Why This Popular Trading Strategy Is So Risky
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- čas přidán 20. 06. 2024
- In 2021, options activity hit a record high, with nearly 9.9 billion contracts traded. That was more than 32 percent higher than the previous record set in 2020. This increase in volume can be traced back to the meme stock mania as millions of new investors jumped into the stock market during the pandemic. Options trading is a popular strategy among institutional investors to hedge their risk in the markets, but if it’s not executed carefully, it can lead to devastating losses. Watch the video above to learn how options trading took off and why the strategy can be so risky.
“The idea that I used social media to promote GameStop stock to unwitting investors and influence the market is preposterous,” Keith Gill told Congress.
Gill - who goes by DeepF------Value on Reddit and Roaring Kitty on CZcams - testified in front of the U.S. House of Representatives’ Committee on Financial Services in February 2021. He became an influential figure online and is credited with helping inspire the epic GameStop short squeeze. Gill would screenshot his investment portfolio, showing his winnings from his GameStop position.
A lot of Gill’s portfolio consisted of what are called options contracts.
Options are an investment strategy that gives a trader the right to buy or sell a security.
“It’s best to think of options as an insurance product,” said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group.
Over the past two years, options have become increasingly popular among individual investors using brokerage platforms such as Robinhood.
“Twenty years ago, if you wanted to trade an option, you needed to maybe call up a broker on the phone, you needed to pay a significantly high amount of commission,” Murphy said. “So there’s much easier access to options markets, and the use of options has pretty much just grown alongside of that.”
If used properly, options can be a good way to hedge risk. But they can also be risky.
“Options are the kinds of bets where you can lose everything,” said Joshua Mitts, associate professor of law at Columbia Law School. “Unlike a share of stock, where you might see your portfolio go down by 5[%] or 10% in value, when you buy and sell options, you can lose all of your money.”
“[Options] in and of themselves are not bad tools,” said JJ Kinahan, chief market strategist at TD Ameritrade. “Fire is a wonderful tool. If you don’t know how to use it, it’s going to end poorly.”
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Why This Popular Trading Strategy Is So Risky
I prefer investing in close-end funds that pay monthly dividends. The trick is to hold long term and reinvest the monthly dividends plus buy more shares on a monthly basis or when ever you can afford to. This can be easily done because close-end funds are bought and sold on the stock market just like regular stock. That’d be enough to create a portfolio that would pay you between $50k to $70k in dividend income
Just because there are entries in the market doesn’t mean you should go in blindly. To understand the potential factors that contribute to your financial growth, I'll advise you to seek the help of a professional
I agree, Having a brokerage consultant for investing is genius! Amidst the financial crisis in 2008, I was really having investing nightmare prior touching base with a advisor. In a nutshell, i've accrued over $2m with the help of my advisor from an initial $350k investment.
That does make sense, unlike us, you seem to have the Market figured out. Who is this consultant?
Try Sonya Lee Mitchell,she is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Google Sonya Lee Mitchell and do your own research. She has portfolio management down to a science
Option isn't dangerous
Lack of knowledge is dangerous.
Successful people don't become that way overnight. What most people see at a glance- wealth, a great career, purpose-is the result of hard work and hustle over time. I pray that anyone who reads this will be successful in life..
You’re right, the importance of multiple stream of income, unfortunately having a job doesn't mean financial freedom or security,
speaking of been successful. I know I am blessed if not I wouldn't have met someone who is as spectacular as Mrs Serenay mathieu
@willam kate I truly agree with you on that,
I must say crypto is the future and with the way Bitcoin is climbing so high it's really advisable for people to invest now.,
Wow, amazing to see others who trade with Serenay mathieu I'm currently on my 5th trade with her and my portfolio has grown tremendously, All my financial goals have been achieved since I met Serenay mathieu
U.S. stock index futures were lower on Thursday as news of another COVID lockdown in China revived concerns about a slowing global economy. My primary concern is how to grow my reserve of $300k which has been sitting duck since forever with zero to no gains, sure I know the risks of short term gains are much greater but if well managed one'd make a killing, am I wrong?
When the market goes down then it's buying opportunity. If the market goes up then you are making money. If you stay invested and ignore the market's ups and downs, you'll make a lot of money in the long run; however, a severe market correction causes a lot of margin calls and sell-offs, driving the market even lower. currently, I'm up 13% in my diversified portfolio. As crazy as it sounds some still make enormous returns from this seemingly unknown market. gotta be greedy when others are fearful
exactly what I'm personally planning on doing now the market is down, but I have no idea about stocks to buy or what assets that would yield the highest potential and so on. Your portfolio is freaking awesome, you seem to be doing well yourself. how do you select stocks you invest in?
I have my portfolio very well-diversified, though I did it using trad signals from a US-regulated broker *PRISCILLA DIANE AIVAZIAN* financial analyst and CNBC contributor and it's been a huge relief. Good earnings and little to no engagement at all on my part. Her stock picks are top-notch, I don't worry about market trends anymore because she's quite the genius in trading and portfolio diversification
@@helenoliver4838 Do you mean copying her trades as it's been done in Etoro? Do you just give out your funds or copy them manually?
