61–70 of 223 posts
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…
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?
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…
"There are low risk strategies like the wheel that basically guarantee you income for doing nothing but being patient." I haven't found any. And every time an option trader tells me about their "low risk" strategy I see a disaster waiting to happen. The "low risk strategies" of option trading are usually strategies where you make a bet that will give you a low income if things go about the way they have been going ab…
That said, using something like a wheel strategy on stock XYZ is inherently less risky than merely buying the stock outright because the premiums can at least be collected until your target price is hit.
Frankly, just reading the headline, I disagree. First of all, yes in a broad sense most people are gonna get fucked trading options if you don't know what they're doing. I know what I'm doing and my strategy is exclusively long equities. But you can absolutely make metric fuckloads of money trading options and there are some trades out there that ain't that hard to figure out. For example, you can print money on a re…
And this is exactly the problem. Most people don't know what they are doing, and it isn't easy to learn.
Even if you have a positive expected value bet, if you aren't using Kelly bet sizing, the odds are you end up bankrupt.
I notice your post only mentioned a positive outcome bet, but does not even hint at risk management tools.
Does anyone know when us plebs will be able to create custom index funds? I recall reading this existed in some form, but not for the public.
Earlier quoted context omitted.
> There are low risk strategies […] that basically guarantee you income for doing nothing Listen to yourself.
What is your issue with my comment? What I said is true. You can essentially guarantee yourself an income. The risk comes from anytime you're holding stock and the stock value decreases, but you can sell calls on that and earn an income on that until a company goes out of business. This type of wheel strategy is inherently less risky than merely buying stock. There's obviously a lot of nuance to even simple options t…
There Ain't No Free Lunch in options. Covered calls give up potential upside gains for income now. You still have the same downside risk as the underlying stock.
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.
Is there any wiggle room in that statement for the alternative? If retail options traders come out ahead winning overall 15% of the time... is that worth pouring time into? It becomes a personal decision on whether you should risk your resources/time given those odds.
The question I have is... why do some people win and some people lose? It can't just be luck.
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)
Assets also include ownership in companies, whether its your own or someone else. The best assets to own are the ones that have the potential to rapidly increase in value, but of course those are the most risky. So the balance is rate of asset value increase over time measured against risk of holding that asset. The best assets are also ones where a third-party can provide a value of that asset, and that asset has a market. The best assets are also the ones you really own versus borrow or lease or have to earn into. Of course, there are ways to borrow assets as a means to actually own and hold other assets.
I know this is stupid and basic, but people get so caught up in swings and moves and trades and plays and options and derivatives and this angle and that angle. But what has worked for me is to buy assets that increase in value, and keep doing that. You can't get "rich" by being an employee and trading your time for money. There's no asset increasing in value. Of course, if you own a piece of the company you're employed in, then what you're working for is to increase the value of that asset, and your income is a cash flow benefit. Likewise, you can't get "rich" by finding passive income. That's great for covering your cash flow and expenses, but there's no asset increasing in value. If you can find an asset that provides cash flow while also increasing in value, that's even better. You can't get "rich" by timing the market. First of all, that's mostly luck, so all examples of where that works can be attributed to luck more than skill, and second of all, there's no asset that's increasing in value.
Oh and one more thing. This is what I realized fairly recently. Venture capital doesn't invest in businesses. It's the biggest head fake there is. They invest in assets, high risk, fast growth assets. Whether that asset generates revenue for the business owners doesn't matter and often gets in the way of the asset increasing in value or slowing down the rate at which the asset increases in value. Whether that asset hires or fires employees doesn't matter (to the VCs). What matters is how fast can their asset increase in value and what is the market to sell that asset. Sometimes you have to increase the value of an asset by overhiring, and then by overfiring. Once you realize that VCs invest in high risk high return assets and not in businesses, then it all clicks.