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arod15
08-20-2005, 04:44 PM
I am thinking into getting into options trading. I have began doing reasearch on the subject and wanted to know other's experience doing so. Also wanted to know of any good books to learn more on the subject. My friend who trades on a more conisetent basis tells me its too speculative, should i listen, i mean he is a coward with his money but is he right? Are options not worth the risk-reward? Let's discuss
Thanks in advance

cwsiggy
08-20-2005, 11:26 PM
Options are as risky or as conservative as you want them to be.
Great book would be the Options as a Strategic Investment by Lawrewnce McMillan - It's kinda the bible though not necessarily for beginners.
Spreads are high, lots of action and ups and downs - kinda like baby No Limit poker.
Bernie Schaeffer's website has good info
George Fontanills book The Options Course is probably better for beginners.
have fun

TStoneMBD
08-21-2005, 12:11 AM
from my understanding trading options is simliar to playing poker. you need to be one of the elite players to win and you need to be one of the super-elites to make a living. alot of pro option-traders go bust just like pro poker players. you really have to put in the dedication to become the best just like poker, and most people start off losers. to make $100/hr+ trading options apparently takes a bankroll far greater than what you need to make that money playing poker. were talking 6 figures from what i understand.

snowbank
08-21-2005, 04:21 AM
to make $100/hr+ trading options apparently takes a bankroll far greater than what you need to make that money playing poker. were talking 6 figures from what i understand.

This is a little off the subject, but this is an AWESOME point. Not for this subject, but for all investing subjects. There are so many people who will post and want to know how much money they can make on something. 99% of the people fail to realize that the power of leverage can change the whole deal. Give a good poker player a day and he can have 1000% returns on his money. He might have only made $1/hour though. Let's say you buy real estate and the market only goes up 2% for the year following your purchase. You say: "that sucks, I could have made 10% in the stock market."

I say: But you only put 5% down, so you made 40% on your money.

It takes money to make money, but no one said it had to be your money.

Like he said, you might need $100,000 to make $100/hr. trading. Poker maybe someone needs $10,000. Real estate maybe someone needs $10.

Sorry for the rambling, been reading/researching wealth, real estate, financial stuff for 20+ hours this weekend. Just finished reading something about leverage, so when I read this it fit perfectly with what I was reading.

TStoneMBD
08-21-2005, 05:48 AM
so youre advising that he leverage option trading? isnt that kind of like playing 100-200 with a 5k bankroll?

snowbank
08-21-2005, 06:02 AM
[ QUOTE ]
so youre advising that he leverage option trading? isnt that kind of like playing 100-200 with a 5k bankroll?

[/ QUOTE ]

Noooooooo. Def not. I was rambling on about nothing because it's 6 AM and I haven't been to bed yet and have been reading/studying all weekend.

btw... did you ever take a guess about the refi question in the other post? I was hoping you'd take a stab at it.

Sniper
08-21-2005, 10:40 AM
[ QUOTE ]
from my understanding trading options is simliar to playing poker.

[/ QUOTE ]

The closest buying options comparison to poker would be MTTs... your loss is limited to your buy in, some make a few $, some get a huge return!

The closest selling options comparison to poker would be a staking agreement.

There are many different option strategies, all with significantly different risk/reward models.

[ QUOTE ]
to make $100/hr+ trading options apparently takes a bankroll far greater than what you need to make that money playing poker. were talking 6 figures from what i understand.

[/ QUOTE ]

First, one of the benefits of using options is leverage. You can start trading options with a very small amount of $.

Second, the time spent managing an option position is minimal. So, to make $100/hr of actual time spent is signiicantly easier than doing the same thing in poker. (which is not to imply that making $100/hr is easy for the average person in either case)

Sniper
08-21-2005, 10:46 AM
The best books to read on Options are by Mcmillan and Schaeffer, as has already been suggested.

