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A secondhand anecdote: An acquaintance of mine used to be a professional options trader. A fairly successful one, too. He retired from the job in his early 30s

A secondhand anecdote: An acquaintance of mine used to be a professional options trader. A fairly successful one, too. He retired from the job in his early 30s. After that, he tried doing a little options trading on his own behalf, for old times' sake. The look on his face as he recounted how that went down was a sight to see. I don't know exactly how much money he lost, or how quickly, but my take-away was, roughly, "Here is a person who, having first traded options with great success as a professional, and then traded them with great failure as an amateur, became more convinced than anyone that options trading is best left for the pros." It would seem that there's a reason why Bloomberg terminals, broker-dealer licenses, exchange membership, a spot in the exchange's colo, and all that good stuff are such expensive commodities.

rutthenut 6y ago
I would think it can also be a bit easier playing with 'other peoples money' as you can hold for longer, double-down and so on, whereas with your own money, the risk is even more real and the pot usually much more limited. However, a trader that doesn't do well and makes losses won't last long in the job either. Luck could make or break either type of trader too.
- JumpCrisscross 6y ago
  > it can also be a bit easier playing with 'other peoples money' as you can hold for longer As a former options market maker (granted, not buy side master of the universe), I saw practically every one of my former colleagues do the above. (I chose the messy path of going all in on a start-up.) Practically everyone lost money or furiously broke even. Options live in a multidimensional space that is tough to recalculate real time without the tools. You can get everything right and then a stock borrow rate shift or rate futures curve bend wipes out your capital. They are designed for hedging. They are total shits outside that context to the point that I’m surprised they’re available to the general public.
  - rutthenut 6y ago
    Certainly sounds like one of the most risky areas for trading, if not using options to hedge other positions - which is what I thought they were intended for. Not something I get involved with, I must say. Far too many 'financial instruments' that I could lose money on! I have worked on trading room systems software before, but that's mostly about presenting the data, not choosing what to do with it. Automating trades, even worse
- deleted 6y ago
  [deleted]
ikrenji 6y ago
depends on the strategy. if you have fairly good predictions about the future, you don't need any of those things. If you are into HFT, you need exchange colo. etc

rutthenut 6y ago

I would think it can also be a bit easier playing with 'other peoples money' as you can hold for longer, double-down and so on, whereas with your own money, the risk is even more real and the pot usually much more limited. However, a trader that doesn't do well and makes losses won't last long in the job either. Luck could make or break either type of trader too.

JumpCrisscross 6y ago
> it can also be a bit easier playing with 'other peoples money' as you can hold for longer As a former options market maker (granted, not buy side master of the universe), I saw practically every one of my former colleagues do the above. (I chose the messy path of going all in on a start-up.) Practically everyone lost money or furiously broke even. Options live in a multidimensional space that is tough to recalculate real time without the tools. You can get everything right and then a stock borrow rate shift or rate futures curve bend wipes out your capital. They are designed for hedging. They are total shits outside that context to the point that I’m surprised they’re available to the general public.
- rutthenut 6y ago
  Certainly sounds like one of the most risky areas for trading, if not using options to hedge other positions - which is what I thought they were intended for. Not something I get involved with, I must say. Far too many 'financial instruments' that I could lose money on! I have worked on trading room systems software before, but that's mostly about presenting the data, not choosing what to do with it. Automating trades, even worse
deleted 6y ago
[deleted]

ikrenji 6y ago

depends on the strategy. if you have fairly good predictions about the future, you don't need any of those things. If you are into HFT, you need exchange colo. etc