Would You Share Your Experience With Options Trading?
Wednesday, August 25th, 2010 at
4:22 pm
dgxkeyboardist asked:
I am still new to trading and I would like to hear about somebody else’s experiences (good or bad) in the options and futures markets. Thank you in advance for your responses.
I am still new to trading and I would like to hear about somebody else’s experiences (good or bad) in the options and futures markets. Thank you in advance for your responses.
Tagged with: Options And Futures • Options Trading • Share Trading
Filed under: Commodity Trading
Like this post? Subscribe to my RSS feed and get loads more!
My personal experience in trading options:
1. Never trade options without knowing what you are doing. You will lose money much faster than in investing in stocks.
2. Never believe what your broker told you to do. I once lost $10,000 in one night because I followed a broker’s advice.
3. Keeping quiet on your trading method that works will get you far. Don’t try to be a smart *** to teach others on how to do it.
I will cover more on options trading in my newly created blog that will be launched soon
Well, for one thing, options are a lot more volatile than stocks. That increases the chances for both gains and losses.
Another thing is that you have to watch the time value of the option; you don’t have the same time horizon as with stocks.
Third, you have to know about the underlying stocks. Trading options is a lot like trading stocks in that you’re making bets on whether the stock will go up or down. There’s no way to make such a bet intelligently without understanding the company and its prospects and its trading history.
Sure. The worst thing that could possibly happen to a new option trader happended to me.
I doubled my money on my first option trade on Intel. Man, this stuff was easy.
Then I spent the next year losing all of my money proving I didn’t know squat.
It was a costly education, and I learned a lot, read everything I could get my hands on, but my account was so depleted at the end of one year, I really didn’t have a chance; always swinging for the fences.
I bought calls on CPQ, INTC, and one other, thinking I was diversified. I had an excellent signal that the market was going to take off, and everyone knew at that time to buy technology and computer stocks. The Dow and the market rallied for two weeks, great run, but that happened to be the exact top in technology for over two years.
My experience with option trading goes back multiple decades, but I have never traded options very extensively.
In general, I would say when I trade spreads and manage the risks after opening the spread I have made money, but when I have taken purely directional positions and not managed the risks after opening them I have lost money.
For some examples of some of the positions I have taken the past couple years and how they worked out see the message board threads starting at