hold their investment from anywhere from a few weeks to 2 years?
I don't really think that most option traders are basically fundamental investors. I have gravitated toward options because I wanted to have downside protection when the market is sideways to down. This last year has been a very steady bull market.....anyone can make money in a bull market. The trick is to make money in a sideways to down and options give you that ability.