Don't trade stock options breh...

[kevm3]

One thing yall need to realize about investing in something risky is this... if you lose the majority of your principle, in order to break even with your next investment, you have to make up for your loss of original principle as well. Let's say I invested $100 and I ended up losing $75 dollars of it. In order to 'get ahead', the next $100 I invest would have to make up for that original $75 loss... and how likely is it that you will get a 75% return on the market? You would have been much better investing in something safe, but in which you avoided losing the principle. Number one rule in the stock market is know what you're doing and number two rule is don't get greedy. If you really don't know how this or that stock or investing technique is going to make you money, go conservative.

 

[LionofJudah]

One thing yall need to realize about investing in something risky is this... if you lose the majority of your principle, in order to break even with your next investment, you have to make up for your loss of original principle as well. Let's say I invested $100 and I ended up losing $75 dollars of it. In order to 'get ahead', the next $100 I invest would have to make up for that original $75 loss... and how likely is it that you will get a 75% return on the market? You would have been much better investing in something safe, but in which you avoided losing the principle. Number one rule in the stock market is know what you're doing and number two rule is don't get greedy. If you really don't know how this or that stock or investing technique is going to make you money, go conservative.

We're dealing with options, not stocks here. It's very likely you can get a 75% return, or 1000%.

 

[The Mad Titan]

Whats a good options simulator I can mess around with. I've read every post in this thread and most of it, no lie.... Clean over my head. I just need to get my feet wet with like half a G and see where it goes.

 

[Turbulent]

don't know shyt about trading to be honest. i vaguely understand how options work (i learned years ago but kinda forgot the mechanic. definitely need a refresher). anyway, interesting thread. From the first day you started trading til today do you guys think you made money overall or lost overall?

 

[Ohene]

Big money is made during earnings. I wouldn't say it's gambling at all if you've done research on how that sector and product/business that the stock comes from has been doing all quarter. The writing is on the wall for most of them.



Technical analysis is great, but everyone has to remember that it's not the only thing that factors in. Some traders trade strictly off this and are successful, while some rarely put much faith in it. It's all just different strokes for different folks and developing YOUR strategy.

Nah it's gambling. In some cases you might know...but in other cases missing estimates by 10 M or beating sales estimates by 20M for a total of let's say 500@M can be the difference between your options doubling in value or going worthless. And unless you're a part of mgmt you have no Idea about a company's operational efficiency/ EPs / margins. It's blind hope/guessing. Equity research analysts are on the phones with mgmt. We don't know more than them

 

[Ohene]

Only in some cases with more practical companies do we know. For instance I knew Aeropostale would go down to about 12 when it ran up to 15 weeks back. Figured its be after warnings thougg. Wish I went in on some puts then but meh

Also I knew live Nation would break through 18 after earnings last week. But I wouldn't dare try to estimate the earnings of a large conglomerate, company like apple or bank etc etc.

But even then like I said you might think a company is going to do well...but what research tools do you have to be absolutely certain that its going to do better than what everybody expects? How do you, a random dude chilling at home know whether or not a company will have an EPS of $0.5 or $0.7 when the consensus is $0.6? How do you know if a company will have revenues of $500m OR $530m? How do you know what their guidance will be? Then you have the instances where random big announcements are made that can either work for or against you drastically (ie - Zynga choosing not to partake in online gambling)

Options are god's gift to the average joe thats looking to make money. Rules must be put in place to avoid lsoses though

 

[Mr swag]

Nah, they're easy man. I agree that things like straddles and strangles and stuff like that is more difficult, but I strictly stick with buying and selling put/call options. It's just like buying stock breh. However, it is a bit different when you throw in time decay.

or.

I'm saying I don't understand the contract. If my contract ends on march for 17$ but can I sell December if its 17.15?

 

[The Nigerian]

Just wanted to do a quick thread to put y'all up on making money in the stock market, with very little capital. I'm no stock guru or anything like that, but I try to make my living doing this. Here are a few trades that I made earlier this year to show you the power of trading stock options. You can seriously make a great deal in a short amount of time, if you know what you're doing.

Basic Option Info

Call Option-An option to buy assets at an agreed price on or before a particular date.These are normally bought when you think a stock price is going to increase.

Put Option-An option to sell assets at an agreed price on or before a particular date. These are normally bought when you think a stock price is going to decline.

Strike Price-The price at which a put or call option can be exercised.

