Option trading for beginners

Alexland

Another_Saver said:

Good spot 🤦‍♂️

You can still edit your post to remove the spammer's link else someone might report your post.

Another_Saver

Alexland said:

Another_Saver said:

Good spot 🤦‍♂️

You can still edit your post to remove the spammer's link else someone might report your post.

Can't edit yet for some reason or post links, do you have to be around awhile?

dunstonh

Mickey666 said:

Hmm.  Another new poster who hasn’t been back in five days to check on any of the answers to his post . . . . 

Probably dismissing the comments here as rubbish.      Will probably return with a post in a few years time asking how they can get their son out of financial difficulty as the unscrupulous options trading app let their son lose all that money.

Mat0987654

To give an answer for anyone who is looking in the future, saxo or interactive brokers (IBKR) are the best platforms. IBKR has a better platform and the commissions are far lower.

But as someone who trades options (selling covered puts/calls only), who had the benefit of family advice and tutelage from 10+ years of experience,  if you can't explain how the vega of a strike on a contract for an option on a covered call shows its a good trade....it's probably not for you just yet

Mr.Saver

Mat0987654 said:

To give an answer for anyone who is looking in the future, saxo or interactive brokers (IBKR) are the best platforms. IBKR has a better platform and the commissions are far lower.

But as someone who trades options (selling covered puts/calls only), who had the benefit of family advice and tutelage from 10+ years of experience,  if you can't explain how the vega of a strike on a contract for an option on a covered call shows its a good trade....it's probably not for you just yet

First, this is a 2 months old thread.

Second, you can't open an account and trade options on IBKR if you are an EU or UK resident as a retail client. I've not tried saxo, but I doubt about it, for the same reason below.

For a UK resident to trade options on any platforms that advertises and selling to UK customers, you need to meet the professional client criteria (and it has some pretty high bars, such as 500,000 Euro net worth, or works in the financial industry). The regulation (Package Retail and Insurance-based Investment Products Regulation) went into effect in 2018, so I guess if you had opened an account with them before 2018 and have been trading options with them since, you may have been allowed to continue trading it.

Third, options is a fairly flexible instrument, and not everyone trades it the same way. For example, I only use it as a leveraging tool for long term investments. It certainly is not what you are using it for.

Saying option trading is dangerous is like saying buying stock is dangerous. It only is if you've crossed the red line, either because you are gambling on it, or you don't know enough about it.

So yes, I largely agree with your last paragraph, but the exception is where the trader uses it for some very specific purposes, and knows exactly why do they use it, how to use it that way, and what's the risk.

Edit: I checked the scope of the PRIIPs, it will only apply to those firms (UK and third country) that manufacture, sell or advise on PRIIPs to retail investors in the UK. So where the investment platform company is registered doesn't matter, where do they "manufacture, sell or advise" matters.

HansOndabush

If you are buying options they are actually safer than spread bets, futures, and cfds because your loss is limited to what you pay for the option. If you are writing uncovered options then that is a different matter altogether.

bermudianmark

Avoid !  I lost a few £K 25 years ago and it put me off investing for nearly 10 years.  Risks are hugely magnified.

Mat0987654

Mr.Saver said:

Mat0987654 said:

To give an answer for anyone who is looking in the future, saxo or interactive brokers (IBKR) are the best platforms. IBKR has a better platform and the commissions are far lower.

But as someone who trades options (selling covered puts/calls only), who had the benefit of family advice and tutelage from 10+ years of experience,  if you can't explain how the vega of a strike on a contract for an option on a covered call shows its a good trade....it's probably not for you just yet

First, this is a 2 months old thread.

Second, you can't open an account and trade options on IBKR if you are an EU or UK resident as a retail client. I've not tried saxo, but I doubt about it, for the same reason below.

For a UK resident to trade options on any platforms that advertises and selling to UK customers, you need to meet the professional client criteria (and it has some pretty high bars, such as 500,000 Euro net worth, or works in the financial industry). The regulation (Package Retail and Insurance-based Investment Products Regulation) went into effect in 2018, so I guess if you had opened an account with them before 2018 and have been trading options with them since, you may have been allowed to continue trading it.

Third, options is a fairly flexible instrument, and not everyone trades it the same way. For example, I only use it as a leveraging tool for long term investments. It certainly is not what you are using it for.

Saying option trading is dangerous is like saying buying stock is dangerous. It only is if you've crossed the red line, either because you are gambling on it, or you don't know enough about it.

So yes, I largely agree with your last paragraph, but the exception is where the trader uses it for some very specific purposes, and knows exactly why do they use it, how to use it that way, and what's the risk.

Edit: I checked the scope of the PRIIPs, it will only apply to those firms (UK and third country) that manufacture, sell or advise on PRIIPs to retail investors in the UK. So where the investment platform company is registered doesn't matter, where do they "manufacture, sell or advise" matters.

All agreed, was trying to make the point on the last paragraph that options arent something to dip your toe into, as the PRIIP is hoping to deter Id guess.

I agree, options trading is not dangerous, just a risk, as is most any other investment. And also agree options have many uses, I use them for income, lots of people use them for hedge or leverage.

I am a big advocate for them (hence replying to a two month thread, I was just searching to see what was being discussed), I think once you've learnt to use them and apply them to your individual investment strategy, they can be a great addition to the armoury. The danger, like any leveraged investment, come from lack of understanding mixed with a getting a little greedy (or naivety seeing Instagrammers claiming 1000%+ day trades).

So in summary, I agree.