Options can be used in many different ways, some speculative and some conservative.

arod15
08-21-2005, 12:34 PM
[ QUOTE ]
Options are as risky or as conservative as you want them to be.
Great book would be the Options as a Strategic Investment by Lawrewnce McMillan - It's kinda the bible though not necessarily for beginners.
Spreads are high, lots of action and ups and downs - kinda like baby No Limit poker.
Bernie Schaeffer's website has good info
George Fontanills book The Options Course is probably better for beginners.
have fun

[/ QUOTE ]
I have some backround as i auduit some companies that their business is options but i got George Fontanillis to start thanks for the other book ill pick it up as well.

arod15
08-21-2005, 12:36 PM
[ QUOTE ]
to make $100/hr+ trading options apparently takes a bankroll far greater than what you need to make that money playing poker. were talking 6 figures from what i understand.

This is a little off the subject, but this is an AWESOME point. Not for this subject, but for all investing subjects. There are so many people who will post and want to know how much money they can make on something. 99% of the people fail to realize that the power of leverage can change the whole deal. Give a good poker player a day and he can have 1000% returns on his money. He might have only made $1/hour though. Let's say you buy real estate and the market only goes up 2% for the year following your purchase. You say: "that sucks, I could have made 10% in the stock market."

I say: But you only put 5% down, so you made 40% on your money.

It takes money to make money, but no one said it had to be your money.

Like he said, you might need $100,000 to make $100/hr. trading. Poker maybe someone needs $10,000. Real estate maybe someone needs $10.

Sorry for the rambling, been reading/researching wealth, real estate, financial stuff for 20+ hours this weekend. Just finished reading something about leverage, so when I read this it fit perfectly with what I was reading.

[/ QUOTE ]
i see well it is between buying real estate or options i realize that options has higher reward opportunity but that the real estate is much safer. Yet i am a specualtive type of investor by nature.

arod15
08-21-2005, 12:37 PM
[ QUOTE ]
[ QUOTE ]
from my understanding trading options is simliar to playing poker.

[/ QUOTE ]

The closest buying options comparison to poker would be MTTs... your loss is limited to your buy in, some make a few $, some get a huge return!

The closest selling options comparison to poker would be a staking agreement.

There are many different option strategies, all with significantly different risk/reward models.

[ QUOTE ]
to make $100/hr+ trading options apparently takes a bankroll far greater than what you need to make that money playing poker. were talking 6 figures from what i understand.

[/ QUOTE ]

First, one of the benefits of using options is leverage. You can start trading options with a very small amount of $.

Second, the time spent managing an option position is minimal. So, to make $100/hr of actual time spent is signiicantly easier than doing the same thing in poker. (which is not to imply that making $100/hr is easy for the average person in either case)

[/ QUOTE ]
like the anaolgy that is more accurate in the end you cant loose more than the intiatal investment you only stand to gain. Where the option provider only stands to lose.

arod15
08-21-2005, 12:38 PM
[ QUOTE ]
The best books to read on Options are by Mcmillan and Schaeffer, as has already been suggested.

Options can be used in many different ways, some speculative and some conservative.

[/ QUOTE ]
ill pick up the Schaeffer does he have many books or just one if so what is the name? Thanks in advance.

snowbank
08-21-2005, 04:35 PM
i see well it is between buying real estate or options i realize that options has higher reward opportunity but that the real estate is much safer

/images/graemlins/confused.gif

eastbay
08-21-2005, 06:10 PM
Just order the stuff from the infomercial you were watching. It will tell you all the insider's secrets to unlimited wealth through options trading. Ditch your 9 to 5 and take control of your destiny!

eastbay

arod15
08-21-2005, 07:38 PM
[ QUOTE ]
Just order the stuff from the infomercial you were watching. It will tell you all the insider's secrets to unlimited wealth through options trading. Ditch your 9 to 5 and take control of your destiny!
Actually i learned about it through seeing how some of the world's biggest instatutions trade them with hundreds of millions of dollars. I have a good overview on the subject but still want to learn more before i throw my pennies in that well.
eastbay

[/ QUOTE ]

cwsiggy
08-21-2005, 08:16 PM
I see the Schaeffer book got panned on Amazon - though take that with a grain of salt. I still like his website.
You may also want to read a book on candlestick charting as it will help you to set up your option trades. Steve Nisson is the God on this topic.

