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Originally Posted by mispoken
(Post 3170358)
Options trading is a great side hustle. I make about as much doing that as I do flying a regular schedule except, for me, it’s way more fun than flying. I’ve only unleashed a small percentage of my overall portfolio for the last few years, at least for the time being.
There are lot of misconceptions out there about the risk/reward of options, and I don’t believe (if you’re serious about it) you should attempt to dispel those myths on an airline pilot forum. My recommendation, if anyone is serious about options trading, is to start learning the tastytrade methodology. It’s a probability based method that requires you trade small and often. It’s commissions are capped at $1 to open (per contract) and $0 to close. Their platform is top notch, uptime far exceeds think or swim, interactive brokers and fidelity (I’ve used them all). Tastyworks is everything you could want for trading. Best of all, their programming is head and shoulders better than the crap you see on CNBC. It’s educational and entertaining. They’re underdogs in options trading but they blow the competition away in every aspect. Their favorite customer are the small fish like us. If you want to trade options with fidelity you can, you can open a margin account, but be warned their desktop platform sucks and trading via the web interface is clunky and annoyingly difficult. Always happy to discuss options and creating your own wealth through investing be it with options or straight equities. Don’t leave it to “the experts”. You’ll probably do “ok” but it may not create the generational wealth you have in mind, if that’s a goal of yours. EDIT; tastyworks is the platform www.tastyworks.com tastytrade is their “media” and education network www.tastytrade.com I agree, options are far less risky than people think. I like to use wide iron condors for the limited down side. Naked puts and calls can empty out your account if you get it wrong. Three or four percent per month is doable if you are knowledgeable and pay attention to details. Tasty Trade is definitely a good place to start. |
Originally Posted by mispoken
(Post 3170358)
Options trading is a great side hustle, but definitely not for everyone.
There are lot of misconceptions out there about the risk/reward of options, and I don’t believe (if you’re serious about it) you should attempt to dispel those myths on an airline pilot forum. My recommendation, if anyone is serious about options trading, is to start learning the tastytrade methodology. It’s a probability based method that requires you trade small and often. It’s commissions are capped at $1 to open (per contract) and $0 to close. Their platform is top notch, uptime far exceeds think or swim, interactive brokers and fidelity (I’ve used them all). Tastyworks is everything you could want for trading. Best of all, their programming is head and shoulders better than the crap you see on CNBC. It’s educational and entertaining. They’re underdogs in options trading but they blow the competition away in every aspect. Their favorite customer are the small fish like us. If you want to trade options with fidelity you can, you can open a margin account, but be warned their desktop platform sucks and trading via the web interface is clunky and annoyingly difficult. Always happy to discuss options and creating your own wealth through investing be it with options or straight equities. Don’t leave it to “the experts”. You’ll probably do “ok” but it may not create the generational wealth you have in mind, if that’s a goal of yours. EDIT; tastyworks is the platform www.tastyworks.com tastytrade is their “media” and education network www.tastytrade.com Sent from my SM-N986U using Tapatalk |
Yes, I’ve been able to build enough capital in my trading account where I can increase trade size while keeping risk roughly the same on a percentage basis. However, I spend a lot of time managing trades. But it doesn’t have to be that way. You can simply sell a put spread, enter a good til cancelled order to close at a profit target and check back at 21 days until expiration. It can really be as complex or as simple as you want.
It is a common misconception that options trading is a zero sum game, it’s not. You can cap your risk and trade probabilities (tastyworks makes it very easy to understand probability of profit on a given trade). The key is to make these high probability trades often so the probabilities can work themselves out in your favor. Inside of my brokerage link, I also purchase LEAPS calls on my favorite investments. This is arguably the riskiest type as you are BUYING premium and time decay works against you, slowly eroding the value of the contract. Yes, I’ve lost 100% of my premium doing this. But I’ve also seen my largest returns. All that being said, your best bet to last in options trading is selling premium on high probability spreads or naked puts. |
Originally Posted by mispoken
(Post 3170372)
Yes, I’ve been able to build enough capital in my trading account where I can increase trade size while keeping risk roughly the same on a percentage basis. However, I spend a lot of time managing trades. But it doesn’t have to be that way. You can simply sell a put spread, enter a good til cancelled order to close at a profit target and check back at 21 days until expiration. It can really be as complex or as simple as you want.
