Why You Will (Probably) Lose Money Trading Options

[@PBoyle]

That photo clearly shows Tony Robbins towering over you!

[@BenFelixCSI]

That photo is a fraud!

[@biplav32]

@@BenFelixCSIWDF happenedto you hair?

[@BenFelixCSI]

It grew.

[@biplav32]

@@BenFelixCSI How about trading super long term options?

[@andrewelburton1]

The most important point: “Always remember: when you’re having dinner with lions, make sure you’re at the table, not on the menu.”

[@mmbarbon2955]

I thought the biggest thing was Ben's height 😅

[@cbqmrbqm8972]

C‘mon, some gas station sushi ain‘t that bad.

[@Blast6926]

Sadly most of options players are naive newbies who are usually very young and believe scam artists on X 😕

[@mamotalemankoe3775]

​@@cbqmrbqm8972Both you and your bank account will present in the emergency room.

[@surfrduede]

I love the quote, but it does feed into the narrative the system is rigged. Most lose on options simply because they are buying premium on directional bets without having an edge or sound risk management. It’s a coin flip at best that you are paying to flip.

[@spanishlefty]

This guy made us think he was average height and bald for years so we could take him serious. Now he's 6'11" and I don't even want to get into his hair thing. We better believe what he's saying.

[@TuEIite]

Hairmaxxing winter arc

[@theondono]

How was that plan supposed to work? Because now all I can think is that these videos are just scaremongering. He sandbagged with his bald head so that I could feel secure with my balding scalp, then he suddenly has H&S ad hair. What if he says “options will lose you money” to keep the options for himself? 😂

[@DiscoFang]

And how about the suddenly form fitting, beefcake exposing shirt!

[@shun2240]

gigachad

[@viraluxeupdate]

@@shun2240how so? You can’t control your height

[@BritishHistoryGuy]

Literal 6'11 Gigachad explains investing and finance

[@BenFelixCSI]

😂

[@MrFoof82]

Ben now needs to have every video accompanied by some opening music straight out of Shadow of the Colossus.

[@pw709]

He could have played in the NBA, but instead went for the MBA.

[@Adelina-293]

I'm awaiting the IPO of his CHAD ETF.

[@ReneRobert-ju7ju]

Great as always Ben. Now I want to see a collab between you and Patrick…but you have to do the video standing side by side for comedic effect.

[@trs8696]

I absolutely believe that a $49.95 KZbin video course by a day trader with a fake Rolex will heap me beat out multibillion dollar investment banks staffed by MIT educated maths prodigies.

[@BenFelixCSI]

Enough people must actually think this to support the existence of all those courses.

[@theondono]

@@BenFelixCSI or enough people think those courses are really profitable to “invest” into setting up these ludicrous schemes, but only a small select group actually makes any money…

[@DekarNL]

​@@BenFelixCSI it's depressing to see so many people get scammed while good professional advice is relatively cheap and easy to find.

[@Adelina-293]

I got a bridge to sell you.

[@relaxingricky]

Once they started making the gamification of options it was ............. game over.🍷🤙

[@MarcNemitz]

Thumbs up for calling out Patrick Boyle! 🙂

[@rendarecorrentecomopcoes2336]

Now on the next video, Patrick's hair start noticeably growing and he reveals he's 7ft tall.

[@rafaelnogales5368]

What level of accuracy can we expect from a rap podcaster?

[@DwightStJohn-t7y]

Red herring, literally. And off topic: Patrick really doesn't care about height ...... or hair.

[@fsmoura]

Yeah, it's high time Patrick's lies got exposed! He's going down soon! Anyhoo, the moment you have hair again, that tacit alliance between bald men goes out the window. "Correction: I _was_ bald!" -George Costanza

[@davieb8216]

Loved the first joke, you got me hooked. I Think it would be good for you to have a chat with Patrick and bring up his quant perspective on "value/low pe investing" and other Farma factors, Especially after your chat the other week with Andrew Chen, who I think Patrick would be inclined to agree with .

[@zohahs5276]

As someone has said...."Before options trading I used to live in trailer. Then I teach my landlord option trading now we both live in trailer."

[@JIM-vp1me]

Ben Felix - the guy with advices saving portfolios, with hair, without hair, we trust!

