Why do people trade in options and lose money ?

Originally Posted by forker

If I am not mistaken, and please correct me if I am wrong because I can't be @rsed to give much energy on gaining knowledge on it. While this instrument is traded for profit, isn't it mostly used to offset risk in the futures market for buyers of an underlying commodity that are not speculating for profit from trading the instrument.

Originally Posted by noni

From my opinion i think every one want to become a rich person or business man. So this thought create greed in their minds. So they spend their money in several trades or other businesses. And some time they loss their money.

Originally Posted by marameo

Have you seen this show? If they ever make season 2 I would love to be part of it!

Originally Posted by Just4Fun

Would you really ?
Why ?

Originally Posted by marameo

Well...just for fun

Originally Posted by phyzelor

Options are like any derivative that move along with the underlying value of a stock / index or whatever. I do not see any difference with any other derivative. The point is that the underlying value is important and that you need to 'play' with the time you got left untill they expire. The fun of the game is that both play a role. When you master this you can find pretty awesome opportunities.

Buying an option that expires the same day can make you a great profit when your trading strategy works. So if you are pretty sure that the market is gonna sell off before the put option is gonna expire, an option that's worth a few cents can go up alot.

And you can have great return on a little investment. When it doesn't go the way you want, you just sell them at the stoploss you have provided yourself before you entered the trade.

You don't need margin for options and if you don't work with a stoploss you can't lose more than the money you put in the trade.