It is a common misconception that options trading is a zero sum game, it’s not. You can cap your risk and trade probabilities (tastyworks makes it very easy to understand probability of profit on a given trade). The key is to make these high probability trades often so the probabilities can work themselves out in your favor. Inside of my brokerage link, I also purchase LEAPS calls on my favorite investments. This is arguably the riskiest type as you are BUYING premium and time decay works against you, slowly eroding the value of the contract. Yes, I’ve lost 100% of my premium doing this. But I’ve also seen my largest returns. All that being said, your best bet to last in options trading is selling premium on high probability spreads or naked puts. Sent from my SM-N986U using Tapatalk |
The investing part is what has really propelled my wealth. Long term, buy, hold and never sell. Winners you hold are what really gives your PF a leg up. Losers wither up and die and become an insignificant part of your PF. Ignore metrics like p/e, p/s, EPS and look more at the business you’re investing in. Companies like AMZN, TSLA, NFLX etc get missed when these screens bias them out. Those are the true gems.
As for options, that’s been generating income (albeit not consistently month to month). It’s been used to pay bills, pay down debt and save. I’ve definitely fallen into the category of closing out a position and opening a new position with the spoils of the previous one vs sweeping profits into savings and to pay taxes (which suck when you’re doing this, tough check to write quarterly). But, these are good problems to have. |
Originally Posted by mispoken
(Post 3170442)
The investing part is what has really propelled my wealth. Long term, buy, hold and never sell. Winners you hold are what really gives your PF a leg up. Losers wither up and die and become an insignificant part of your PF. Ignore metrics like p/e, p/s, EPS and look more at the business you’re investing in. Companies like AMZN, TSLA, NFLX etc get missed when these screens bias them out. Those are the true gems.
As for options, that’s been generating income (albeit not consistently month to month). It’s been used to pay bills, pay down debt and save. I’ve definitely fallen into the category of closing out a position and opening a new position with the spoils of the previous one vs sweeping profits into savings and to pay taxes (which suck when you’re doing this, tough check to write quarterly). But, these are good problems to have. These type of stocks are commonly known as Net Nets or Cigar Butts(usually companies that trade at these depressed valuations are poor businesses so you're getting one last puff out of them) . I hold the stock until they reach their Liquidation value, sell them(unless in the rare case I can project the company's long term earnings with conviction), Rinse and Repeat. With this strategy I expect at least a 25%+ annual returns over the long term and right now averaging 30%+. Warren Buffet averaged 50%+ using this strategy in the early days of the Investing Partnership he ran but several of the Net Nets he invested in he was able to obtain a board seat and drive shareholder returns. Sent from my SM-N986U using Tapatalk |
Interesting! That’s certainly one way of doing it, and sounds like it works quite well. We have roughly the same performance numbers using two very different methods (I’ve been tracking annualized return aka XIRR since 2008).
Is there a service you use to identify these companies? |
Originally Posted by mispoken
(Post 3170525)
Interesting! That’s certainly one way of doing it, and sounds like it works quite well. We have roughly the same performance numbers using two very different methods (I’ve been tracking annualized return aka XIRR since 2008).
Is there a service you use to identify these companies? For international Net Nets I'm focused on Japan and use kenkyoinvesting.com's free screener to identify and KaijiNet/JapanExpress evaluate the Balance sheet and cashflow statements. Sent from my SM-N986U using Tapatalk |
Y'all are talking about a market that has tripled in a short period of time, I'm not sure I would count on that kind of performance in the future, especially with the coming economy.(Diminished tax base, job loss,etc.)
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Originally Posted by badflaps
(Post 3170625)
Y'all are talking about a market that has tripled in a short period of time, I'm not sure I would count on that kind of performance in the future, especially with the coming economy.(Diminished tax base, job loss,etc.)
Options, when traded properly, have little to do with the relative performance of the stock market. Properly built spreads make money up or down as long as the movements are within reasonable limits. Usually 1 to 2 standard deviations. I am not for selling naked options but in up markets you sell puts on down moves, down markets you sell calls in rallys. Down markets usually pay more profits. |
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