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.
My view is you have an opinion on whatever it is you are trading and place a 'bet' on direction. Adjustments are separate trades and add to the wager. There is nothing wrong with this. Making money should be your major focus and interest, otherwise you are kidding yourself and are in the wrong business. We are capitalists first.
Windlesham1
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I don't need an opinion on the market,as I can use volatility and time decay to give an edge. I do however have a lot of opinions on most things, and it does sicken me to see governments placing wild bets on an absurdly infantile picture of economies. However there is trading,which I do for profit,and there is politics, for which,ironically a lot of rubbish people get paid.
Prairie Viewer
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Most people loose money in option trading b/c they misjudge the direction and magnitute of the underling asset (stock, commodity,etc.). Then there's time decay, then there's commisions, then there's also earnigs announcements, and also market moving indicatiors like jobs reports, FOMC announcements that a trader might not be cognizant of and loose money because of that. KEY: The goal of the trade is to be in the money (ITM). If not going to be ITM. Then it will be reflectet in the sale price of the option; for a loss.
Option traders pay the premium up front. It's an option to buy the underlying instrument at the set price, it's not an obligation. Hence if the underlying asset goes to crap they can let the option expire without exercising it, leaving them short the premium. I don't know much about option trading, although I know enough to know it's not representative of your post. Feel free to correct me if I am wrong
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.
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.
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tar
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tar
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exactly
Yes You are 100% right
MacroStyle
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They probably focus too much on the underlying and not enough on the vol market.
For example i like 3M AUDUSD vol, implieds at 10 realised at 11 and 1 vol of roll down over 2M seems like good value to me given all the current unknowns with China growth and Europe crisis etc.
For example i like 3M AUDUSD vol, implieds at 10 realised at 11 and 1 vol of roll down over 2M seems like good value to me given all the current unknowns with China growth and Europe crisis etc.
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marameo
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Million Dollar Traders (Full Series 1 of 3) - YouTube
Have you seen this show? If they ever make season 2 I would love to be part of it!
marameo
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Well...just for fun
Funny it is not. Look carefully and you will see it is just a cruel joke pretending to be an opportunity. Awful. Sad,
stockkevin
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I complete agree with you. I don't see how options is less or more risky than stocks more or less. Especially since options are derivatives of stocks.
Well, it is. Because if you buy a call option when the price is going up the time value on that option will go up disproportionately with reference to the true value. Therefore, even if the price does not reverse, the time value will.
Therefore, figure. If it is difficult to make money on a rising share price and a deteriorating time value, what chance do you have if the share price reverses?
Example:
Share price on purchase of 3000p. Options= 80p.
Shareprice on exercise date 3080p = Option value = 80p ie. You get your money back, less commisions and, remember, if you start hedging with straddles, etc, you pay commisions on every transaction.
You have to figure out, correctly, where the share price will be, on expiry, to give you a satisfactory porcentage profit on your investment.
I'm not trying to say that experts do not make their bread and butter from this--I'm sure that they do-- but that newcomers must beware of the easy money trap, because it is the newcomers who are bringing fresh money into the market.
The market only loves you if you have money. Once it has your money, the market does not want to know you but will look for the next source of income.
Happy trading!
