4 ms·

how do you actually trade complex options like this? E-Trade or Robinhood or something? I'm sure I could get myself in a whole heap of trouble trading options,

how do you actually trade complex options like this? E-Trade or Robinhood or something? I'm sure I could get myself in a whole heap of trouble trading options, but it looks fun..

CaptainZapp 4y ago
Actually less trouble than short selling, where the loss, in theory, is unlimited. On options losses are capped to the money invested. Nevertheless, you should consider that a host of professional traders with much better equipment and connections are betting against you.
- Majromax 4y ago
  > On options losses are capped to the money invested. On long options -- a purchased call, purchased short, or a combination -- then losses are capped to the money invested. On short options, losses are potentially unlimited. Understanding the difference is obviously extremely important. > Nevertheless, you should consider that a host of professional traders with much better equipment and connections are betting against you. I'd rather suggest that professional and sophisticated traders are arbitraging against you. Options market makers are not usually in the business of taking a directional stance -- they don't care one way or the other about whether Musk will buy Twitter. Instead, they seek to sell you the option but buy back the risk more cheaply, beginning with dynamic hedging that is impractical for a single retail investor with limited capital.
  - SamReidHughes 4y ago
    Yes, and if you have a tight bid/ask spread, that means there is a professional trader that agrees with you, just at a slightly different price.
  - FabHK 4y ago
    > On short options, losses are potentially unlimited. On a short call, your loss is unlimited. On a short put, it is limited to the strike price, because the stock price can't go negative.
CSMastermind 4y ago
Yes. You can trade options like this using pretty much any brokerage including E-Trade and Robinhood. TD Ameritrade, Fidelity, Charles Schwab, etc. I'd steer you away from Robinhood, not just for the sake of the meme culture that's developed around it, but because other platforms generally have better research tools and support. With all of that said, jumping straight into options trading is a big leap to take and with active investing in general I'd encourage you to look at it not as 'investing' but as gambling. If you're doing it for fun that's all good just don't bet more than you can afford to lose.

how do you actually trade complex options like this? E-Trade or Robinhood or something? I'm sure I could get myself in a whole heap of trouble trading options, but it looks fun..

CaptainZapp 4y ago

Actually less trouble than short selling, where the loss, in theory, is unlimited. On options losses are capped to the money invested. Nevertheless, you should consider that a host of professional traders with much better equipment and connections are betting against you.

Majromax 4y ago
> On options losses are capped to the money invested. On long options -- a purchased call, purchased short, or a combination -- then losses are capped to the money invested. On short options, losses are potentially unlimited. Understanding the difference is obviously extremely important. > Nevertheless, you should consider that a host of professional traders with much better equipment and connections are betting against you. I'd rather suggest that professional and sophisticated traders are arbitraging against you. Options market makers are not usually in the business of taking a directional stance -- they don't care one way or the other about whether Musk will buy Twitter. Instead, they seek to sell you the option but buy back the risk more cheaply, beginning with dynamic hedging that is impractical for a single retail investor with limited capital.
- SamReidHughes 4y ago
  Yes, and if you have a tight bid/ask spread, that means there is a professional trader that agrees with you, just at a slightly different price.
- FabHK 4y ago
  > On short options, losses are potentially unlimited. On a short call, your loss is unlimited. On a short put, it is limited to the strike price, because the stock price can't go negative.

CSMastermind 4y ago

Yes. You can trade options like this using pretty much any brokerage including E-Trade and Robinhood. TD Ameritrade, Fidelity, Charles Schwab, etc. I'd steer you away from Robinhood, not just for the sake of the meme culture that's developed around it, but because other platforms generally have better research tools and support. With all of that said, jumping straight into options trading is a big leap to take and with active investing in general I'd encourage you to look at it not as 'investing' but as gambling. If you're doing it for fun that's all good just don't bet more than you can afford to lose.