@Mitesh_Engr Hey Mitesh, hope you are well. We all know how good you are as a trader, may be the best out there in public space. However, with due respect, would like to disagree with the above. Hoping to have a healthy debate, to clear out the popular misconceptions. Few pointers. 1/
@Mitesh_Engr Short options have a high probability of making a small return and a low probability of incurring a large loss. Long options have a high probability of making a small loss and a low probability of achieving a large gain. 2/
@Mitesh_Engr As Taleb illustrates in his book 'Fooled by Randomness', a 99.9% chance of winning a 1$ bet over 1000 bets is not worth it,if there is a 0.1% chance of losing 10000 $. over 1000 chances you will win 999$ but at one go lose 10000$ It works out that if you can win with 99%..3/
@Mitesh_Engr probability, lose a little in 0.99%, and have one-in-a-thousand chance of losing big (e.g. Large 1-day drop in an index, you can end up seeing yourself gradually getting rich - then losing all the accumulated riches in a single round.4/
@Mitesh_Engr An Option buyer must know how to catch the trend with momentum and when to trade and when not to, option buying is probably a better strategy than people been led to believe (and I strongly believe that).You lose money as a buyer cause of you are wrong in direction, trend, 5/
@Mitesh_Engr Momentum, not because the way of transaction (buying is wrong). The key to making money with long options is not to hold them for too long, letting Theta overpower rest of the Greeks and the option should have more intrinsic value than extrinsic. I would rather buy option with 6/
@Mitesh_Engr high premium and sell it higher. The people who say that buying options is a losing trade, are buying the wrong options. These generally are OTM options as they are cheap and most of those (80-90%) expire worthless. Buying OTM calls outright is one of the hardest ways to 7/
@Mitesh_Engr make money consistently in option trading. As a buyer one just don’t need to give into the strength of the seller. And that’s the game here. Option buying returns are unmatchable to option selling. And also its not without any leverage, and risk management is way better than 8/
@Mitesh_Engr than selling. Those who have seen May 31st 2018 expiry and dealt with it, will never will come back to market..so many prop houses went bust..My point neither selling nor buying is bad per say, but surely one needs to deal with it much more smartly. Problem arises when novice 9/
@Mitesh_Engr tarders without knowing the risk associated with selling, think its easy money lose their whole savings in market in just one day. They can lose in buying as well, but the damage will be much lesser..10/
@Mitesh_Engr So lets not glorify selling nor brand buying as a losers game. Neither is true, had it been that simple, James Cordier would have made it much better with all great resources with him. Its just that not easy either ways..You have made it so big with your skillsets and 11/
@Mitesh_Engr intelligence, am sure you would have made even bigger in buying maybe, but what has been achieved by you is pure conviction, hard work, that credit cant be given to selling..lastly as my fav Taleb says 12/
@Mitesh_Engr ""Options have a tendency of sucking in very intelligent people and blowing them up. The smarter the person, the more spectacular the blowup" - Taleb
Hope I made my point...all in healthy debate..cheers
Hope I made my point...all in healthy debate..cheers
