Why do people trade in options and lose money ?

[lloydbee]

What a lot of useless posts in this thread, it doesn't look like I missed much at all and definitely nothing of value.

I don't think the argument of Options trading being a gamblers game will ever stop, it just comes back to the belief or mentality of the individual and is probably more a play on words than anything.

As a full time options trader I know you can make money 'trading' options and for me it is a business and one I take very seriously. There is no gamblers mentality to my trades, just calculated and knowledgeable business decisions as a 'trader' to make as many consistent wins as I can.

I love trading as a business and could not see myself doing anything else, there is just too many positives that far outweigh the negatives.

Happy days.

 

[optionsrules]

I think most people lose with options because they are bad directional traders and most rookies think the only way to make money is to buy options. If you are long an option you need extensive and quick move of the underlying. Be honest most people have no clue what the market does nontheless guessing the direction and timing.

I am honest with myself, I am a very bad directional trader that is why I only trade nondirectional options strategies.

But to master trading with options takes years and most wannabe traders want to make it quick and dirty and finally it becomes very dirty

 

[rsh01]

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.

as a more general answer to the question, the perceived greater risk is cos theres a massive amount of leverage in options (& other derivs), so buying deep otm call/put cld bring returns on your investment of hundreds of %, and equally large losses if writing. you get exposure to the underlying with a lot less outlay (premium/margin) than if you just bought the underlying.

btw loads of option traders scalp, dont hold to expiry etc, like any other product, so their exposure to these risks are managed. monthly income generating trades eg buying iron flys with expiry 30-50 days are often closed out in 2-3 weeks.

what i like about them is the plethora of strategies, combos etc one can use suiting all different types of traders - directional/non directional, scalpers, risk averse, income generating, punters etc etc.

 

[lloydbee]

what i like about them is the plethora of strategies, combos etc one can use suiting all different types of traders - directional/non directional, scalpers, risk averse, income generating, punters etc etc.

here here!

 

[lloydbee]

Mr.Charts " I see the figure in the avatar is weeing on optionetics..... diss on the opposition, huh? lol"


Not because they are opposition, because they fail as mentors and are nothing but a sales company in mentors clothing. Even to the point of them being scared enough of my business that the GM gave me a threatening personal phone call as well as emails.

To them I say...
"There is less to fear from outside competition, than from inside inefficiencies. "

 

[sambazone]

people loose because they loose because they loose))

 

[Hoggums]

lose ffs!

 

[thunderstruck]

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.

I think most people lose with options because they are bad directional traders and most rookies think the only way to make money is to buy options.

Its a combination of the 2 . If you are wrong on the direction you would lose if you buy/sell the underlying , unfortunately if you are correct you might still lose as time value becomes smaller .

Us rookies should stick to BUYING options , selling is risky unless its part of a hedged strategy .

At least with options you know your stakes and you can try an exotic stategy for he fun of it .

PS People trade options because you can apply theory to a practical test and because potential losses are known beforehand (if are buying).

 

[lloydbee]

Those of you that Option trade whether it be Live or Virtual, what is your EOY (end of year) account goal for Profit or Loss?

Mine is +60% conservative target, +80% aggressive target and 100%+ aggressive with the markets behaving and yes account gain.

 

[optionsrules]

Mine is 80% target and I am at 74 right now so I will pretty sure reach it. And this is *only* nondirectional trading!

 

[lloydbee]

Mine is 80% target and I am at 74 right now so I will pretty sure reach it. And this is *only* nondirectional trading!

At +74% since when?

 

[Depth Trade]

Why do people trade in options and loose money

Because they sell a Put or Call with out a stop. The market moves against them and the volatility is more than they anticipated. Equaling a greater move than if they had traded the actual product.

 

[optionsrules]

At +74% since when?

Year to date, 2012. After friday it is 80%

 

[lloydbee]

Nice one and a great way to end your year, you must be a very conservative trader, nice. Good luck for the remainder of the year optionsrules.

I've just started with a new broker after taking most of the year off but my % goals are for the remainder of the year, or over the remaining 8 weeks of the year(so two months of trading).


Why would you not love Options

 

[optionsrules]

So what is your annual trading performance goal in general?
You think that 80% is conservative? Are you serious?

 

[lloydbee]

So what is your annual trading performance goal in general?
You think that 80% is conservative? Are you serious?

My annual goals differ each year for a couple of reasons,
1) I never trade a full year
2) The markets and my trading style change

Last year I closed the year about +310 to +320%.
This year until I stopped in the beginning of it I was +120%, in a complete year my goals are +300-600%

Yes, to me +80% PA is conservative but by no means poor trading, as you know that is probably better than a lot of people manage. My latest or newest client that I am mentoring is about +65 in maybe 2 months and he is not even putting his full attention into achieving gains, after starting with a new broker after 2 weeks I am +28% and I can say my first week was a small 5% gainer as I was testing the waters so to speak, being unsure about how they would be to fill me and how I would handle doing adjustments as their platform is second rate.

 

[optionsrules]

300% is the best I have ever heard from a trader. I guess you are not trading nondirectional strategies, but directional one, am I right?

But anyway, congrats on your achievements, this is great man

 

[lloydbee]

300% is the best I have ever heard from a trader. I guess you are not trading nondirectional strategies, but directional one, am I right?

But anyway, congrats on your achievements, this is great man

I know a couple of guys that make 1000+ but that's a bit too active for me.
I trade using a non-directional approach but you know it's funny that more people don't make good gains but I know so many people that trade Options and their mindset and trading has been corrupted by so called Mentoring companies and they are lucky to make even 20% a year if anything at all.

Good luck with this weeks gains I hope you nail it once again.

 

[optionsrules]

What are your trading instruments? I guess you are trading with futures, right?
Only Short Strangle or Iron Condor as well?

 

[lloydbee]

mainly SPY, sometimes SPX and AAPL, no futures. Just options using advanced verticals.