@Manuel Andrea Yeah but I don't give out funds here, It stays right in my account. I only mirror her trades in real-time that's ideal for this system. Copy trading is 100% secured and very transparent to work with her, you don't have to send any funds over. you have control over your funds and can opt-out anytime you want just like in Etoro. Check out her name online and get in touch if you need help with this insane market.
I'm MUCH more interested in buying stocks now that they are cheap. You can't just sit on cash waiting for the market to drop 10% before you start buying. The best strategy is to start buying in slowly and then gradually increase the pace of buying as the prices continue to drop. Cash isn't king at all in this era
This whole video can be summed up into “leverage correlates with risk”
We are already in the big crash, Inflation is a catastrophe. This CPI report is a colossal failure. To bring the housing market to a halt, the FED will have to pull all the stops. The unfortunate issue is that other markets are being decimated.If you want to stay green, you have to rely on a lot of diversification. Currently up 14% and being careful. Still a better deal than leaving it in a savings or checking account yielding 0-1 percent interest.
People believe their currency has the worth it does because they have no other option. Even in a hyperinflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.
@Lloyd Bernard You are right! I diversified my $550K portfolio across various market with the aid of an investment advisor, I have been able to generate a little bit above $1.4m in net profit across high dividend yield stocks, ETF and bonds during this red season.
@@anthonyrussell5718
@@kansasmile
@@anthonyrussell5718 Thanks her website popped up on the first page immediately I searched her. I read through her resume and seems pretty tight, so I booked a call to discuss with her
Well... the only problem with using GameStop as an example is that it is one of those rare internet trades that actually made a ton of money for retail investors, and destroyed a number of large private traders who had been shorting the stock and got squeezed for billions. That particular action was not a pump and dump, it was a "we're going to force a short squeeze and take some large over-leveraged traders to the slaughterhouse", in public, on the internet. And they did it. Twice in fact. And now maybe even a third time.
Robinhood, on the other-hand, is the ultimate stupid-consumer bait. It wasn't promoting trading for the masses... you could already do that on any number of platforms. It was promoting fast, repeated trading by offering 'free' trades. They make money by selling those retail trading streams to large trading houses to sniff and front-run. Death of a thousand cuts. Their platform definitely did not have the best interests of the teeming masses at heart.
If you want pump-and-dumps, shady trading practices, and mass fraud, the crypto-currency and NFT markets take the cake these days. A never ending stream of fakery, fraud, and theft.
-Matt
Which stock should I buy Matt help me i am poor
@@user-pi2lq Every word in that sentence implies greater problems for you my friend. Stocks should be the last of your worries.
-Matt
You sound bitter
@@junkerzn7312 Everything you’ve been saying sounds broke
Very well said, if you have a channel that speak on finance I'd definitely follow it. That's a good summary of what the current financial landscape is about
Can't you guys just make a direct video explaining how people can make big gains within a short period? Isn't there a more direct approach to this? Or are these all speculations?
@@ANTHONY_esq Generally diversification is a major key to investing. Great tips.
Don’t chase fast money. My PhD is in Finance and that’s not typically how it works
I have be working with mrs debra barton for 4 months now i can guarantee you she is the best when its comes to trading and investment.
I can recommend anybody and swear with my life that's she no like others.
you can contact her on Instagram
I can’t wait for the piece they do on “How Market Makers and Hedge Funds Made Risky Trading the Norm”
They won’t lol
Market makers and hedgefunds didn't make me to trade options. I've been trading it for 7 years now. If you own growth tech stocks, especially in this environment, you should use options to hedge your portfolio 😀
with this intern explaining it lol!
With the way the market is moving, we'll mostly hold for longer than 2030 to realize profit gain, I think a video on "How to profit from the present market" will be more effective, I mean I've heard of people making upto 250K within few months and I'd like to know how.
there are loads of ways to make a killing right now, but such high-volume near impeccable tradess can only be carried out by real-time experts.
@Flynn Chasin that's impressive!, I could really use the expertise of this advisors , my portfolio has been down bad....who’s the person guiding you.
I just looked up Frances Annette Batista online and researched her accreditation. She seem very proficient, I wrote her detailing my Fin-market goals.
Very well articulated; I wish I had more time for trial and error, but I'll be 56 in October and I need ideas and advice on what investments to make to set myself up for retirement, especially with the looming inflation and recession; my goal is to have a portfolio of at least $500k at the age of 60.
The S&P500 is now trading below its 25-year average based on the price-earnings ratio. Good news for people who will be investing over the next years and decades.
The cool thing about investing in the S&P 500 is that if a company starts to massively fumble, turn unprofitable, and lose market valuation, it will get booted out and replaced with a better company. All without you having to do anything.
