Anyone here in the Options market?

[Coolisme]

Im really interested in the perspective of owning some options, so I was wondering if anyone here trades with options and any tips they can provide me.

How to get started? How much money should I have before considering options trading?
The costs a person may encounter.
Can a person do it alone, or do we MUST need a broker for transactions?

[Sash[DSL]]

im pretty damn sure u need to sign a contract with a broker company, options arent groceries :D Not sold in stores. I think the lowest fee youd find is $30 per transaction.

[Hymac]

You can trade options with an on-line broker like Investorline or Waterhouse.

[ruwaydr]

You can trade options with an on-line broker like Investorline or Waterhouse.

Yep.

I traded thousands of dollars worth of options in grade 8,9,10. It was fun.

And I was using real money too.

Then the market crashed..

[trader08]

Yep.

I traded thousands of dollars worth of options in grade 8,9,10. It was fun.

And I was using real money too.

Then the market crashed..

Were you insightful enough to buy puts?! :cheesygri

back to original poster
Understand that options are very risky, you can lose all your money and therefore I think if you want to test out options it's best that you try playing it in a simulated environment. Mind you, I've preached this more than once but most people don't listen. The worst thing is when a new investor (and this goes double for option investors) dive in and actually make money. They suddenly think they know what they're doing and throw caution to the wind.

I guess there are certain things you have to experience yourself before you can really appreciate the pain. Buyer beware...

[Coolisme]

Were you insightful enough to buy puts?! :cheesygri

back to original poster
Understand that options are very risky, you can lose all your money and therefore I think if you want to test out options it's best that you try playing it in a simulated environment. Mind you, I've preached this more than once but most people don't listen. The worst thing is when a new investor (and this goes double for option investors) dive in and actually make money. They suddenly think they know what they're doing and throw caution to the wind.

I guess there are certain things you have to experience yourself before you can really appreciate the pain. Buyer beware...

Do you any virtual simulated environment I can try out?

The only loss I see is just the cost of actually buying the option, there is a HUGE chance of risk for sellers of options. Option buyers will either make infinite profits minus cost of options and cost of brokerage contracts or break even.

There isn't really a lot of risk, if you play it safe. DONT borrow money to purchase options since payoff is uncertain, and DONT spend a ton of money at once, $100 - $300 purchases should be sufficient.

[advantage21]

The only loss I see is just the cost of actually buying the option, there is a HUGE chance of risk for sellers of options. Option buyers will either make infinite profits minus cost of options and cost of brokerage contracts or break even.

There isn't really a lot of risk, if you play it safe. DONT borrow money to purchase options since payoff is uncertain, and DONT spend a ton of money at once, $100 - $300 purchases should be sufficient.

No offense, but your comments shows you really haven't a clue about the options market. This is a zero sum game (if you neglect the commissions), just like poker (and the rake), the only way you can make money is by taking it from someone else. Think there is no risks? Unlike owning stocks, to make money in options, you have to be right about the direction of the price movement, the magnitude of the change and the time frame.

Go read some books before you try this.

[Coolisme]

No offense, but your comments shows you really haven't a clue about the options market. This is a zero sum game (if you neglect the commissions), just like poker (and the rake), the only way you can make money is by taking it from someone else. Think there is no risks? Unlike owning stocks, to make money in options, you have to be right about the direction of the price movement, the magnitude of the change and the time frame.

Go read some books before you try this.

I already know that the options market is a zero sum game, whatever amount I win someone has to lose that amount.

Say I purchased $100 of call options and the price of shares goes up. I exercised my options and buy the shares at the lower price and sell it at the current price. Whatever profit I make, someone must lose that amount.

But if the shares of the price does not change at all or goes "out of the money" by the time the option expires, I just lose the money in which I used to purchase the options. I lose $100, the seller of the options profits $100. A zero sum game. Benefits of the buyers outweights the benefits of the sellers.

The entire risk of the game is based on time and movement of the stocks.

[trader08]

Do you any virtual simulated environment I can try out?

The only loss I see is just the cost of actually buying the option, there is a HUGE chance of risk for sellers of options. Option buyers will either make infinite profits minus cost of options and cost of brokerage contracts or break even.

There isn't really a lot of risk, if you play it safe. DONT borrow money to purchase options since payoff is uncertain, and DONT spend a ton of money at once, $100 - $300 purchases should be sufficient.

Advantage21 is right, I don't think you quite grasp the magnitude of risk involved from your comments. But I guess if you're only thinking of spending that kind of cash ($100-$300), it's a cheap lesson (assuming you learn something out of it).

If that's your budget, I think you'd probably get better odds from the casino (pending on the game you play of course).
The problem with such a low starting point is that commissions is going to kill you off the bat. We're looking at $30 commission one way and $30 getting out (and that's a conservative estimate). Then comes good old spread, spread is extremely important in the options game and picking the right type of options will give you a better chance of getting out alive...

I think I'm going to stop there, not because that's all there is to it, but because I don't have the time to type everything out. You are definitely better off putting that money into some good books or a sim program that provides option trading. google is your friend.

[advantage21]

But if the shares of the price does not change at all or goes "out of the money" by the time the option expires, I just lose the money in which I used to purchase the options. I lose $100, the seller of the options profits $100. A zero sum game. Benefits of the buyers outweights the benefits of the sellers.
The entire risk of the game is based on time and movement of the stocks.

If a call is priced cheap, it's for a good reason. Your $100 option will be so far out of the money you wouldn't see daylight. Listen to trader08, take your money to a casino, you'll have a better chance. And probably more fun.

[Coolisme]

If a call is priced cheap, it's for a good reason. Your $100 option will be so far out of the money you wouldn't see daylight. Listen to trader08, take your money to a casino, you'll have a better chance. And probably more fun.

Well the $100 was just an example.

You seem to know about trading options, would you kindly tell me the difference between owning stocks and owning options. Such as earning potential, risk, etc.

[advantage21]

Well the $100 was just an example.

You seem to know about trading options, would you kindly tell me the difference between owning stocks and owning options. Such as earning potential, risk, etc.

Read post #7.

Now I'll give you an example. You go to the casino and play roulette. Buying options is equivalent to being the player, betting on each spin. Owning stocks is equivalent to being the House. Which is potentially more profitable?

When you buy an option, you are effectively betting that the price of a stock will reach a certain level by a certain date or you lose. The more likely this will happen, the larger the premium you will pay. Time is not on your side.

When you buy a stock, you have part ownership of the company. Assuming you did you due diligence and picked a profitable company, you will gain financially either by receiving dividends or an increase in share price, or both. This will happen as long as the company is profitable. Time is on your side.

[15-20_God]

You seem to know about trading options, would you kindly tell me the difference between owning stocks and owning options. Such as earning potential, risk, etc.

As what others have said, with stocks you have an equity ownership in the company and can participate in divs and all that good stuff.

There is more risk in options, thats why most ppl use it to mitigate risk, and to a lesser extent, speculate. With options you are investing against the intrinsic value of the option, time value, and spreads depending on the option. If you don't know what you're doing and you see trading way out of the money options as a way to make a quick buck, then get ready to lose that buck.