1 option contract is equivalent to 100 shares of the underlying security (stock). So if I buy 5 call options of Yahoo at a strike price of $25.00 for .20 each, I am spending $100 (excluding commissions). [5 contracts X 100 shares=500 X .20 each=$100 ]

All of these transactions took place over two weekdays. Initially, I bought 43 put contracts of stock BRK.B (Berkshire Hathaway) for .20 each on a Thursday for a total of $920.75 (including commissions). The price of BRK.B (the stock) decreased so the Put option price that I bought increased. I sold all 4300 contracts at .35, so I nearly doubled my money that same day [43 contracts X 100 shares=4300 X .15=$645]. This is a great return, but I really want you to look at later on that day. I took most of my funds and bought 13 Call contracts of LNKD (LinkedIn) @ $1.05 each. LinkedIn was going to announce quarterly earnings that night and there was a rumor that they would be great, so I took a chance and held overnight. The earnings were great and the stock exploded in Afterhours trading. Options don't trade in afterhours, so I had to wait till the next day to sell them. I sold all 13 contracts not long after opening bell for $7.50 each. Here is the math on that one (13 contracts X 100 shares=1300 X 6.45=$8385.00 profit)! This is holding for less than 24 hours...After I sold, the stock continued to climb. I thought it was going to pullback some, so I bought a few put contracts but I lost some of my profit on that as you can see. But this is the POWER OF TRADING OPTIONS. If I had held my original call options on LNKD until later in the day, I would have made over $20,000 IN ONE DAY FROM AN INITIAL INVESTMENT OF NEARLY $1,400.00. Of course, this isn't necessarily an everday occurrence, but it all depends on what you're trading and how much you're risking. At the link below, there is a guy who has been making hundred of thousands trading options and he documents it for everybody.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=90738925

This is something to look into if you've ever wanted a career in the stock market, but never quite had to money or time to look into it. It's time to stop living paycheck to paycheck. If you have any questions, I'll try to answer them.

Great info, breh. Day trading looks fun as hell but I've seen people lose their minds to it.

http://abcnews.go.com/Health/long-work-hours-linked-heart-disease/story?id=13292157

http://theessentialsoftrading.com/Blog/index.php/2011/01/05/the-down-side-of-day-trading/

http://www.fxdayjob.com/forex-trading-addiction-1713/

Your post focuses on the upside but that downside is a bytch. Not many people are built to handle that.

People, the information contained in the OPs post is great, but please proceed with caution when playing the stock market.

 

[eastside313]

What about the binary options?

 

[Marciano]

I'd rather stick with regular stocks

I was making a killing before that bytchass recession

Things are looking up these days though.

You should have made plenty more if you loaded up on the beaten stocks. I was trying to school some females back in 09 when Coach was under $15 a share, now they're back around 50 a share plus they have a decent dividend.

 

[HoLLaBaCK]

I really, really want to get into this. There's a guy at work that says he's into it but when you try to ask him about it he acts like you're asking him for his SS#Then he starts talking in riddles But I'm gonna sub this thread and see what I can do to get started in this.

I know a dude like that, he's also into the foreclosure market, he mentions shyt and when I ask follow-up questions he gets all .

I kinda feel like most of the shyt is , but over time I've learned that when it comes to making money most people wont give you any real advice so it's best to do your own research.

 

[BrothaZay]

all i want is 300-500 a week, can i realistically make that lol

 

[ThumpDaddy]

all i want is 300-500 a week, can i realistically make that lol

You sound like me, I just want to make about $300 a week extra. I can use that as my spending money and then use the money that I make on my job towards bills and eventually savings. As soon as I get my check just drop it on bills and anything left over will be in savings.

 

[The Mad Titan]

lets keep this moving

 

[Ohene]

all i want is 300-500 a week, can i realistically make that lol

You definitely can (depending on the amount of your initial trades/risk)...and that rigid mindset is the type that will make you prosper.

Just make sure if that 300 comes in you dont find yourself saying...hmmm lets stretch it to 600...because thats when it becomes worthless.

I've been up 500 on a 1000 dollar SPY options bet (S&P500) only to have the shyt bounce back up during lunch and render my options damn near wor

Nah, they're easy man. I agree that things like straddles and strangles and stuff like that is more difficult, but I strictly stick with buying and selling put/call options. It's just like buying stock breh. However, it is a bit different when you throw in time decay.



Yep, all options expire eventually. But there are many different options you can buy-weekly, monthly, quarterly, yearly. I definitely deal more with monthly and weeklies. Alot of times, it's better to go with the monthlies so you have some time to let your trade play out, but weeklies are cheaper and are usually where a greater amount of money to be made is.



If I could say anything to you to ensure success, I would say walk, don't run into your trades. A bunch of small gains is much better than a bigger gain because bigger gains lead to more recklessness with your trading, and you can end up in the red if you're not careful. Trade based on your account size where you're not risking that much if a trade doesn't go your way. Concentrate first on making the majority of your trades winners.



This is absolutely the way to go, probably for a few weeks I'd say. Make sure you understand how options deal with time decay also and it will help you alot. Also, trade the simulator the exact same way you would trade your own account, so if you only have $1000 in real life to work with, make sure you only deal with $1000 on the simulator.

Breh, short selling options has to be the easiest way to make money right? I would love to dabble in em.