I have saved myself from all the hassle that chaotic market causes. These days the best way to come into the market space is reading, studying, patience and seeking guidance when necessary, due to my line of work i can’t handle my portfolio so i just copy the trades of ‘’Theresa Mary Chamblee" a CFA i saw on Bloomberg business news. It’s been smooth since then.
@@MIchaelGuzman737 I'm trying to find out how to contact this Financial Adviser since I'm looking for a better investment strategy.
@@kashkat987 You can look her name up on the internet. She's renowned and has quite a following. So it shouldn't be a hassle finding her official webpage.
@@MIchaelGuzman737 Thanks for this mate. Her website popped up on the first page immediately I searched her, I read through her resume and Did my due diligence on her before leaving a message. So, hopefully she replies soon.
When some people think of successful stock traders, they think of multimillionaires lounging in a beach town, making trades and relaxing. That reality is rare, and stock trading isn't as easy or lucrative as it might seem from the outside. Despite challenges, some people elect to stock trade as a part-time job, or they take on stock trading as their full-time gig. If you know your stuff and follow a strategy, you can make money over time through stock trades by adopting the signal of a licence broker
The best way to find that balance between saving and living is by investing. This way you get to have your saving intact and then live comfortably off the revenue coming in from your investments. Financial freedom is possible, you just need to know what to do and when to do it. I am a living testimony.
My consultant is Kathy Genelle Brittton I found her on a CNBC interview where she was featured and reached out to her afterwards. She has since provide entry and exit points on the securities I focus on. You can look her up online with her name if you care supervision. I basically follow her trade pattern and haven’t regretted doing so
Nice content. To me, trading the stock and crypto market is way better than any online investment
I've been unsure about the market due to it's volatility, at the same time I still feel it's the right time to make profit cos of the price increase, heard someone speaking of making over $700k during this quick rise and I'm driven to ask what techniques/skillset is needed to achieve this.
The best strategy to use in trading stock is to trade with a professional who understands the market quite well, that way maximum profit is guaranteed. Because i have learnt along the way of my investment that research and analysis are important, note that experience is more needed than luck when it comes to the stock market.
Tldr: A bunch of professional gamblers want more rules "to save the common gambler" in their casino so the professional gamblers have less chance of losing money.
For every option bought, there is an option sold. For all the "dumb" money greedily buying short term options chasing big short term gains, there are INCOME investors selling those options, covered by stock to fully hedge the risk, and making a LOT more income than the dividends on the significant option premiums.
There are LOTS of books and articles about trading stock options out there, so it's not like anyone has to go into the risk blindly.
What books would you recommend?
watch the tastytrade videos on youtube. If you are new to options, stick to selling cash secured puts on stocks and ETFs you already want to own. It’s easier to make money by selling options because the value of options lose value with time. Your basically selling something that you hope will become worthless because options expire. Doing this won’t make you a lot of money but it’s very high probability and good for beginners.
I love how this video only talks about how terrible options are and that you could lose all ur money but never once talks about the exponential gain potential of options. If options were so terrible, then why are they so popular with traders?
It’s all fear propaganda they do the same thing about starting a business is so “risky”
Not entirely true. Try 2:12, for example.
True, but remember a lot of Wall St traders make money regardless of if they win or lose their clients money. Many also have no legal obligation whatsoever to do what's in the best interest of their clients, nor do they care about their integrity. That's how the Wall St casino always wins.
They just trying to scare retail investors options can dangerous if you’re yoloing otm options other than if you’re using charts like TradingView and getting the premium version with best indicators you’ll be good I’ve been trading options since last summer and at this point I make more a month trading them my gross take home pay from my job.
Options are a valuable instrument for insurance and leverage! Idk why CNBC claims its sooo "risky". Maybe they've read too many Reddit posts about people buying OTM option contracts with an expiration date a week from now? Just a guess lol
Options are not risky if you know how to exit your position; got to take profit and have a stop loss!
Managing money is different from accumulating wealth, and the lack of investment education in schools may explain why people struggle to maintain their financial gains. The examples you provided are relevant, and I personally benefited from the market crisis, as I embrace challenging times while others tend to avoid them. Well, at least my advisor does too, jokingly.
Investors should exercise caution with their exposure and exercise caution when considering new investments, particularly during periods of inflation. It is advisable to seek guidance from a professional or trusted advisor in order to navigate this recession and achieve potential high yields.
This is superb! Information, as a noob it gets quite difficult to handle all of this and staying informed is a major cause, how do you go about this are you a pro investor?
Through closely monitoring the performance of my portfolio, I have witnessed a remarkable growth of $483k in just the past two quarters. This experience has shed light on why experienced traders are able to generate substantial returns even in lesser-known markets. It is safe to say that this bold decision has been one of the most impactful choices I have made recently.
Wow, that’s stirring! Do you mind connecting me to your advisor please. I desperately need one to diversified my portfolio.
I’ve actually been looking into advisors lately, the news I’ve been seeing in the market hasn’t been so encouraging. who’s the person guiding you?
