Does anyone here trade options?
2 posters
Page 1 of 1
Does anyone here trade options?
Does anyone here trade options?
I'm trying to figure them out.
I'm trying to figure them out.
jon- Posts : 27
Reputation : 0
Join date : 2010-11-26
Re: Does anyone here trade options?
I am trying to learn. Look into http://www.optionseducation.org/, which seems to be a good starting point.
My biggest concern is that time becomes a much more important factor in options. You need to call the direction of movement (put or call), need to call how much it is going to rise (in order to beat the premium), and need to call when it is going to rise (in order to profit before expiration date).
With stock, all you have to call right is the direction of movement. To me, the excess risk of having a forced time based erosion of value (all other things equal, call option price will decline as it gets closer to the exercise date), along with a premium, higher commissions, high probability of 100% loss (generally not possible in most stocks, low probability of loss greater than 50%), generally adds up to a bad deal. It would take a good strategy or a lucky long shot to make it work.
My biggest concern is that time becomes a much more important factor in options. You need to call the direction of movement (put or call), need to call how much it is going to rise (in order to beat the premium), and need to call when it is going to rise (in order to profit before expiration date).
With stock, all you have to call right is the direction of movement. To me, the excess risk of having a forced time based erosion of value (all other things equal, call option price will decline as it gets closer to the exercise date), along with a premium, higher commissions, high probability of 100% loss (generally not possible in most stocks, low probability of loss greater than 50%), generally adds up to a bad deal. It would take a good strategy or a lucky long shot to make it work.
Max- SDDL Insider
- Posts : 297
Reputation : 7
Join date : 2010-07-01
Page 1 of 1
Permissions in this forum:
You cannot reply to topics in this forum