Options trading

[Anonymous]

Anytime I see a posting asking about option advice, the same two responses pop up: 1) don’t touch them because you will lose everything, or 2) it’s really, really complicated, so read these dozen theoretical/classic books and work on it for ten years. While there’s a grain of truth to both suggestions, you could say the same about almost any risky investment, including stocks. The sad reality is there are few (if any) books that tell you how to trade options profitably. I have experimented with options and found a way that works for me, but I’m reluctant to share my recipe. Some people find that covered calls are a relatively straightforward and low risk way of using options to enhance their return. If you go this route, learn how to “roll” the call, because at some point you will need to.

[Anonymous]

I have experimented on part of my post tax accounts with selling covered calls and covered puts. It takes maybe ten minutes a day, and I’ll make maybe 15-20% returns in a year, but then have to pay taxes on that income. I have read several articles about selling options but my strategy is very simple and not time consuming, and I don’t sell options on many stocks. I do not buy options except to buy them back after selling.

Is this a success story? Not sure. Could the strategy generate consistent income if I needed it? Sure. Is it really risky? No.

[Anonymous]

Anonymous wrote:I scalp options every day. It is definitely intense. I use technical analysis, but primarily stick to scalping about 10 different tickers because I don't have time to do tons of research. I make money off of quick small movements that these stocks make every day. I don't need to know more than which way I believe the stock is going to move in the next few minutes. I make small consistent gains, and as I gain more experience and success, I will scale up to double or triple each trade by buying more contracts.

Scalping lowers your risk considerably because you can get out of a losing trade quickly and minimize losses. I have no desire to try to predict how a stock will move tomorrow, let alone next week or next month. Personal preference.

My most successful trades are pretty much all under 2 minutes in duration.

Can you share some of the tickers and recent examples of trades?

[Anonymous]

I have buddy at work who does options trading. Total idiot. Seems more like gambling than anything. He seems to lose more than he wins based on his comments. I think it is very very important to have good well tested strategy focusing on one or two stocks that closely pay attention too. Seems like a lot of work without reliable gains.

[Anonymous]

Anonymous wrote:My husband wants to get in to options training. I am trying to educate myself on the risks vs. reward (yes I have already googled it). I’m interested if anyone has any feedback to share on how much time options takes in a given day/week. My husband already has a busy job (10 hr days)/ so I am wondering options if it is something people dabble in or does it require lots of hours (researching companies) to be successful. My bias is to just put more funds into our retirement accounts but he knows people that have made a lot in options….

He's going to make you poor.

[Anonymous]

I mostly sell covered calls but I'm intrigued by the wheel. If it didn't tie up so much capital, I'd be doing that. Although, maybe best to wait on wheeling until volatility drops and avoid doing it on tech stocks for a minute.

[Anonymous]

Anonymous wrote:I mostly sell covered calls but I'm intrigued by the wheel. If it didn't tie up so much capital, I'd be doing that. Although, maybe best to wait on wheeling until volatility drops and avoid doing it on tech stocks for a minute.

Look into rolling your Puts instead of wheeling. Less overhead.