Options trading

[phillll]

What are people's opinion/experiences on options, especially for US stocks? There don't seem to be many providers in the UK vs US, but to me they seem like a better option than cfds due to the limited risk (provided I don't try selling). The main problem I see is that some are rather more expensive than I am willing to risk, can be reduced by going to silly strike prices but I see this as increasing the risk of expiring worthless.

Is there any sense in buying a cfd/spreadbet but with an order to hedge the other side if it drops past what I am prepared to lose, then selling the hedge again once/if back at breakeven? I can see this getting messy quickly though for a volatile stock, losing a huge amount in fees, and I can't spend all day watching to buy/sell hedges at the right times to maintain the position that I want.

Any thoughts welcome, including telling me to stop being a millennial gambler and buy a house instead!

[siovey]

I've been 'practicing ' this recently. US stock options. Did an online course and subscribed to a program which showed you how it all works. It was brilliant. And I was making 100% profit per day, based on a theoretical £1k per contract. Opened a broker account and got live prices but paper traded them.
I've found out that when buying 'live', the spread on many options kills it before you start. No point trading a 10-15% spread!
In live trading 'practice ', I'm averaging a $700 per day loss! Thank god I paper traded first!
I've decided to close all accounts down and put my money somewhere else!
Good luck if you try this!

[anonymous-user]

If you haven’t found it already, take a look at tastytrade.com

[Benbay001]

siovey said:

Opened a broker account and got live prices but paper traded them.

Smart. Well done.

[isleofthorns]

1) forget uk individual stock options...
2) US markets much better, but not so easy getting a good account, with some having minimum account sizes etc
3) Volatility can move around a lot with US options, especially nasdaq etc. If you're buying options, look for value with regard to implied volatility, otherwise you'll end up with far out of the money positions.
4) Maybe look to expand your strategies with defined risk short positions.
5) tasty trade are a good place for education, but they focus more on selling premium

[LeoSayer]

JPJPJP said:

If you haven’t found it already, take a look at tastytrade.com

Just saw this news...IG to buy tasty trade.

https://www.reuters.com/article/us-tastytrade-m-a-...

Back to the OP's question... Isn't spread betting the best way to achieve what he wants?

[siovey]

Better day for me today, only a $150 paper loss!

[limpsfield]

phillll said:

What are people's opinion/experiences on options, especially for US stocks? There don't seem to be many providers in the UK vs US, but to me they seem like a better option than cfds due to the limited risk (provided I don't try selling). The main problem I see is that some are rather more expensive than I am willing to risk, can be reduced by going to silly strike prices but I see this as increasing the risk of expiring worthless.

Is there any sense in buying a cfd/spreadbet but with an order to hedge the other side if it drops past what I am prepared to lose, then selling the hedge again once/if back at breakeven? I can see this getting messy quickly though for a volatile stock, losing a huge amount in fees, and I can't spend all day watching to buy/sell hedges at the right times to maintain the position that I want.

Any thoughts welcome, including telling me to stop being a millennial gambler and buy a house instead!

The problem with options is if the underlying asset doesn't move quick enough, the time decay will mean you still lose, even though you may have ended up being mildly right on direction. The benefit of the option for purely directional trading is the fixed risk - you can't lose more than the premium paid.

I sell options as part of a strategy but my main stuff is CFD and spread bet on directional trades.

You should just have an auto stop loss on your CFD or spread bet at the level you want to take your loss.

And of course don't forget that >70% of people lose

[sideways sid]

What are you trying to achieve OP?

Hedging an existing portfolio, leveraged exposure to movements in price, profiting from movements in volatility?

Have a look at the Options Forum on Elite Trader.

[anonymous-user]

OP, unless you're willing to put years of hard work into this type of speculation, it's unlikely you'll succeed.

limpsfield said:

And of course don't forget that >70% of people lose

And the rest, that's a quarterly figure.

It'll be high 90s over a year and longer.

[DaveA8]

I have hedged with options but NEVER sell them unless you are totally covered. I can only imagine the carnage last March for Naked sellers. Victor Niederhoffer who has a PhD reckons selling volatility you'll make money 95% of the time and then at some point be wiped out.