My advice for investing priority: 1) Real Estate 2) Tech ETFs 3) Company's you believe in long term . Options are no different from gambling in the casino
@Beta Weighted Betting on whether a stock is going to go up or down based on some "catalysts" isn't gambling to a certain degree? Nobody in the world knows what stock will go up or down unless you have insider information, so with that degree of uncertainty you buying calls or puts is exactly what gambling is. As someone who's made over 50k in 2020 over options and subsequently lost half my profits this year alone, i think i know what options trading is
One of CNBC's best this year. Tips for the newbies; In your quest to make money through stocks, remember to spread your investments locally and Internationally. The market is a zero sum game and you could potentially lose all. Always make correct inquiries before putting your money somewhere or better still, get the services of a pro(that way, you give little room for error). Made my first million earlier this year this way. Good luck!
Very sound and pragmatic. I have been into this for long and though I won't say I have lost a fortune, but I have squandered quite a lot. If it's not a problem, do you mind recommending the pro you worked with? I could definitely use the help of one right now... I look forward to your reply...
@@archiemcdougald5466 Funny enough, I can honestly relate. I don't know if I am permitted to drop it here, but her name is "Nancy Lynn Lewis". Was in the news a lot in 2018. You can check her out online for more.
@@emersonstagnitta65 She's got a pretty decent bio and seems American. Does she work with foreigners?
@@emersonstagnitta65 This right here is the second time I am coming across this name in a week,, My colleague at work seems to feel she's some kind of God sent angel,,,
Comfortably sitting on this table
Regulators don't really care about investors. Only keeping you poor and in the working class. If they did you would not have the PTD rule. That just locked you into a trade for a day so if a trade starts to go against you you can't get out before you lose your profits.
Yup these regulations are more counterproductive and not necessarily protective. Those who want to trade should do so if they lose they lose simple. Those who'll adapt and win will do so. Regulators do more harm than good.
News, the party is over do you want to stay around when the party is over and pay the bill.
Regulators want to protect retail investors 🤣🤣🤣
Great video really. also i agree with your opinion, For the newbie if you are actually trading in the crypto space and you don't have a sound mentor. Then you are certainly going to get liquidated in 90% of your trades. Yeah that's the sad truth. For a start you need a good and experienced hand to guide you. Trust me, trading isn't difficult as we see it. With the right information and guide, you can earn hugely monthly.
You're right! I have lost a lot trading all by myself without a guide. It's been an uneasy ride for me. Who is your mentor please. I actually don't mind paying.
@@reyansh437 That's sad. i totally understand. i actually lost too at the early stage and then i had someone to manage my account and i watched his strategy and how he does it. Anthony Kulan has been my mentor and i trade using his daily signals
First understanding the financial market and how it works then you need to know how to study the market charts. That's all you stand to get when you start trading with Anthony. he's highly recommendable.
Trading without any guide is so risky, you're right. you need to get a good mentor to guide your trades.
How can i get in touch with Anthony please?
Lol 😆 it's only a problem when the little guys do this en masse
Keith Gill/RoaringKitty is legend. Don’t make him out as a bad guy.
Institutional investors are scared now that retail investors are being exposed to all of these products because they will no longer have their edge. People are free to make their own decisions. AMC and Gamestop shares rose because of the demand. Whether or not that the price is reflecting the “true intrinsic” value is irrelevant. The market price is determined by how much someone is willing to pay, so retail investors stuck it to the man when those institutions shorted the stock. Good on them too, who says investors have to play by the rules. If they get caught with their pants down, then thats the risk they took by shorting the shares.
Out of the money covered calls, with a strike price higher than what you paid for the underlying isn’t too risky.
Investing in today is priceless because tomorrow isn't promised, trading bitcoin, gold, silver or any other cryptocurrency secure a better tomorrow.
Most people have been having a lot of failures in investing because of poor orientation and bad experts.
That's true
I do see it that forex and crypto trading is one of the profitable money exchange services that elevates investors and their financial status.
It's really needful for beginners not to settle for videos alone or they will see themselves losing all their money just like me when I newly started trading with CZcams videos
I'll recommend Mrs Patricia Flores to anyone who wishes to invest in crypto trading, her strategy is working for me. I'm making good profits from bitcoin trading
i have been actively buying (mostly) and selling stocks since about beginning of 2020. It has been huge learning experience. I have not touched bying or selling options. I am not ready for this. Perhaps later in 2022, I may be ready to sell an option as an experiment. For now, the closest i have come to buing and selling options is bying ETN, with deploy covered calls, such as QYLD and XYLD. I pay their expense ratio, and receive a monthly distribution. Their pros do all the work of sorting out selling covered calls. I am able to generate about 12-15% in anual distributions, paid out monthly with these.
