trading options on the share market ?

[wilkie0611]

hi all recently ive been looking at ways to increase my income through investing my hard earnt mone... am currently looking into trading options to produce that extra income and thought there would be no better place to put these questions up other than an investment forum, as I know quite a few of you peeps trade shares and maybe dabble in options...

so my question is have you done a course to learn about trading options or did you
just read books and join a forum like this about stock investing ? do you find this rewarding for the time put into it ?

 

[datto]

Wilk. Mate, this is a property forum. Sorry for disappointment.

 

[D.T.]

hi all recently ive been looking at ways to increase my income through investing my hard earnt mone... am currently looking into trading options to produce that extra income and thought there would be no better place to put these questions up other than an investment forum, as I know quite a few of you peeps trade shares and maybe dabble in options...

so my question is have you done a course to learn about trading options or did you
just read books and join a forum like this about stock investing ? do you find this rewarding for the time put into it ?

Definitely get a handle on ordinary shares first if you haven't already before you go anywhere near options. There's some learning resources on the ASX website.

 

[Terry_w]

hi all recently ive been looking at ways to increase my income through investing my hard earnt mone... am currently looking into trading options to produce that extra income and thought there would be no better place to put these questions up other than an investment forum, as I know quite a few of you peeps trade shares and maybe dabble in options...

so my question is have you done a course to learn about trading options or did you
just read books and join a forum like this about stock investing ? do you find this rewarding for the time put into it ?

Options trading is a good way to lose your hard earned income....

 

[grand dad]

Options trading is a good way to lose your hard earned income....

When I last looked, only one in ten people make money trading options.

Its those who are gutsy (or mad) enough to write options who seem to make a killing.

Writing options entails unlimited risk. Only for the very brave.

 

[joeExpat]

When I last looked, only one in ten people make money trading options.

Its those who are gutsy (or mad) enough to write options who seem to make a killing.

Writing options entails unlimited risk. Only for the very brave.

Not at all, writing covered calls is low risk, and writing puts is a way to buy stock under your entry point. I've been doing it for years.

 

[D.T.]

When I last looked, only one in ten people make money trading options.

Its those who are gutsy (or mad) enough to write options who seem to make a killing.

Writing options entails unlimited risk. Only for the very brave.

There can't possibly be public statistics available on how many in 10 make money trading options.

 

[grand dad]

Not at all, writing covered calls is low risk, and writing puts is a way to buy stock under your entry point. I've been doing it for years.

Do you have a math/stats or IT background? Just curious. My first Options trade gave me a 66-fold return. After that, it was all downhill. I guess the market makers were finally much smarter than I was.

There can't possibly be public statistics available on how many in 10 make money trading options.

If you care to look, its there. Back in the good old days there was something called the Journal of the ASX, which was mandatory reading. I think I got the 1 in 10 number from there, I really cannot recall.

 

[Terry_w]

Not at all, writing covered calls is low risk, and writing puts is a way to buy stock under your entry point. I've been doing it for years.

I agree. Writing options on shares you own is safer than just owning the shares.

Buying options is extremely risk because you are buying something that will end up worthless at some point.

I too have heard that 90% lose money, but I don't know if there is any firm reliable statistics on it.

 

[redwing]

Theres a few threads on share options in the forum

 

[joanmc]

When I last looked, only one in ten people make money trading options.

Its those who are gutsy (or mad) enough to write options who seem to make a killing.

Writing options entails unlimited risk. Only for the very brave.

Other way around is closer to the truth. Writing covered calls is safer than trading options.
To the OP: read, read, read and probably don't bother buying a trading system. Educate yourself. you can make huge amounts of money in the stock market but you can also lose huge amounts. I have done both.

 

[grantwhit]

I've been trading using a pretty simple system that has had some good results
1. Look for reversal/continuation patterns using candlesticks
2. Also use MACD and fast stochastics to help identify reversals/continuation
3. Keep an eye on company/political news that could effect the stock price
4. Buy when SMA (15) crosses the EMA (10)
5. Sell when they cross again or when you want to take profit
6. Buy in the money options at a strike price around +-5% of the stock price
7. That is about it
Buying in the money helps to reduce the risk but also reduces the return
I only really keep an eye on these stocks (US market only)
spy
iwm
eem
efa
gld
tlt
uso
vwo
qqq
rut
dia
vix
sds
jnj
gme
ko
ddd
gs
aapl
jpm
wfc
pfe
ibm
emr
iyr
twm
emr

My last few trades were:
47% profit in 7 days
57% profit in 7 days
55% profit in 7 days
47% loss in 7 days
28% profit in 3 days
26% profit in 3 days

I believe they are quite risky however your outlay is a lot smaller than if you wanted the same $ value return in capital growth from stocks. I think it would be hard to get rich off options alone but they can be good for cash flow to pay off other investments.

Just my thoughts.

 

[The Y-man]

Buying options is extremely risk because you are buying something that will end up worthless at some point.

.

Perfectly ok if you are doing a spread.

I thought the 90% thing was the proportion of options that go unexercised- worthless for the buyer, great for the writer (seller).

The Y-man

 

[The Y-man]

just read books and join a forum like this about stock investing ? do you find this rewarding for the time put into it ?

I did (several) courses - but definitley read read read - and if you are doing Australian markets, read books by Australian authors as well as the US ones.

The Y-man

 

[greedy2000]

I've traded options very heavily in the past, lots of fun, lots of money, but labour intensive (don't have the time anymore ).

It can be very complex, But I just normally sold Puts and Calls for added income over my portfolio.

Start by writing covered calls and understanding how they work, what affects their price, what happens when a share pays a dividend, when you are likely to get exercised and all the situations where it can go wrong.

Once you build up your knowledge move into things like naked puts and naked calls.

My only advice and this is where I see many people go wrong is too many "naked" positions. The market can move very quickly and you can find yourself exposed to a very large margin call that can completely wipe you out.

 

[SoftBank]

I trade stocks, currencies and futures for a living. Writing options is one area I stay away from. The market makers in this market are extremely sharp and it's difficult to get an edge without taking inordinate risk. There are many examples of people making consistent money, month after month, year after year...until they don't. Allow this picture to illustrate:

* short gamma = short options premium.