Options trading

Intel / Eng drunkmonk
Jul 10 21 Comments

I am new to options trading. I've watched videos, read articles, had people whiteboard to me, but I'm somehow not able grasp it. (I guess I'm just not a finance person)
Could someone explain it here like you're talking to a nine year old? TIA

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TOP 21 Comments
  • Microsoft 1337r0x0r
    R/wallstreetbets
    Jul 10 1
    • VMware xs0hcn
      Love that sub
      Jul 10
  • Chase wordladder
    They’re really not that hard to get - in a general sense you’re trading based on estimates of potential of future gains or loss of a stock for money(premium) in the short term.
    ELI9:
    You’re a candy maker and you know you will have made hundred pieces of candy on October 1st. You want to sell this candy in October to pay rent at your candy factory, but because of Halloween there will be a ton of candy for sale November 1st for cheap, so if you don’t sell it before November 1st at at least $1/candy you’re out of luck. You write a call contract, stating you will sell 100 pieces of candy at a fixed price of $1 on October 1st.
    I own a candy store and I know for sure that I will need a hundred pieces of candy in October to sell.I buy your call, paying you money then, so that I don’t need to worry about the price on October 1st and can have a fixed estimate for the cost of the inventory today. The price of candy on the open market may be $.75 on October 1st, in which case I ignore your contract, or it might be $1.25 and I saved money. However, I needed a guarantee of having candy, so I’m willing to pay the fixed amount of premium before October.
    Jul 10 0
  • Do NOT trade options, you will invariably get burnt up. Rather invest in stocks , you won’t at least time decay to 0
    Jul 11 8
    • You Sir are an idiot . People who make money are experts who trade after calculating all the risk with their various strategies which can get fairly complicated. Beginners like OP almost always get burnt
      Jul 11
    • E*Trade / Finance cbEV72
      So the experts are born options traders? The have never been beginners? Are fucking drunk
      Jul 11
    • Read OP’s message again. How much Option Maths do you know ? Anything can be learnt - that does not mean everyone will be able to do it. For example , people play poker professionally , does that mean anybody can start playing poker and winning ? Takes a lot of effort , plus even at the end of it , it’s gambling. It’s a decent suggestion to start with stocks , understand the market and then delve into options
      Jul 11
    • E*Trade / Finance cbEV72
      Yes anybody can play poker. You don’t need PhD
      Jul 11
    • Yes and anyone can trade options ! Though I believe OP does not want to just do that , he wants to win too !
      Jul 11
  • Intuit CwuK88
    Look up wallstreetbets for the best introduction to options trading
    Jul 10 0
  • Microsoft / Eng bobobuddy
    Expecting an explanation here in text is really not gonna help you. So I can point you to some more resources that I have used. First one is Optionalpha.com which has tons of free videos. They have lots of podcasts as well but I would suggest go through the free courses before. Tasty Trade videos on YouTube are good too. There are a few more but these are amazing starters. If you need more dm me.
    Jul 10 0
  • Facebook public2
    Don't trade options.
    Jul 10 2
    • Wells Fargo seeyeeyeo
      Why so
      Jul 10
    • Facebook public2
      1) you dont understand derivatives 2) it takes a ton of time to mitigate risk 3) return is low except around earnings which is only quarterly 4) see number 1 again lol
      Jul 10
  • Susquehanna International / Eng Kristaps11
    y tho
    Jul 10 0
  • New / Other
    DuQvV7y

    New Other

    BIO
    Did stuff. Hustled hard. Retired
    DuQvV7ymore
    /r/woosh
    Jul 11 0
  • E*Trade / Finance cbEV72
    Take training on your brokers website
    Jul 10 0
  • Wells Fargo seeyeeyeo
    Imagine a security(stock)and how it will move in a week, in 2 weeks etc.  Options are nothing but a derivative built on a Model that brings traders together to basically gamble on how that stock will behave.  Since it is a gamble you loose or win at the end unlike a stock where you can recoup some loses.  The original proponents of the model won a Nobel prize.  It has its loophole and if you are mathematically smart you may be able to figure it out and win all the time.
    Jul 10 0