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The biggest beginner trap with options is thinking you have 50/50 odds. I'm buying a call or a put, so I have to have a 50% chance of being right, right? Nope.
by ramesh31 4y ago
The biggest beginner trap with options is thinking you have 50/50 odds. I'm buying a call or a put, so I have to have a 50% chance of being right, right?
Nope. You have a million ways to be wrong, and a very tiny narrow window of ways to be right. You can lose your shirt on poorly executed calls, even if the stock skyrockets. You legitimately have better odds walking into a casino and betting on black than buying calls/puts.
- spywaregorilla 4y agoThat's... wrong as well. You don't need to have a million ways to be wrong and a few ways to be right. You just need to understand that the world doesn't operate on naive probabilities where each outcome is equally likely.
- jnwatson 4y agoOdds and expected value are different. There are plenty of 90% plays in options trading. There aren't in the casino. Expected value though...