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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

#51

Post by rr888 »

NovemberWhiskey wrote: post #28

The way to get rich by options trading is to make a market in them, to aim to be as neutral as possible on your greeks and to take bid/ask spread, and to do this with extremely high-quality real-time risk analytics systems, first-line trading oversight and second-line risk management oversight. In other words, it's to be an equity volatility trading desk.

> it's to be an equity volatility trading desk

There are already a lot of real professional trading desks doing this. How can you compete with them?

Re: No, You Aren’t Going to Get Rich by Options Trading

#52

Post by ivanche »

cactacea wrote: post #25

If you trade options and any of this is news to you then no, you're definitely not going to get rich by trading options.

Definitely! If one doesn't know at least 4 greeks (delta, theta, gamma and vega), what is volatility crush, what are credit and debit spreads, one doesn't have any business in option trading, let alone in trading weekly options or earnings.

Re: No, You Aren’t Going to Get Rich by Options Trading

#53

Post by stjohnswarts »

I knew someone who quadrupled his holdings over the past two years and "got out" in time to keep the vast majority of it. So it does happen from time to time and I'd say going from half million to 2 million is pretty great. I don't have the stomach for it though. However it's just an anecdote, most people people don't have the knowledge (or luck?) to do well other than to make moderate gains.

Re: No, You Aren’t Going to Get Rich by Options Trading

#54

Post by highwaylights »

gxs wrote: post #40
highwaylights wrote: post #29

Honestly this is why after dipping my toes into this some time back (along with some very limited time spent in crypto without any kind of derivative shenanigans) I came full circle back to index funds and just putting what I can away at the end of the month. Are index funds going to make me crazy-bonkers-rich? No, but neither was anything else in all likelihood. What they’re brilliant at is giving me my time and att…

It's fun to me to stock pick and I rather enjoy it fully aware of the risks. My solution is to set aside a small amount for this purpose and the rest, as you said, put away into index funds.

And I sincerely wish you well with it, I hope you beat the market and have fun doing it!

For me, I’ve learned that modest returns over a long period (that I never have to think about) are good enough :-)

Re: No, You Aren’t Going to Get Rich by Options Trading

#56

Post by idontpost »

MuffinFlavored wrote: post #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…

No post body was provided.

Re: No, You Aren’t Going to Get Rich by Options Trading

#57

Post by rr888 »

MuffinFlavored wrote: post #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…

> If they are losing 100% of the time

No its not so one sided. If you really can lose 100% of the time you can just reverse the positions and make money. Price movements are usually random so you'll make money some times and lose at others.

Re: No, You Aren’t Going to Get Rich by Options Trading

#58

Post by dsfyu404ed »

NovemberWhiskey wrote: post #28

The way to get rich by options trading is to make a market in them, to aim to be as neutral as possible on your greeks and to take bid/ask spread, and to do this with extremely high-quality real-time risk analytics systems, first-line trading oversight and second-line risk management oversight. In other words, it's to be an equity volatility trading desk.

This is terrible advice for a retail trader. Don't pick a fight with the pros. Find a dusty corner they don't care about and pick up the scraps.

(this rule applies well to a lot of professions, not just high finance)

Re: No, You Aren’t Going to Get Rich by Options Trading

#59

Post by Archelaos »

A warning about index funds, that were mentioned a couple of times in different threads here.

If the investemnt bank issuing the index fund goes bankrupt, you lose your money - see Lehman Brothers.

You can mitigate the risk by buying from different issuers. However, the bankruptcy risks might still be too closely related; in other words: there is the risk of a domino effect of bankruptcies of investment banks in a future financial crisis.

The best thing you can do to avoid this risk is to buy many different stocks and directly mimic an index or other fund yourself. It is not necessary to do this exactly. A random proportional selection of a considerable number of stocks (40+, but the more the better) from the index or fund you want to mimic and adjusting your investment once a year should be sufficient.

Re: No, You Aren’t Going to Get Rich by Options Trading

#60

Post by matwood »

logicalmonster wrote: post #16

You're probably not going to get instantly rich doing any kind of options trading. The story of an average guy who randomly makes a big bet, times the market perfectly, and quickly turns a few thousand dollars into a few million happens once in a while, but is incredibly rare. That said, some kind of options trading can be less risky than just holding stock because you can do things like collecting premiums until you…

Selling covered calls is a way to make money with the risk of capping your upside. QYLD is an ETF that does this for you.

https://finance.yahoo.com/quote/QYLD

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