Options trading any thoughts

arod15 · #1 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 · #2 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 · #3 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 · #4 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 · #5 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 · #6 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 · #7 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 · #8 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 · #9 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 · #10 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.