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Thread: options trading

  1. #1

    Default options trading

    A couple of times over my life I've played with stock options (or index options).

    It's been 10 years since I bought an option. At that time my conclusion was that if you had 100k to play with, you could make money in the long run. I suspect people that were playing the options game would have come out better in the current market than the long term conservitive investors because they would have been out of the market quicker. In the end, I lost about $2k.

    It's really a form of gambling. The brokerage fee's are essentially the percentage of the bet that goes to the house.

    There are ton's of strategies etc on this stuff. I'd like to do some paper trades for the fun of it in this market. I'd like to do paper trades for a year or more and if I think I can make money at it throw some disposable income at it.

    Does anybody play the options game here? If so, what software is out there for analysis? Are there any sites you know of for doing paper trading (not investing money, just pretending)?

  2. #2
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    About a month ago i had a company from Hong Kong contact, and spent probably close to 2 hours on the phone all together. They were trying to get me to invest in Options regarding the US Heating Oil Price. I cannot remember the exact figures at the time for the price, however the investment they wanted was US$1,200 per option for a minimum of 5 and maximum of 10 options.

    The Idea they were selling was that because an option controlled X number of barrels of heating oil a 1cent per gallon move would mean reasonable profits and they were looking to only keep investors in for a 10cent move upwards. Well, i was doing my research while he was on the phone and found that the price had been dropping for quite some time, and he was adement the price would increase. Kind of glad i did not put my money in as the price seems to still be dropping, and i would have probably been stressing about the loss but have kept my money safe. I mean there is every chance it could have gone the other way, but until i started talking about the poor performance i was seeing in the research i was doing all he was doing was talking it up.
    Joel Brown
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  3. #3
    Mr. Tax Man
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    Options can be quite risky, and it very much is a form of gambling. But it's certainly a more sophisticated set of gambling where you need to do your research. It's also never good with this game to put all your eggs in one basket.

    While I haven't participated in options, I do look at doing something with it in the future when I have more money I feel I can "lose" and be fine with. The current stock market prices depleted my current portfolio of "play" money (which includes retirement), and I'd rather not lock in losses. Especially because I've continued buying on the ride down. Whether that move was stupid or not, I'll find out soon enough!
    Small Business CPA
    "A tax loophole is something that benefits the other guy. If it benefits you, it's tax reform."

  4. #4

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    Kind of my point Evan. I've played with them in the past and came to the conclusion you will be up or down, but if you are investing X% of your money to play with in each investment you know what your maximum losses will be. If you are only investing X% of your money, you can make money in the long run. My parents lost 43% of conservative investments in the current market which was not anticipated. They are in their late 80's and will never recoup what they have lost in their lives.

    So I am interested in doing paper trading in an unknown and difficult market. For the fun of it and to learn. In a year or two, I can do some real trading, but not with money right now.

  5. #5
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    At this point i have figured that i am just going to try and keep my eye looking for when things do hit bottom and start moving up. While i think that even if i buy on the way down, i am just as happy to buy on the way up.
    Joel Brown
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