Join our investing community

Options Trading

Discussion in 'Shares' started by Triu, 27th Jul, 2007.

  1. Triu

    Triu Well-Known Member

    Joined:
    1st Sep, 2006
    Posts:
    161
    Location:
    WA
    Hi do you think traders lose more money than they invest? Do you think trading will make you wealthy in the longterm? Or would you rather earn an income from business or job and invest for the future wealth.

    what does anyone think?
     
  2. Aimjoy

    Aimjoy Member

    Joined:
    13th Jul, 2007
    Posts:
    21
    Location:
    Central Coast NSW
    Triu,

    Options trading is a zero sum game - so for every winner there is an equal amount lost by someone else.

    Nevertheless, I do like to write covered calls for the premium income and if I get exercised I'm not bothered because it is at a profit anyway.

    The only time I have lost money on options is when I was doing protected buy writes. In that case the cost of the put options was high by comparison to the income I made from the calls. But it did allow me to have 100% margin lending. having $0.5M on margin without the possibility of a margin call was kinda comforting. But I'm not allowed by Mrs Aimy to trade like that anymore. But writing calls on shares we own outright is still OK :)

    I've got to say though, that I have made more out of B&H shares (admittedly in a bull market 03 - 07) than trading.....and most people do lose money trading.

    For now I have a job paying 6 figures but my ultimate goal is to have $0.5M in the share market on B&H and living off CG and dividends to replace this. I think 20% return pa is achievable.

    Cheers,
    Aimy.
     
  3. coopranos

    coopranos Well-Known Member

    Joined:
    11th Oct, 2006
    Posts:
    498
    Location:
    Perth
    If that were true it might be an easier game! Dont forget that commissions make it a minus sum game!

    As for options trading, I am completely inexperienced in this arena, however in my studies on trading (share market in particular) most authors suggest not to bother with derivatives until you are able to consistently turn a profit trading shares the old fashioned way. Perhaps this is wrong, I have no idea...
     
  4. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,394
    Location:
    NSW
    As for options trading, I am completely inexperienced in this arena, however in my studies on trading (share market in particular) most authors suggest not to bother with derivatives until you are able to consistently turn a profit trading shares the old fashioned way.
    Perhaps this is wrong, I have no idea...


    Spot on !!!:D :p :p :D
     
  5. crc_error

    crc_error The Rule of 72

    Joined:
    1st May, 2007
    Posts:
    1,367
    Location:
    Melbourne, VIC
    get your share trading right first before you consider trading options..

    In options there are to many things against you.. spread, theta, brokerage, delta.. you need to line up all the planets to get options right!

    In saying that using simple stratergies like covered calls, or selling puts on shares which you plan to buy anyway could be some simple things you can do which are low risk. But as far as 'trading options' best to get the shares right first! Anyway I think 'trading' shares also isn't very profitable anyway.. Look at the Navra fund.. it has underperformed a booming market, and they claim to 'buy low and sell high' - trading..
     
  6. coopranos

    coopranos Well-Known Member

    Joined:
    11th Oct, 2006
    Posts:
    498
    Location:
    Perth
    This is one of the least ignorant posts I have ever seen.
    And by least, I mean most.
     
  7. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,394
    Location:
    NSW
    Do NOT expect much from a 'taxi driver' !!!:rolleyes: