Success With Options

[Anonymous No.154406]

Options Investing: What are the most important rules to follow and best criteria?
What's the best strategy?
What things should you never do?
Why does almost everyone lose money on options?

[Anonymous No.154416]

>>154406
1) know what you're doing
2) depends what you're trying to do
3) jump in without knowing what you're doing
4) because they have no idea what they're doing

but more seriously, writing options is a bad idea for most people, people too often go way too big on a small account, etc.
options aren't like daytrading.

[Anonymous No.154421]

>>154416
>options aren't like daytrading
Which is less risky for a novice?
Which is easier to do and learn for a novice?

[Anonymous No.154422]

Look, if you don't know what an option is and you're considering asking a Japanese anime imageboard to find out, you shouldn't be investing in them.

[Anonymous No.154423]

>>154406
The smart people use options to hedge against risk, create spreads, and all that jazz. Stupid people just throw all their money in options around an then lose it all because they're super volatile.

[Anonymous No.154462]

This is a short:

Company X is trading at $100. I think it's going to go down in the next 7 days. I go to the broker and say, "I'll pay you $10 if you let me borrow your stock of Company X. I'll give it back to you in 7 days." The broker gives me the stock of Company X. I sell it for $100. The stock drops to $80. I buy it and give it back to my broker.

He made $10. I made $20, minus the $10 for writing the short, so $10.

As you can see with the short, your upside is limited to the price of the stock (if it went from $100 to $0, the maximum return I'd get is the $100, less the $10 fee), while the downside is unlimited (if the stock went to $1,000, I'd have to buy it for $1,000 to get it back to the broker). Obviously there are ways to cover the problem, but that makes the trade more complex and thus more expensive, since options cost money.

This is a (European) call option:

I go to the broker. Company X's stock is trading at $100. I think that it'll go up. I say to my broker, "I'll pay you $10 if you promise to sell me a share of Company X's stock for $100 7 days from now." He says ok. I pay him $10. 7 days from now, Company X's stock has risen to $120. I exercise my call option, buy it for $100, and sell it immediately for $120. My broker made $10, and I made $20, less the $10 fee.

Here's a put:

Company X is trading at $100. I think the price will go down. I go to my broker and say, "I'll pay you $10 if you promise to buy my share of Company X for $100 7 days from now." He says OK. I pay him $10. 7 days from now, the price of Company X has dropped to $80. I buy a share for $80, exercise my put, and sell for $100.

[Anonymous No.154482]

>>154421
>Which is less risky for a novice?
>Which is easier to do and learn for a novice?

daytrading on both counts, but if you're a complete novice you're not going to be daytrading anyway unless you want to throw $25k in an account anyway.
As an extension, if you're not successful at daytrading, you probably won't be successful at options.

[Anonymous No.154491]

>>154462
This is suuuper basic and has some inaccuracies, but close enough.

[Anonymous No.154497]

>>154482
Are "Futures" day trading?

[Anonymous No.156103]

>>154497
Someone pls

[iHaz !MILLiOnz/Q No.156151]

>>154422
>Look, if you don't know what an option is and you're considering asking a Japanese anime imageboard to find out, you shouldn't be investing in them.

Quoted for truth. I always knew 4chan was semi-retarded ... then /biz/ opened and I lost all hope.

[Anonymous No.156189]

>>156151
I remember you answering my questions in another thread a week ago. I had always considered being a high-up lawyer, but the hours per week needed are way too much. You made me reconsider, but then I was reminded of the hours. Fuck.

[Anonymous No.156196]

Learn the greeks (delta, gamma, theta, etc)

[iHaz !MILLiOnz/Q No.156308]

>>156189
I recall that thread. You seem like a smart person. So do listen when I say that you should not come to 4chan for advise on options, day-trading, stock picking or other risky investment tactics. There's no filter here, almost no one has any real investing experience, and a tremendous amount of bad advice gets posted. Caveat emptor.