Trading options

I am ready to try my hand at options. (tired of crypto shit),

Is it worth starting small (like ten-fifteen dollars)?

I was thinking of putting $15 on a buy call of GE and $15 sell call on Altria.

DO I just....sit and wait afterwards? I can't lose more than the $15 I put into reach right?

if you buy a 2.5 call and its $5, that means you buy 100 shares for 2.5 at the expiry date or you can sell the call to someone else. You could get 1000 shares for like $100 and end up with $100,000 if the price moved dramatically and your call goes from a ridiculous bet to an incredible choice

I had to study options strategies as an actuary. it's not complicated, really, but there's no guaranteed way to win or anything. You always need to have someone on the side of your bet. Like even if you buy a straddle on the most volatile asset in the world, you still need to find some moron willing to take the opposite side of that bet, so the premium you pay on that straddle will be huge. In other words I think trading options certainly has a place but if you can't already trade stocks or something pretty well you won't gain anything from learning options first at all.

>In other words I think trading options certainly has a place but if you can't already trade stocks or something pretty well you won't gain anything from learning options first at all.

This.
Options trading is essentially the same as trading stocks. For trading stocks you need the stock to go in the direction you think it will go. For trading options, you still need the stock to go in the direction you think it will go. Trading options just allows you to get a much higher percentage gain on the move in a stock, because as a percentage an option moves in much bigger increments compared to the stock itself.

Avoid all the complicated option strategies, they are all nonsense. If think a stock will go up, buy calls on it. If you think a stock will go down, buy puts on it. If you already have a lot of money, then do covered calls and you're done.

Once you realize how much bigger the percentage gains are from trading options versus trading stocks, you will never trade stocks again.

at best you will learn nothing in this thread
at worst you will be coached into unimaginable losses

I wouldn't bother until the options are 5% your portfolio's worth or less, options can fuck you up far worse than stocks if you're not careful.

I just stick to that weekly 3%, it adds up fast.

Holy fucking shit that's a lot. I could quit my job!
Can you lose more than you invest (if that even makes sense)? I don't even know what good stocks to look at or when exactly to buy so I'll probably make a lot of mistakes at first.

Yeah like if you buy a 2.5 call and it drops to $1.5 and no one wants to buy your contracts you will be forced to buy them when they expire for the call price

Unless I'm misunderstanding or Robinhood works differently, I believe what you just said is wrong. One of the benefits of buying an Option is that it limits the amount you lose to the Initial Cost of the Option (plus any other additional costs, like commissions).

I assume $2.50 is the Call Option's Strike Price, right? If, by expiry, the underlying stock is trading below the Call Option's Strike Price you are not "forced" to buy any stocks at the Strike Price ($2.50).

Literally gambling unless you really know what you’re doing or are insider trading. If you have to ask what options are, you shouldn’t be buying them. Not trying to be a dick, just don’t want you to get btfo

no, thats why its an "option".

the amount of money you lose or gain is entirely up to you, its a way of losing money faster.

laughing at all the retards itt
you will lose money trading options unless you write covered calls.

laughing at all the retards itt
you will never make it buying options, only covered call writing on stocks you already own works.

So limit orders with expensive pussy out insurance

If I buy a put on MO/Altria (1 contract) with a limit price at 26 cents it says my max loss is $26.00 and my max gain is $4,224.

I am guessing my odds of getting $4,224 are extremely low? But if I am out only $26 it's probably better odds than shitcoins.

No, there's no max price an option mighr sell for in the future, and there's no guaruntee that the price will be anywhere close to that. If you're going to speculate on options, at least learn the models people use to determine fair options prices. If you think of options as a slot machine, you're going to lose. You're going to lose anyway.

>No, there's no max price an option mighr sell for in the future, and there's no guaruntee that the price will be anywhere close to that. If you're going to speculate on options, at least learn the models people use to determine fair options prices. If you think of options as a slot machine, you're going to lose.

Well, if the max I can lose is $26 in this situation is that so bad?

>You're going to lose anyway.

So, legitimately why bother getting into the nitty gritty? Sounds like its all a coin toss anyway

If you throw $26 in the garbage, you also lose a max of $26, right? Befire gambling on options prices, you should at least understand what options are. Options prices tend toward $0 as they approach the expiration date. Unless you understand how options are priced and have a good idea of what would make a given option's price increase eather than decrease, then you have no business gambling on them.