Sniper
08-21-2005, 11:35 PM
Schaeffer - The Option Advisor
http://www.schaeffersresearch.com/

McMillan - McMillan on Options & Options as a Strategic Investment
http://www.optionstrategist.com/

Paluka
08-22-2005, 05:40 PM
You guys are only going to do yourselves a disservice by constantly comparing options trading to poker. When you are an options market maker, trading has some similarities to poker that you might want to keep in mind. From a customer point of view I don't think there is any such analogy that is going to do you any good.

tek
08-23-2005, 10:58 AM
Two suggestions. 1) Write options. writers make the money
2) I traded OEX for a brief period of time in '98. Very exhausting. Makes the stress and variance in poker seem like laying on a hammock with a lemonade...

08-23-2005, 08:00 PM
do you want to buy or sell?

crazy canuck
08-24-2005, 06:00 AM
First, you should learn to beat the futures or stock market, then you can try options.

Paluka
08-24-2005, 12:57 PM
[ QUOTE ]
First, you should learn to beat the futures or stock market, then you can try options.

[/ QUOTE ]

The skills needed for beating these things are almost completely unrelated.

arod15
08-24-2005, 11:20 PM
[ QUOTE ]
You guys are only going to do yourselves a disservice by constantly comparing options trading to poker. When you are an options market maker, trading has some similarities to poker that you might want to keep in mind. From a customer point of view I don't think there is any such analogy that is going to do you any good.

[/ QUOTE ]
we tend to compare everything to poker like when i went all in on my girlfriend last night. Poker just on the mind all day... But point taken

StickyWicket
08-29-2005, 10:09 PM
"write options...options writers make money."

This is quite possibly-no offense-the worst response I've ever heard in reply to an options question. I can only liken it to "Aces win every hand." Ay-yay-yay!

I remember when I learned the basics of options back when I took my series 7 exam...hated the bastards at first, but then they clicked. Still love 'em to this day. Is it an appropriate strategy for investors? Depends upon your risk tolerance, as there are conservative options strategies and more aggressive ones. As a registered financial advisor, I have to take into account what my client's goals, net worth, experience, risk tolerance, and understanding of a wide variety of financial issues are---and I simply cannot recommend whether or not the original poster should get into options trading, as I don't have that basic information.

As the posters on this forum rely (perhaps wrongly so) on the other posters to provide them with advice, take a look at the following chart that provides you with a basic understanding of BASIC options strategies and what they are used for and what the max gain/max loss is on each type of position.

Some definitions:

Strike price:
The stated price per share for which underlying stock may be purchased (in the case of a call) or sold (in the case of a put) by the option holder upon exercise of the option contract.

Premium:
The price you will pay per option contract. (i.e.: if you buy 1 options contract for stock ABC @ $5, then $5 is the PREMIUM)

options chart (http://i19.photobucket.com/albums/b190/erikanapo/options.jpg)

flame away at will...

Sticky /images/graemlins/heart.gif

***please note that none of the information in this post construes investment advice, just some basic information and definitions on options*** /images/graemlins/cool.gif

1800GAMBLER
08-29-2005, 11:45 PM
You should mentor us all /images/graemlins/frown.gif.

I think reading this forum, all the disagreements and all the confusion has put me off learning anymore about investing. I was going to just invest in index funds and be down with it but then i felt stupid when you said in a post 'what makes you think the market will continue to increase?' and since i couldn't even answer that i didn't invest. So now, i'm still lost.

08-30-2005, 12:25 AM
actually funds that write options are the most consistent in the industry on a month basis. i can think of at least 5-6(remember there are not many that do this) that do 20%+ yoy with only 1 monthly drawdown a yr.

08-30-2005, 12:32 AM
here's one
http://www.iasg.com/SnapshotPT.asp?ID=753

what a nice equity curve

http://www.iasg.com/cfxtemp/CFT0829_2134021D4.jpg

Paluka
08-30-2005, 07:44 AM
[ QUOTE ]
You should mentor us all /images/graemlins/frown.gif.



[/ QUOTE ]

I don't really invest at all outside work.