No, You Aren’t Going to Get Rich by Options Trading
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Re: No, You Aren’t Going to Get Rich by Options Trading
#2> My position, to be clear, is not a patronizing one that posits people can’t do as they please with their money, but rather that a game of Russian roulette wouldn’t be so thrilling if you found out it was a full clip.
Might I suggest to the author posting some evidence/data that shows retail options traders getting burned? Burned in the sense of having no returns to speak of. Obviously, they're getting burned on bad spreads/lots of commissions (mentioned in the article).
I could be wrong but wouldn't simple logic dictate that... most people stop doing something that loses them money?
If they are losing 100% of the time (aka putting money in, it disappears, they are left with nothing over and over), wouldn't they stop?
Or are they winning just enough to keep them hooked?
I don't disagree. Wall Street = manipulative. Little guy loses. We get it.
But... what's drawing people to Robinhood? The thought of turning $500 into ~$1k+ really fast by guessing something correctly, right?
It's weaponized gambling. My question is, why is it so popular if they supposedly always lose/have nothing to show for it?
Re: No, You Aren’t Going to Get Rich by Options Trading
#3The biggest beginner trap with options is thinking you have 50/50 odds. I'm buying a call or a put, so I have to have a 50% chance of being right, right?
Nope. You have a million ways to be wrong, and a very tiny narrow window of ways to be right. You can lose your shirt on poorly executed calls, even if the stock skyrockets. You legitimately have better odds walking into a casino and betting on black than buying calls/puts.
Re: No, You Aren’t Going to Get Rich by Options Trading
#4> My position, to be clear, is not a patronizing one that posits people can’t do as they please with their money, but rather that a game of Russian roulette wouldn’t be so thrilling if you found out it was a full clip. Might I suggest to the author posting some evidence/data that shows retail options traders getting burned? Burned in the sense of having no returns to speak of. Obviously, they're getting burned on bad…
> I could be wrong but wouldn't simple logic dictate that... most people stop doing something that loses them money?
Humans aren't meat-based Turing machines, they're living beings with emotions and impulses. Why do you think gambling addictions are a thing? Or drug addictions? Or any bad habit that we know is bad, but still do it because self-control is difficult?
Re: No, You Aren’t Going to Get Rich by Options Trading
#5> My position, to be clear, is not a patronizing one that posits people can’t do as they please with their money, but rather that a game of Russian roulette wouldn’t be so thrilling if you found out it was a full clip. Might I suggest to the author posting some evidence/data that shows retail options traders getting burned? Burned in the sense of having no returns to speak of. Obviously, they're getting burned on bad…
It's the same reason slot machines, lotto and scratch offs are popular despite their extremely low odds of winning. The dream of the big winner invokes something in us, especially those most susceptible to gambling addictions.
Re: No, You Aren’t Going to Get Rich by Options Trading
#6> My position, to be clear, is not a patronizing one that posits people can’t do as they please with their money, but rather that a game of Russian roulette wouldn’t be so thrilling if you found out it was a full clip. Might I suggest to the author posting some evidence/data that shows retail options traders getting burned? Burned in the sense of having no returns to speak of. Obviously, they're getting burned on bad…
Why are casinos so popular? The answer is likely similar, and likely not because people come out ahead financially.
Re: No, You Aren’t Going to Get Rich by Options Trading
#7As far as I know, options writing is how one makes money in options in the long run. Maybe experts can share their thoughts.
Re: No, You Aren’t Going to Get Rich by Options Trading
#8> My position, to be clear, is not a patronizing one that posits people can’t do as they please with their money, but rather that a game of Russian roulette wouldn’t be so thrilling if you found out it was a full clip. Might I suggest to the author posting some evidence/data that shows retail options traders getting burned? Burned in the sense of having no returns to speak of. Obviously, they're getting burned on bad…
My theory is people are seeing the 'winners' post their gains on social media (like reddit /r/wallstreetbets) and so they try and go in and see if they can do the same thing. A lot of these people are in experienced and may not know what they are doing, with many losing money in the process
Re: No, You Aren’t Going to Get Rich by Options Trading
#9> My position, to be clear, is not a patronizing one that posits people can’t do as they please with their money, but rather that a game of Russian roulette wouldn’t be so thrilling if you found out it was a full clip. Might I suggest to the author posting some evidence/data that shows retail options traders getting burned? Burned in the sense of having no returns to speak of. Obviously, they're getting burned on bad…
> I could be wrong but wouldn't simple logic dictate that... most people stop doing something that loses them money?
Have you ever been to a casino? Everyone knows that the house always wins in the aggregate, but everyone hopes that they're one of the lucky individuals who will beat the odds and win as an individual.
I would guess, in the case of options trading, that it's not the same people being burned over and over again, approaching 100% of the time, but rather enough wins among the losses to keep some people hooked, while they eventually either get slowly drained or, in some cases, body-slammed. Couple that with a steady influx of new, intrigued customers, and there's enough fuel to burn for a while.
Re: No, You Aren’t Going to Get Rich by Options Trading
#10People said the same thing with crypto way back.
The truth is sometimes people are able to make money on something. Sometimes their returns are going to be eye watering.
But you should know going in that finance is a game for sharks. If your skill is in mathematics, did you go to the best one of the best universities for it? If not, think long and hard about what type of angle you have that others haven't found. There may be a downside that you're unaware of.
But yes, the market can be be beat if you've got insight.