It's virtually impossible to hedge with VIX or its variants are although they are negatively correlated, timing is a nightmare. Also the Vix can be manipulated, in 2017 in theory it should have moved 60% but didn't and a lot of people felt short changed.

IG offer is woeful, Saxo great system but everything way too expensive. Interactive Broker are clearly the leader but you need to be a genius to operate their system.

As a hedge they are the best of a bad bunch, direct shorts of shares or Indices have killed me in the past due to "whipsaw", the VIX flatters to deceive.

[DonkeyApple]

phillll said:

What are people's opinion/experiences on options, especially for US stocks? There don't seem to be many providers in the UK vs US, but to me they seem like a better option than cfds due to the limited risk (provided I don't try selling). The main problem I see is that some are rather more expensive than I am willing to risk, can be reduced by going to silly strike prices but I see this as increasing the risk of expiring worthless.

Is there any sense in buying a cfd/spreadbet but with an order to hedge the other side if it drops past what I am prepared to lose, then selling the hedge again once/if back at breakeven? I can see this getting messy quickly though for a volatile stock, losing a huge amount in fees, and I can't spend all day watching to buy/sell hedges at the right times to maintain the position that I want.

Any thoughts welcome, including telling me to stop being a millennial gambler and buy a house instead!

I'd start by evaluating the limited risk perspective. What's not limited about CFD or spreadbet positions today?

Plus, how do you factor in the increased risk in an option of not just having to understand the risk of the underlying market but also the option itself as both are subject to movements via supply and demand changes etc?

Options were never terribly popular in the UK specifically because spreadbets and CFDs were available, as opposed to in the US or Europe (until recent years).

The logic for options is stronger when used as an investment tool but for trading, gambling etc, a spreadbet is arguably a better product for a retail individual.

[phillll]

Thanks for inputs! As for what am I trying to achieve, I think(!) I am looking for cheap exposure to some of the bubbly stocks (eg puts for tesla long term or calls GME at the start of this week but probably puts by the end of next week!). For me the advantage of an option vs spreadbet here is that I can hold while (what I think) is a bubble continues without having to time the top, whereas my spreadbet would get wiped out on the way up (unless this isn't how it works?).

This is the reason for wanting to buy the opposite cfd once at my loss rather than closing the position, which would also allow me to have <100 shares as the contract size - useful for the more expensive stocks where premium becomes way bigger than I want to risk.

Also worth saying that I'm not expecting to be making a living off of this, more like 1-2 risky but somewhat researched stocks a month, if that!

Edited by phillll on Friday 22 January 16:18

Edited by phillll on Friday 22 January 16:31

[Blue_star]

Hi all, relaunching this topic. Does anyone have an advice on using robinhood vs ig for trading options - which one is it worth setting up account at? Based in uk

Edited by Blue_star on Tuesday 16th September 19:23

[greengreenwood7]

can't give you a direct/perfect answer - i use IG but currently not for options. I have an ISA and spreadbet account, what i like is that teh isa is flexible - so i can withdraw and use the monies for 'whatever' and have the rets of that financial year to pop up to the same amount back in - plus transfer between IG acc's is seamless;
so i was transfering funds from ISA to spreadbet, and back again.....

I'd have assumed that most platforms are pretty much the same (?) when it comes to options, they don't drive the price, they don't set the dates or strikes.....so can't imagine there'd be much diff between the 2.

[Mr_Megalomaniac]

Blue_star said:

Hi all, relaunching this topic. Does anyone have an advice on using robinhood vs ig for trading options - which one is it worth setting up account at? Based in uk

Edited by Blue_star on Tuesday 16th September 19:23

I moved from IG over to Interactive Brokers (IBKG) after the whole Robinhood/GME fiasco and their trading interventions/halts. I must say that whilst IBKG is a little more sophisticated in terms of offering and interface, I've found it infinitely more useful and usable. In particular for derivatives and options trading.

[NowWatchThisDrive]

What are you looking to achieve by trading options?