>>No, there's no max price an option mighr sell for in the future, and there's no guaruntee that the price will be anywhere close to that. If you're going to speculate on options, at least learn the models people use to determine fair options prices. If you think of options as a slot machine, you're going to lose.
>Well, if the max I can lose is $26 in this situation is that so bad?
>>You're going to lose anyway.
>So, legitimately why bother getting into the nitty gritty? Sounds like its all a coin toss anyway
go gamble your money and lose or fuck off and do your own homework. why should we spoonfeed someone who won't even go try to learn the basics.

I already read this: investopedia.com/articles/active-trading/091714/basics-options-profitability.asp

What I don't understand is why people complain about "losing everything". It seems like you can take small bets for (possible but yes, highly unlikely) good returns. Are people just throwing large sums into these hoping for huge returns?

Yeah, it's unlikely to happen.

I recommend understanding what Out-of-the-money, At-the-money, and In-the-money means for Options.

OTM and ATM Options are valued based primarily on Time Value. ITM Options are valued based Intrinsic Value as well as potentially a small amount of Time Value. Time Value can also be known as "Extrinsic Value".

2 Variables that generally impact Time Value are: Time till expiry and Implied Volatility (there's also other things like the Risk-free Rate and Dividend Rate of the underlying asset).

OTM Options with low Time Value are more likely to lose a lot of their value to something called Time Decay (Theta). investopedia.com/terms/t/theta.asp, Options with low Time Value are less likely to reach their Strike Prices.

There are other things to consider too. Things like Delta and Gamma, which I think this user was talking about

Delta is a measurement of how much an Options price will change, each time there is a $1 change in the Price of the underlying.

Example: You bought a Call Option for $1, and the Price of the underlying stock rises by $1. If the Delta on the Option, at the time, was 0.5, the Price of the Call Option you own would go up by $0.50 to $1.50 ($1 x .5 = 50 cents).

Delta is a positive number for Call Options, and a negative number for Put Options. If Price of the underlying increases by $1, the Call will increase in value (positive Delta), and a Put will decrease (negative Delta).

Gamma is a measurement of Rate at which Delta changes. If you're from a Physics background, think of Delta as Velocity, and Gamma as Acceleration (a change in Velocity).

Gamma increases the closer the underlying gets to the Strike Price of the Option, and decreases, the further the underlying moves away from the Strike Price.

This is because Delta is not constant, and Option prices change in value most when the underlying is near the Strike Price of the Option.

The people who tend to lose everything are writers of Options. They do things like selling naked options: investopedia.com/terms/n/nakedoption.asp

They collect premiums from selling, and justed by a massive obligation one day.

I actually understood this, holy shit.
Yeah I saw that on the link I posted above, seems kind of nuts to me. I will stick with buying calls/puts at low sums for now while I get a feel and see how it all works through experience, thanks user.

Alright. Just realized this user was more likely talking about the Leverage options provide (Initial Cost to buy an Option being lower than the total value of stocks it deals in), rather than Delta/Gamma. Still good to be aware of though.

Just go to a casino you are more likely to earn a profit from a casino if you know how to play.

For example i heard there was a guy who got rich in 2013 by playing roulette using the martingale system. Apparently richguycasino.com (yes that is an actual name) has a certain roulette table without the 0 which means you have 50/50 chance

So is this worse than crypto?

hello sirs buy chainlink sirs

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So real question, do all of you retards just assume crypto is a terrible investment because the amount of shitcoins and muh 2017? If you simply bought some BTC a few years ago and help onto it you would have made two decades worth of stock market returns by now.

I bought at 2.19. I'm waiting for it to break even before I risk losing more. It feels unpredictable right now.

Even 4 months ago it would have been a good investment.. when it was 3k. I didn't have money then though since I was unemployed and I wanted to buy.

call means you expect the price to go up, it lets you buy low when the price is actually high, you buy low with the option and resell the underlying on the open market for a profit

put is the opposite, it lets you sell high when the market price is low, so you buy the underlying on the open market and sell it high to the contract writer for a profit

An options contract involves buying a contract for minimum 100 shares of the underlying asset. You're not getting into options without several hundred dollars to throw at them, realistically over a thousand dollars.

i bought 1 contract @ 26 cents....it came out to $26

just want to get a feel for it all and see what happens.

They you go. A call or put? And what stock and strike price?

put. MO (Altria, I was hoping Juul which was supposed to be the future of smoking killing people dings them). $42.50

Best of luck to you, user.

thanks, starting small, want to learn as I go. Want to experience something new besides regular stock index investing and shitcoins.

holy shit this is still alive?

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