Buying Option & Carrying Option is kind of Slow Poison

Buying Option & Carrying Option is kind of Slow Poison?


  • Total voters
    37

onlinegtrash

Well-Known Member
#5
Can you please explain in detail. Is option buying only for insurance & not for trading?
well... who said you can't trade insurance contracts!
Infact Insurance companies do exactly this.

You can buy or sell insurances if you see any of these insurances are mispriced.
You can use options for hedging.
You can use options as lottery.
You can use options as heavily levered position when you are quite confident on market direction.
etc etc...
someone in Traderji used options for weight reduction... weight reduction bcoz of anxiety!


Options serve different purpose and behave in entirely different ways.
Methods used to profit in stocks/futures will miserably fail in options...

As a matter of fact... making money in options consistently is very very hard for 90% of trading population... the rest 10% are smart and they know what they are doing.
 
#6
well... who said you can't trade insurance contracts!
Infact Insurance companies do exactly this.

You can buy or sell insurances if you see any of these insurances are mispriced.
You can use options for hedging.
You can use options as lottery.
You can use options as heavily levered position when you are quite confident on market direction.
etc etc...
someone in Traderji used options for weight reduction... weight reduction bcoz of anxiety!



Options serve different purpose and behave in entirely different ways.
Methods used to profit in stocks/futures will miserably fail in options...

As a matter of fact... making money in options consistently is very very hard for 90% of trading population... the rest 10% are smart and they know what they are doing.
Well said Sir,

You can use Options as a substitute for Futures with very less margin requirements and get more value for your money. But you have to be very smart in selection of strike and have to beat all those Greeks which are normally against a buyer!
 
#8
Sir options are kind of insurance.
Insurance do what they are supposed to do.
Provide protection for the premium paid.

Don't see options as stocks or gold or real estate or even futures!
Check the underline, you simply classified option as insurance only and don't look at option as stocks/gold/real estate/futures.

Options can be traded as stocks/gold/real estate/futures.
 

smartcat

Active Member
#9
In the wrong hands, buying an option & carrying the position is slow poison. But then, those traders selling options is even worse! For them, selling options is a fast acting poison!
 

bunny

Well-Known Member
#10
In the wrong hands, buying an option & carrying the position is slow poison. But then, those traders selling options is even worse! For them, selling options is a fast acting poison!
90% of speculative options buyers lose their premiums. The rewards for option writers is small in terms of percentage gains, but most of the option writers are big guys who have extremely good judgement of where the market will go and therefore they write options confidently.

That is why the Put-Call ratio is said to be a opposite indicator. If the market is expected to go up, they will sell puts. They will not sell calls because if they are exercised on expiry, it will cause huge losses. They cannot buy calls because majority of small traders are option buyers and not writers, and also, due to small pockets, positions will be closed quickly as the market moves against the small traders.
 

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