Went in looking for payments and cross border payments related questions about a business I’m starting. He saw that I traveled and the conversation went towards trading. He’s up like 50% and I’m down for the year with my options portfolio, my stock portfolio is positive and fluctuates between beating the market by 5-10% to underperforming by 10-15% largely based on rivians stock price. On average I’m a much more profitable stock trader. I’m profitable trading options, it’s just that I get greedy and that is usually the downfall. Once you start thinking about the money, and making plans as if it’s a forgone conclusion that you’ll profit tomorrow and the next day, it’s time to close everything and walk away for a few days because that’s usually when you’ll see big losses.
He started pleading with me to stop trading options and that it’s a money pit. Yes, being able to make 100-5000% is a hell of a drug but so is losing it all due to a million bs reasons. I’ve lost about $100,000 trading options. I’ve spent about $50k traveling. I am 29 and it’s kind of crazy sitting back and running the numbers. I didn’t think it was that much until recently. I started with Robinhood after I randomly stumbled onto wallstreetbets and thinking if those idiots who don’t know what they’re doing can make money, then surely I can make money…. lol.
He says, you could have traveled, gotten married, gotten divorced, lost half your shit in divorce, and still ended up with more money than you have now if you hadn’t touched options. You could have bought a house in the U.S. or almost any other country. Thank God you have not received your inheritance yet and have not blown it. My sister, 22, got the first trounce of hers earlier this year, $600k, and immediately dumped half into stocks and etfs.
Anyway, I’m going back to stocks and will only trade options during federal reserve FOMC meetings since those are my single most profitable days. My win rates usually like 90%+ and I average like 30%+ those days since the trend is sooo predictable.
So for those of you desperately trying to get into options, be warned. Odds of you winning are low. And when you lose, you have nothing to show for it. No girl, no bar story or experiences, certainly no money.
Bank manager convinced me options are for fools
byu/ThePatientIdiot inoptions
Posted by ThePatientIdiot
23 Comments
It’s fine to trade options if you know what you’re doing. It’s just that they are so much more complicated than equities mathematically and statistically.
People have to learn a ton just to get started, and many refuse to that + many don’t even have college degrees here since basic stats and calc 2-3 helps a ton in getting a footing in this.
And water is wet
Well it just seems that you’re not good at trading options but there’s money to be made. Study your craft more and paper trade options.
For now just buy and hold quality ETF’s and mega cap stocks.
Options are supposed to be used for hedging, people instead just buy otm calls and expect insane gambling returns.
Let me guess. They advised you to invest in ETFs
So I just started and feel much differently than you but I’m curious of your thoughts. So far I’ve made money on about 70% of the options trades I have made. That’s about a 30% return over what I invested. I understand that options can be extremely volatile and lead to losses, but here are the rules I set for myself and they seem to working well.
1) I don’t touch my IRA/401k/ other long term investment accounts. These are mid six figures and getting 8-13% returns each year. They are also professionally managed for me.
2) I only gamble in options with my fun money. I have a limited amount each month I throw into my options account, and if for some reason I lose it all, that’s it. I’m done for the month. No margin trading.
3) I limit the amount I’m willing to invest on a given trade to less than 10% of total capital. I try to follow the 2.5% rule whenever possible. If I can only buy a small number of contracts following this rule, then that’s it. No YOLOs.
4) No FOMO trades. I watched lots of people last week trying to get those Nvidia calls right before the earnings came out. I didn’t want to invest that much because of rules 2 and 3. So I didn’t make any plays on Nvidia. This was a smart choice.
5) No sunk cost fallacy beliefs. If I buy a naked call and I don’t hedge it with a put, and it goes south on me, I sell it at whatever price I can get to minimize losses. I don’t wait till expiry to lose all the premium.
6) I set a profit target for each trade and if I hit it, I sell it and I’m out. I never go back and look at whether I could have made more money. I take profits as I can.
What do you or others think?
Want to trade options without self destructing? Dont use them as a tool for leverage.
Want to take a position on £1000 worth of a stock? Use options to de a price if you want to own it, or to take a position if you are expecting movement- don’t spend £1,000 just use options to give you the same exposure as if you held the stock.
Easy numbers used above…
Winning odds are pretty good… if you stick to reasonable profits!
it’s fairly easy getting 20% returns if you do your DD legitimately…it’s just that people swing for the fences, and get strikeout all the time!
it’s much easier just booping the ball and running to 1st base, collect your modest gains, and move on to another trade!
My blown account agrees
I had a CLOV option. I was up 80% pretty quickly. I got greedy & wanted 100%….then it went red pretty quickly. I waited & when it went green again I sold at a 27% profit. I also have a UWMC option that is currently down 27%. Thinking about selling, but I want to wait until the Fed cuts rates & see if my loss reduces. Also, it expires in February & it’s not a lot of money. I’ve learned my lesson not play options
How did the convo transition from travel to trading?
Stonks go up
Buddy is the fool his banker was talking about, if you ain’t a fool you’ll be fine
No it just turns out you’re bad at using them.
I will pocket $120k/yr in options premiums on solid companies that I can hold for a decade. Please dont tell people not to buy or trade options.
It will hurt my business. Thank you.
Just trade $10,000 for 10-30% intraday youll be fine and make like 3 grand a week at the very least
Maybe you have some unfounded confidence considering you keep referencing your win rate, but are down 100k
You say you are a profitable trading options but you are down?
Is that overall you made money on options but you are at a loss this year?
If you pile everything into VOO or SPY you’re going to average 8% returns. That’s great and it’s pretty historically reliable. With options you could be anywhere from -100% to +10,000%. With individual stocks, you could be anywhere from -100% to +2500%.
I personally have about 83% in VOO, 13% in cash (currently – slated for VOO), and 4% in options/gambling. I keep my options narrowly focused with limited downside. I’m aiming for 2x, not 100x. I also used covered calls and cash secured puts with the VOO I own.
Options like trading you have to have a learning curve and understand the risks.
That being said IMO buying options is way more riskier than selling options. Most people I talk to who buy options get out because they lost money by having to purchase the option that expired worthless and they lost the money they spent.
Selling options, though it does carry some risk, provides immediate cash flow and your getting paid to sell Covered Calls and Cash Secured Puts.
I do very well with getting an average monthly income of $3,500 by selling options.
It’s kind of like the tortoise and the hare story. If your the rabbit 🐇 and buying options hoping for instant wealth you might get discouraged after none of you option purchases hit it big. But if your the tortoise 🐢 you sell options and build your wealth slowly. Unless you’re a professionally educated trader the tortoise almost always wins the total option income race.
Should’ve went balls deep on spy puts today .. easy money .. tell your manager to suck a dick when you have 4000% return
With that money you could have bought stocks and written a sizeable number of contracts against it for premium.
There are ways of trading options that increase your expected value, but most of those are boring/hard/complicated math. You aren’t going to see the big percentage returns, but you can get slow and steady returns.
p.s. as a former branch manager, it was wildly inappropriate and unethical for him to be telling you his trading returns, and probably illegal if he gave you investing advice without being licensed. Some branch managers are licensed, but most aren’t.