Thanks so much for this video, I'm nearly 32 trying to understand the market, I spent about 8 hours just on this video, taking notes and trying to get at least beginners knowledge, and I have to say that out of all the videos I watched, this one helped the most. Thanks again
having professional mentor is also very important when it comes to trading, without proper mentorship, one trend to opt out of the market early enough. I do my investment with mrs Stacy Griffin
I stumbled upon one of her clients testimonies and decided to try her out...I'm expecting my third cash out in two days
Mrs Stacy is indeed a forex mentor. With my first investment of $7000 I got a ROI of $70,000 in a week
@Betsy Schwartz I don't really know about that, but I think There is really no country restrictions in her company...I'm investing with her from Switzerland
What surprises me about mostly is that, she gives her clients access to her trading site whereby they can monitor their trades on daily basis
*Great video. We all strive towards financial stability and a better life. It is easy to achieve this through the right investment, by living frugally and budgeting. I’m glad I learnt early in life to work hard for financial freedom*
In my opinion, venturing into a good investment, is not just a strategy for generating passive income but a profitable saving method for future expenses. Those who fail to make the right decisions early in life end up regretting. Nevertheless, investing can be difficult and risky doing it solely. For this reason , I advise on seeking help from professionals(financial advisor). It’s not just watching videos and reading investment book but the challenge is using it well.
@@MariaDeigo8 I’m truly inspired by your words. I’m very interested in investing and I’ve a good sum of money which I’m ready put in with the right information. My fear is losing my money in a wrong investment. For this reason, I’m willing to listen to your suggestions and ideas on how to invest wisely.
@@whitneyhouston6888 I firmly believe that the success of any investment depends on having the right information, regardless of what others say, do whatever you set your mind to. Warren Buffer always says "be greedy when others are fearful and be fearful when others are greedy". This is certainly the trick to succeeding even when others fail. I made *$200,000* working with *Donald Nathan Scott* a licensed *financial adviser* . It’s been a promising experience so far with him.
@Maxime Louise As to get more details about my coach; *(Donald Nathan Scott)* quickly do a web check where you can connect with him, do your research with his full names mentioned.
This is precisely the right information and I hope it motives so many. To win big, you just need to think outside the box. Leading Successful investor, didn’t just get rich doing what others did but took there time investing despite all odds to get to the top. Working on my path towards financial independence, I realized that; “the greater the risk , the more the rewards”. Just a personal advice to anyone who wish to invest, I recommend having a Personal financial planner.
Last October started with $350 and end the month with $4,600. Spend time understanding and paper trading before using real money. Cash account was the best way for me to start. Start with SPY cheap contracts. You don’t need to trade expensive stocks.
The Wheel Strategy for options is still pretty good
was that dude doing an interview in the laundry room?
Following this options trading strategy, I made $ 3.47 million with a capital of $ 255K
Bot
Recently I got into the stock financial niche, and I’ve taken a deep dive into investing, My advice is always to keep the majority in ETFs that cover multiple sectors. Then have a couple stocks, as a small percentage, picked out that you feel personally attached to or interested in. particularly dividend growth investment as it interests me. Tried several methods trying to figure out the best approach to building my portfolio.I made my first million to my portfolio from great company stocks. So far, I’m making progress with the help of my financial Jane Marie Kunak . Back to the video, wonderful job there, always look forward to your next content.
Financial management is a crucial topic that most tend to shy away from, and ends up haunting them in the near future.
I invest in stable stocks, my rule: if you previously liked the stock, then you should love it at a discounted price.
So i found her webpage by looking up her name online.... Her resume is quite outstanding, I'll be writing a mail to her shortly.
ROFLMAO @ LING 🤣😂🤣😂 your first million 🤣😂🤣😂
pretty sure you posted this just so you could brag about your portfolio, wow what a narcissistic post. but you won't know that because a narcissist wouldn't understand
if you were giving advice you could leave out the "first million" B.S.
Me and Elon are cracking up on this one while taking a rocket ship to Mars........I spent my first million on the ticket!!
What I would do is taper the amount that can be risked with options, on any account that hasn't seen option trading before. Like $100 the first month; $200 the second month; $400 the third month, etc. Also, Pattern Day Trading rules clearly, CLEARLY are what drive most poorer people into options trading - this includes myself when I first started. Pattern Day Trading rules make zero sense, do not protect, and clearly harm. Abolish them. Some rules are appropriate with options to protect traders, but they need to be good ones.
Please stop regulating the market
For what? These are free markets
@@TruckerLerone They're absolutely not free.
@@brrianland If I freely rake my money in and out that’s what we call freedom
@@TruckerLerone Maybe you can, but if others can't, then it's not a free market. PDT must die.
Are people still trading with the crash?
Some investors look to their investments as a source of income while others use it as a means to grow or preserve their wealth.
For new investors, getting started can feel overwhelming. Risks loom large, and complicated, unfamiliar financial jargon can be intimidating.
Been trying to get started but i end up loosing out. Do you have a professional broker???
Lol the blaming starts 🤣🤣😂😂😂
You can't lose more money than the cost of the option. At the end it's always your call to exercise the right to buy or the right to sell.
