Hedgemaster, all of your comments have been marked dead. As a result others cannot respond to your comments, most will not see them either, unless they specifically set "show dead comments" to True.
I dont think there is anything objectionable in your comments. Do email hn@ycombinator.com if this does not get resolved.
Regarding your comment on my query, it really doesnt answer my question, but that does not mean that your comments should be marked dead.
Hi, thanks for the heads up, will resolve that issue.
You meant that the stock prices can be predicted from the options patterns right? Please correct me if I'm wrong.
That's the general direction, but had a little more than that in mind.
In prediction markets people bet on a future outcome and then these bets are traded in a market. Turns out that the price that they trade at converge to the perceived (and often the underlying) probabilities of those outcomes. Options market has a similar structure, people bet on the future price of a stock. What I am interested in if there is any study that shows whether the prices on these outcomes track their probabilities.
Since you made a comparison to prediction markets, let's focus on earnings release dates. Earnings release is an event that's known to happen on a certain date in the future, just like some political election (only few companies don't disclose their future earnings dates in advance, Berkshire Hathaway is amongst them).
The conclusion of that particular study is that option prices prior to the earnings release date are helpful for learning about the future stock price volatility.
Hi Steven, thanks for sharing your opinion!
Since options' underlying are stocks, as such value is being exchanged.. agree, no goods being produced but the same in stock investing, the purpose is a speculative wealth creation. I do agree that outcome is not completely under your control but with options people can minimize their risks.
options trading is a valuable hedge, especially against the market crash. the outcome should be mitigated with proper tools, but yeah, those are expensive
Hi, thanks for a fair point. Analytical tools are indeed quite expensive but our purpose is to make them free and comprehensible to the general public.
Once more they make it look so easy, every mother and grandmother can do it, and even the 6 year old.
"Take Control Of Your Options"
...sure, until you realize you have absolutely NO CONTROL and you just burned your hard earned money.
Listen - it's not (only) about a product to become successful in the markets, it's about understanding and learning years and years.
Why the heck should people believe, that you simply can make money with in the markets with your phone, while others study for years and go to work every day and never stop learning?
This is just flat out another BS, PERIOD!
I trade options since many years. But I would never ever use my phone to trade options. You can not just choose from a simple strategy and press the GO button...keep dreaming ;-)
You have to know WHEN you have to use WHICH strategy. What do you want to accomplish with a options trade:
- trade directional?
- trade for income?
- trade non directional and profit from a time decay?
- hedge?
- support another stock/futures strategy?
- ...mix the above?
You have to analyze
-what's the current volatility in the market
-volatility in the expiry strikes etc (some expiration give you better prices)
- what's your real risk! ..and how can you fix it when your idea is going down the toilet?
How can you use complementary products with Options (Stocks/Futures/Volatility Products like the VIX).
OK, enough ranting ;-)
...here's my advice for everyone who can stay away from trading by the phone and want it seriously:
1. Go to tastytrade.com - it's the absolute N1 learning resource for Options Trading on the internet. ALL FREE.
2. Apply everything you learn in a DEMO ACCOUNT
3. Do it for AT LEAST 1 year and TRACK your success
Hi! Thank you very much for such an in-depth (albeit somewhat pessimistic) comment.
1. Making educated predictions are the essence of investing. As a professional options trader, don't you agree? Just for the record, I am an options trader myself.
2. It is possible to control your exposure, so taking control of your options does make sense.
3. "Years and years":) Ok, is there a correlation between a number of years spent in the financial industry and investment performance? Sure thing, Berkshire doesn't look that bad, but in truth many professionally managed funds are simply burning people's life savings.
4. Why would anyone believe? People should try and see. First on a paper trading account and then with actual cash.
5. All the examples you made are translatable into an everyday language, for example "IV smile" can be translated into "market sentiment", etc. People are being discouraged by the excessive jargon and unnecessary overcomplication. I understand some people are afraid of creative destruction, but c'est la vie..
6. You praised Tastytrade(!) Yet before you said "you would never trade with your mobile". Their founder (Tom Sosnoff) indeed sometimes shares good material, the problem is that sometimes he says something that's good for him only, so take his advice with great caution, these are 2 links: https://www.facebook.com/watch/?v=5658429654182670https://www.reddit.com/r/thetagang/comments/ooio8q/does_anyo...
And yeah, tastyworks has been sold to IG Group (British CFD provider) so now they are in a mainstream gambling ;)
Contrary to popular belief, options trading is a good way to reduce risk according to most expert comments I've read. But it can be very frustrating for ppl who want to try for the first time. I do sports trading in the UK and wanted to get into stock & options. But the jargon is so off-putting.
22 comments
[ 2.2 ms ] story [ 43.4 ms ] threadI dont think there is anything objectionable in your comments. Do email hn@ycombinator.com if this does not get resolved.
Regarding your comment on my query, it really doesnt answer my question, but that does not mean that your comments should be marked dead.
In prediction markets people bet on a future outcome and then these bets are traded in a market. Turns out that the price that they trade at converge to the perceived (and often the underlying) probabilities of those outcomes. Options market has a similar structure, people bet on the future price of a stock. What I am interested in if there is any study that shows whether the prices on these outcomes track their probabilities.
Since you made a comparison to prediction markets, let's focus on earnings release dates. Earnings release is an event that's known to happen on a certain date in the future, just like some political election (only few companies don't disclose their future earnings dates in advance, Berkshire Hathaway is amongst them).
There are plenty of studies researching option prices and the stock moves post earnings release, this is just one of them: https://www.stern.nyu.edu/sites/default/files/assets/documen...
The conclusion of that particular study is that option prices prior to the earnings release date are helpful for learning about the future stock price volatility.
you may be able to reduce/manage the risk better than a pure random bet, but fundamentally it's still gambling.
ref: https://www.investopedia.com/terms/s/speculativerisk.asp
Once more they make it look so easy, every mother and grandmother can do it, and even the 6 year old.
"Take Control Of Your Options" ...sure, until you realize you have absolutely NO CONTROL and you just burned your hard earned money.
Listen - it's not (only) about a product to become successful in the markets, it's about understanding and learning years and years.
Why the heck should people believe, that you simply can make money with in the markets with your phone, while others study for years and go to work every day and never stop learning?
This is just flat out another BS, PERIOD!
I trade options since many years. But I would never ever use my phone to trade options. You can not just choose from a simple strategy and press the GO button...keep dreaming ;-)
You have to know WHEN you have to use WHICH strategy. What do you want to accomplish with a options trade: - trade directional? - trade for income? - trade non directional and profit from a time decay? - hedge? - support another stock/futures strategy? - ...mix the above?
You have to analyze -what's the current volatility in the market -volatility in the expiry strikes etc (some expiration give you better prices) - what's your real risk! ..and how can you fix it when your idea is going down the toilet?
How can you use complementary products with Options (Stocks/Futures/Volatility Products like the VIX).
OK, enough ranting ;-) ...here's my advice for everyone who can stay away from trading by the phone and want it seriously:
1. Go to tastytrade.com - it's the absolute N1 learning resource for Options Trading on the internet. ALL FREE. 2. Apply everything you learn in a DEMO ACCOUNT 3. Do it for AT LEAST 1 year and TRACK your success
Learn to earn, period.
May all the luck be with you.
And yeah, tastyworks has been sold to IG Group (British CFD provider) so now they are in a mainstream gambling ;)
That women have lower IQ than men?? Sexism is a social disease so you better see your doctor!