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The "fastest" way of losing money - which the author says is trading options, is naive. Even with a margin account, your purchasing power is 4:1, at best! Now -

The "fastest" way of losing money - which the author says is trading options, is naive. Even with a margin account, your purchasing power is 4:1, at best! Now - if you have _enough_ money, you can write uncovered(aka 'naked') option contracts and open the possibility of unlimited losses at least, but that won't afford you any more leverage. IMHO...that "fastest" method to lose money(in the markets) is the commodity futures market. You get 200:1 leverage there, almost no rules, and it's open 23 hours a day, 6 days a week. The securities market and derivatives within are small fish by comparison. If commodity futures don't scratch your itch for losing(or gaining) money very quickly, you can also trade forex with similar leverage. Both of these market types make securities and options look like the kiddie track at the go-kart park.

gruez 6y ago
>Even with a margin account, your purchasing power is 4:1, at best! [...] IMHO...that "fastest" method to lose money(in the markets) is the commodity futures market. You get 200:1 leverage there Shouldn't margin be weighted against volatility? Part of the reason why they give you that much margin in the first place is that commodities are presumably less volatile.
- clipradiowallet 6y ago
  Commodities are infinite more volatile than stocks - mostly due to the sheer [large] volume of market participants. For example, today the nasdaq 100 future moved 22 points in the first 60 seconds of the day session. That's $480 gain/loss, per contract - in the first 60 seconds. Within 180 seconds, it moved a further 50 points. To recap...within the first 3 minutes, the futures market moved 72 points, or $1,440 per contract. Some extra information (in case you are curious)... the symbol I mentioned above is "NQ", it's the commodity future for the Nasdaq 100. Margin requirements are (on average) $15,000 to $20,000 per contract, which will vary by the broker. There is a catch though...during the hours of 9:30-4:00p EST, those margins drop to $500-600 per contract. These are "day margins", ie for "day trading". So in those first 180 seconds, you could lose 3 times the margin required for a small(1 contract) position. edit: updated margin requirements to include day margin
  - greenshackle2 6y ago
    Uh, NQ is stock future not a commodity future? Commodity futures are soybean, oil, corn, gold, etc.
    - clipradiowallet 6y ago
      NQ is based on the collective value of the nasdaq 100, which themselves are classified as a commodity by the NFA. I'm not sure if you are being pedantic or not... 75 years ago, the commodities you listed were the only type available on the futures market - but since then, it's no longer the case.
      - greenshackle2 6y ago
        Not pedantic just confused, I've never heard stock index futures referred to as commodity futures, that's all. If you told me you're a commodity trader and all you trade are stock indices I'd be puzzled. But maybe that's just me.
fortran77 6y ago
I think shorting a stock is even faster.
- greenshackle2 6y ago
  No. Shorting cannot be faster than writing uncovered call options. They have the same exposure but the option has more leverage.
maverik 6y ago
ya I 100% agree! naked options are much worse! i think the article was only covering less advanced instruments :)

gruez 6y ago

>Even with a margin account, your purchasing power is 4:1, at best! [...] IMHO...that "fastest" method to lose money(in the markets) is the commodity futures market. You get 200:1 leverage there Shouldn't margin be weighted against volatility? Part of the reason why they give you that much margin in the first place is that commodities are presumably less volatile.

clipradiowallet 6y ago
Commodities are infinite more volatile than stocks - mostly due to the sheer [large] volume of market participants. For example, today the nasdaq 100 future moved 22 points in the first 60 seconds of the day session. That's $480 gain/loss, per contract - in the first 60 seconds. Within 180 seconds, it moved a further 50 points. To recap...within the first 3 minutes, the futures market moved 72 points, or $1,440 per contract. Some extra information (in case you are curious)... the symbol I mentioned above is "NQ", it's the commodity future for the Nasdaq 100. Margin requirements are (on average) $15,000 to $20,000 per contract, which will vary by the broker. There is a catch though...during the hours of 9:30-4:00p EST, those margins drop to $500-600 per contract. These are "day margins", ie for "day trading". So in those first 180 seconds, you could lose 3 times the margin required for a small(1 contract) position. edit: updated margin requirements to include day margin
- greenshackle2 6y ago
  Uh, NQ is stock future not a commodity future? Commodity futures are soybean, oil, corn, gold, etc.
  - clipradiowallet 6y ago
    NQ is based on the collective value of the nasdaq 100, which themselves are classified as a commodity by the NFA. I'm not sure if you are being pedantic or not... 75 years ago, the commodities you listed were the only type available on the futures market - but since then, it's no longer the case.
    - greenshackle2 6y ago
      Not pedantic just confused, I've never heard stock index futures referred to as commodity futures, that's all. If you told me you're a commodity trader and all you trade are stock indices I'd be puzzled. But maybe that's just me.

fortran77 6y ago

I think shorting a stock is even faster.

greenshackle2 6y ago
No. Shorting cannot be faster than writing uncovered call options. They have the same exposure but the option has more leverage.

maverik 6y ago

ya I 100% agree! naked options are much worse! i think the article was only covering less advanced instruments :)