Not true. Sell a 50 strike call for $4, now what happens if the stock goes to $70 and you get exercised? You will need to go buy the shares at $70 to cover the calls you sold and lose way more than the $4 premium you received
@@Alex-us2vw Why wouldn't you instead buy puts in that case?
Is it the same , risk , to in vest in options on the Chigago Stock exchange. Corn and wheat futures , options etc. Is it better to learn on the commodities market?
I normally just sell covered calls on investments I have or plan on holding long term for extra income. If it is called I just look for another entry point later on and keep the gains I had plus the selling premium. Most of the time it doesn’t get called and I keep the premium and the asset. Not super risky unless you where just swing trading a company and you sell a covered call with it. Then if it tanks you take a larger loss because you have to buy to close the option and then take the loss on the stock if you really didn’t want to keep it anyway.
I would think the main problem with this would be having to pay taxes if you have to sell a large position. Am I right? I’ll be looking to sell way out of the money covered calls in a retirement account once I have enough shares. It wouldn’t be a lot of money but it’s basically free and will compound tax free.
@@AJohnson0325 you do have to pay taxes but that means you’re making money.
that analogy of calls and puts is on point. I'll never forget it.
Casio strategy applies. People lose money because they stick around instead of cashing money when money is up. I remember one of the best female traders saying" If you watch the tape more than 45 minutes a day during market hour you will lose." Place conditional orders (buy and sell) before market opens and walk away.
Options trading is also riskier than it should be for many traders because they refuse to take losses and double down on the losers. Since options can lose value so rapidly, especially if they're close to expiration, this is a sure way to quickly blow up your account. Instead, losses most be cut very quickly. Gamma squeezes are real though, when people buy many, many call options the market makers hedge by buying shares, causing the price to rise further. If you know what to look for you can get an edge instead of it being a slot Machine.
8:23 Alright, so you’re telling me that the closer in the money option @$925 ($27) costs less than the further out of the money contract @$1000 ($30)
Great example 👍
The higher profit probability for 925 call has a lower $27 price due to collecting the premium from selling the 1000 call (2nd leg of the option spread). Good example to illustrate the basic idea of trying to improve odds for making money on every trade.
Options are just speedrunning the stock market.
Main problem, trading in general is very rosy regardless of options trading or stock trading. From my experience the options trading is the most rigged as you have no control and you are betting against a volatile item. It can also be noted that even though the experts have a leg up, it can be said that 95% of traders including experts have a bad trade. (FYI some of them have degrees which benefit them yet still fail)
What are you even on about? Rigged? No control? Betting against a volatile item? Literally just don't buy short term expiries, far OTM, or dabble with illiquid options. Already following those rules will limit your risk greatly. Then if you actually make your decisions based on fundamentals rather than based on hopium, you'll most likely end up in profit.
Covered calls...... Conservative method.
i'm guilty of playing options, my cousin taught me before the pandemic but I could never fully understand it so I did my research and studied it online. I remember making a lot of money from AMC but honestly I got lucky. I bought AMC because there was a rumor that Amazon was thinking of buying AMC . So i bought contracts for a year out with a strike price 3 to 5 dollars close to the money. all of a sudden three months in, wall street bets gets a hold of it and shot it to the moon. I sold literally at it's all time high which I got lucky again because I didn’t have an exit strategy especially when you see money move in your account at a rapid pace. I was able to at least see what was clearly luck I cashed out and before putting any more money back in the market. I took the time to get the education and learn how to trade effective and would practice with paper trading first.
Can’t be yoloing your way through it and gotta invest in yourself if you’re going to do options trading, I make myself about 2 to 4 grand a month trading options.
Delta/Gamma/Vega. Think about why you are trading options and what's your payout is compared to regular stocks. Enough said, do your own due diligence, there's money to be made if you can use options to your advantage.
But what does option trade add of value in the economy? It appear like gamble to me.
Someone told me that it's the best time to buy because there will be a huge pump soon
The cost of living is making people go into different businesses anyways, but my problem is that the rate at which money gets finished on little purchases is so surprising
I saw all this coming I had to switch to Crypto trading and I'm really enjoying the fact I made the right choice because of my weekly earnings
I make good income too from bitcoin trading and its been my most reliable source of income at the moment. With profits I've made so far I don't think i can get broke or lack anything.
How do you do it please?
Because I've tried severally but seems not working
I made so much money on options. Be careful for wide bid/ask spread for more liquidity. Always buy over a month out because of it goes wrong you don’t lose everything. DONT play earnings it’s a trap. The Greeks will burn you. Also options allow hedgefund to control a stock because they can make a synthetic share by buying a call and put at the same strike.
i think you can close your position before expiration day and profit the same or more than level 3?
"Sir, this is the casino"
On one hand you have the wide gap between finance and actual business, with the image of financial types playing with other people's money and getting a bailout if things go bad; on the other you have millions putting more faith in their abilities than they should: "if that feckless finance bro can do it, so can I".
Is the scenario that the gentleman at 12:25 in the video the same as a "pump and dump" scheme ?
Thank you
Great info👌
Don’t buy options It’s better to sell them
sorta. you can get stuck catching a falling knife with cash secured puts...then again, that's just an opportunity to start selling calls against those newly assigned shares.
For everyone that is second-guessing options from this video: Options may be risky, but that is true for every financial asset in the markets. Please do your research on key statistics for options such as implied volatility, intrinsic value, time value, the Greeks, etc. There are great resources like Investopedia, The Balance, etc. to help with the basics of options.
Also...
You might "lose" all your money, but you will never owe the brokerage money for going negative, which is safer than going short on pure stock. Just don't put 100% of your account value into one option contract.
Happy gambling 😃
It's funny actually that they have a number of rules against Stock trading. Let alone, options trading. There's an age restriction, PDT, level 3 restrictions etc. while the only restriction that they impose on gambling is an age restriction. It's extremely obvious that these rules and regulations aren't meant for our well-being but for the several multi-billion dollar hedge funds' sake. The wealth become wealthier and poor get poorer!
"never going negative" remember that for every option you buy there is someone else selling it. Thus, when writing options you could lose massive amounts (when writing puts) or technically infinite amounts (when writing calls).
@@jeroenreimink4977 Yes, but the basics of options works in such a way you will only lose 100% of the position and never owe any money to the brokerage (aka a margin call).
@@Void-yl9om omg i just realized we have like the same profile pic 😂
Anyways, there's a lot of new brokers like Webull which is what I use, and they give retail investors so much room to get into new markets (which is how I'm able to trade options). But regardless, the whales will always be the ones making big bucks!
5:42 that's brilliant
The opening line: a hoarde of investors... correction GAMBLERS.
Risk of Bull Call Spread is if no one buys the Call Option you are selling. And if the price falls.
If you gonna gamble your money anyway I rather you do it in the stock market than in a casino or lotto. Just don't short or use leverage.
If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability. --Henry Ford
Unsophisticated investors + complex options trading = five alarm dumpster fire
Getting rich quick is the oldest scam in existance! Time *IN* the market beats *TIMING* the market!
Not always bro lol market from 2000-2008? Lol
Just look at PYPL and where it stands? Still in Jun2019, meaning that if you sit on PYPL, you simply wasted 3 years for no gain. I still think PYPL will eventually go back up 300 at some points, but when? That's the question you want to answer before you say "Time in the market beats timing the market".
Many people are saying that, and there are some truth in it, but it's not always true.
@@jaelee2277 that saying is usually implying a much longer time horizon, and historically referring to the broad market. 3 years is hardly “time in the market.” If you’re thinking in terms of horizons less than 5 years, you’re probably more of a trader than an investor, which is fine if you want to do that, but still doesn’t discredit that saying.
Most people have access to spreads. I do and I have no clue what Im doing, 😂
Nice video.
Is this Ben Shapiro telling me I shouldn't have access to options trading?
Also, what happened to doge to the moon lol. There was only two months throughout the whole year where you would have made money if you bought in AND sold within that time.
The trading memes these days are like a pyramid scheme of hype. Most people get in too late and try to continue to hype up other people so they have a chance to get out.
Do a video on how Melvin Capital created the perfect market conditions for retail investors to profit and what that redistribution of wealth looked like.
You will never take the emotions out of trading because everyone is looking to win. No one sane would be trading looking to lose. Being able to pay your rent on time, feed your family have money to take care of the little luxuries you may want. Those create joy, calm. Losing creates sadness,anger.
Option spreads are safer and cost less money then buying calls and puts
How in the world is the ATM 925 call option in there example at the 8:05 mark cheaper than the OTM 1000 call option? These people are getting the basics wrong.
Good insights
“Coordinated” does the MSM really think we are all that stupid? Again, putting the retail investor as the bad guy. I’m sick of it.
I think you are reading way too much into it.
Going onto a forum and convincing everyone to buy is literally coordinating lol
@@MrPs391 convincing who? That’s not what he did. He presented facts on his CZcams channel. He didn’t convince me. I bought my own shares because I did my own research and I love the companies.
The hell?? The shills come out by force...
@@layhosik - Right, we're shills because we happen to disagree with your take. I'm a retail investor, most people here are, and while I chose not to participate in the meme stocks, I did pay attention to the ongoing discussions in reddit. Whether it was organized or not, it most certainly was a coordinated effort revolving around a few stocks by a group of retail investors.
Im just learning about the bull call spread so ill explain it in comments to help me understand.With an bull call spread in this situation when the stock price is 900 you buy a call with a lower strike of 925 for 27 dollars so break even is 952..then sell a 1000 call for 30 dollars both at same expiration date so the net gain to is 3 dollars at that point. if the stock goes above 952 to 1000 you make a profit. After 1000 the sold call is in the money. So the 925 call that was bought can be sold and with that profit you can buy to close the call.
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CNBC needed some clicks lol perfect video topic
On facebook, I see people who could barely pass their high school math test trading options...
My name is Ape and I'm an options trader addict 🤣
Hit me up 👆📥
You might not have a hundred million dollars to invest, but that doesn’t mean your money can’t share in the same opportunities available to others. You work hard for your money; make sure your money works hard for you.
The wealth you pass to the next generation can have a profound impact on your heirs, providing educational opportunities, the capital to start a business, or financial support to your grandchildren.
To manage investment risk, consider maintaining a broad diversification of your investments that reflects your personal risk tolerance, time horizon, and the nature of your financial goal. Remember, diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.Because investing can be complicated, consider working with a financial professional to help guide you on your wealth-building journey.
can you endorse any ?
TERESA JENSEN WHITE does a perfect job. look her up on the web
thanks for the info . Found her website and it really impressive
Awesome!
I'm a newbie with options and need a tough question answered. Please help..
When I place a market order to "buy to open" a call option, and once it's filled, I then place a "stop loss order" at say 50% of the purchase price paid for the option, can I possibly lose more than that?
If not, then why are people losing their life savings? I don't understand.
12 year options trader here. People are losing their savings trading on "margin". Or simply put borrowed money traded against the balance as collateral. They are highly leveraged in this position on an already leveraged financial instrument. , and you still must come up with the interest you owe on the loan.
@@lawrencefearon6830
Thanks for responding!
@@lawrencefearon6830
Just curious..
Are you a day trader? Swing trader?
And why do you find that to be better than the others?
@@bottomfeeder1307 Definitions are too rigid because I've done both depending on the situation. Sometimes simultaneously.
options that are binary Are they one and the same? Sorry, I'm a beginner in the capital market, so I'm still confused about terms in the financial world.
Very good information
I'll tell you how it works- when you buy calls, stocks go down, when you buy puts, stocks go up LOL
" my heart goes out to them" 😂😂😂😂 certainly not his profits. 😅 11:50
Credit spreads, just use them
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People are and should stay be free to purshase anythning they want, when they want for any reason they might see fit if they have proper collateral to to be accountable for their actions. That said, education is the greatest risk reduction option trading strategy there is. A given market participant can lose 20% out of a correction of an underlying itself under a month. An individual can go bankrupt over any business endeavour for that matter, it happens every day. ;)
I’m under the opinion it’s actually both riskier and less risky. Also I’ve made more money consistently with less money on options. I’m by no means perfect at it but I agree with have a strict planned amount of money you spend with each trade.
Paper trade for over a year, learn the Greeks and the markets. Pro tip: focus on trading a single ETF ex. SPY or QQQ and learn the movements.
This was actually a very well our together explanation of options.
Who created and allowed these margin/leveraged risky gambling items and legal in stock world this is 1st question, why shorting is legal to destroy a company 2nd question. No one want to discuss it why?
The company earns money on shorting.
The shares drop because both now own shares in the company. The result is a drop with a rapid increase only to drop again. While the bet is set they're shares in the company and as long the bet is online the shares will drop until it meets the date. This is why shorting is cyclical losses of the value and why companies stocks with allowed shorting never increase over long terms. These stocks are for daily trading as it's almost predicted for the shares to lose its value because of money printing. Shares are cryptocurrency. Beware of shares who have many owners because 70% is likely based on shorting.
lol i’m a retail trader with level 4 options. not easy to get there though.
robinhood doesn’t allow short stock or naked options for retail, but plenty of other brokers do.
RIP to homie who died because he panicked over his losses.
Why is there no coverage of the strategy of selling out of the money options (cash secured, not leveraged) to collect premiums in order to generate modest, but consistent income?
To my mind, this is the least risky way for folks to generate income - they become the insurer, not the person buying a policy.
It would be beneficial to see some coverage of the less risky side of option trading.
Those are very risky, there's a good reason why your always making money, all you need is one market turmoil and that's it you lost everything
Respectfully, not really - if you apply proper analysis and discipline.
1) only sell puts on a company whose stock you would buy anyways - do a fundamental analysis and figure out at what price that company is on sale, ie, what price you would pay for that stock even if you weren't using an options strategy.
2) only sell the put at your above mentioned "sale price". If you get assigned the stock, that's ok, because you would have bought it at that price anyways, you just got paid for doing what you would have already done.
3) only sell covered calls above your basis, and at an amount that lets you lock in a healthy profit.
Rinse.
Repeat.
If you're employing a strategy like this on some stock just because it is volatile or has lots of premium, then it is risky, but if you're employing the strategy on a company you would buy anyways, you're actually reducing your basis and hence your risk.
Never employ this strategy unless you're investing like Buffet ie; don't buy a stock for 10 minutes if you wouldn't hold it for 10 years.
Same rules apply to options.
You're welcome :)
@@TheNExperience there are only a few like you and I that get it ;)
@@TheNExperience yep and your returns will be 10 percent a year
@@dannyshap8698 calm down dude this is really common strategy not advisable due to the low amount of returns
Can't US traders trade in index directly???
Please some one tell me how to calculate currency futures