[@peregrinedalziel4999]

I am friends with 6'10" identical twins. I am 5'8". In photos, side by side, i look like their ventriloquist dummy. It's enriching.

[@jesterz4635]

Hey man, I’m just doing my part to make markets efficient.

[@BenFelixCSI]

Thank you for your service.

[@europana7]

Thanks for your donation 😂😂

[@francoisaube7652]

I'm contributing to price discovery! It's a team effort

[@artasheskocharyan]

6’11 and hair like that ? Man I better find a way to make money from options

[@Ryhm14]

Ben shoulda hooped instead of tryna enrich people cause he tall as hell!

[@caniggiaful]

​@@Ryhm14 all the evidence suggests he's at least decent too. I guess basketball is an even more competitive market!

[@BenFelixCSI]

I played NCAA D1 basketball but wasn’t that good, and not good enough to go pro. Pretty good in my rec men’s league though 😂.

[@batrarohit1]

@@Ryhm14he played ball but his real calling was being a model. Instead he’s helping save our financial lives. Legend

[@nemesis3255]

​@@BenFelixCSIand a money three point shot!!

[@mattfin5900]

Thanks for putting this together Ben. I have a few friends that really need to watch this. It's wild how well the marketing is working. I didn't realize firms were making THAT much money off retail traders. Crazy! The amount of Canadians that you are helping with your content is truly incredible.

[@hansel2001]

So clear. I’ve never traded an option, but I understood every word of the video. Well done and thanks.

[@ricomajestic]

The guy is clueless when it comes to options. They are actually safer than stocks!

[@brianfrankson772]

“ @Patrick Boyle , please do your research” haha. Ben dropping jokes awesome

[@zdmsr]

It gets worse in developing markets. From Bloomberg: "The average time an Indian trader holds an option is less than 30 minutes...the Securities and Exchange Board of India, known as Sebi, says 90% of active retail traders lose money trading options and other derivative contracts" (Retail Traders Are Losing Billions in India’s Booming Options Market, February 12, 2024) One aspect of Options that is criminally neglected is their introduction and marketing by brokers in countries where financial market participants are still nascent. India is currently experiencing a retail trading boom, however unlike the boom in the US, the retail boom in India prominently features Options and does not lock it behind safeguards. I highly recommend reading the Bloomberg article.

[@DwightStJohn-t7y]

I get five/ten calls a day, from EAST Indians and they're always the top sales reps. in LEGITIMATE fields, so no surprise.

[@murky024]

You can only expect so much credibility on a person's size when referencing a Rap KZbin Channel.

[@RabianskiT]

Hilarious 😂

[@alvadagansta]

Bro really did the “I’m 6’4 btw” meme but for real and for more

[@BenFelixCSI]

😂

[@BuildWealthCanadaShow]

Fantastic video as usual Ben. Thanks for all your hard work on the financial literacy side.

[@financialtrader3435]

Thanks for exposing Patrick. I always sort of knew he was wrong about finance 😔

[@jb_makesgames2264]

Great Video Ben - it is worthy of a part II - I'm a retired risk manager who has dabbled in options, mostly selling covered calls. The commission structure in Canada is horrible with a two tier commission charge been paid. Also the premiums in the Cdn option market is disgusting and does not adequately cover your commission cost unless trading sizable volume. Also I have read research papers which speak to Canada's tax system for recognizing premiums vs the US that in turn affects how the market evolves through the year.

[@thisaraperera3678]

Ben Felix: Man in Finance ✅ Trust fund (probably) 6'5 ✅ Blue eyes ✅

[@Viper4ever05]

I dabbled in options out of curiosity, and it scared the hell out of me. How quickly you can go from a winning trade to a losing one in a few minutes is terrifying. I managed to get lucky a few times but ended with a few hundred dollars in losses.

[@rajak3958]

Loved this video. Appreciate you being addressing this. You hear some story online of someone betting change to make a life changing amount of money. That’s the exception, not the rule. With growing underemployment young men are desperate to attempt this. Truth is, most of my worth is in my 401k. That account I kept putting 14% of my salary into and never monitoring it. That’s the one thing stupid young me did that was smart.

[@rajak3958]

I can’t edit the above comment so apologies for the grammar errors.

[@PMA65537]

Remember the study that found above average performance from investors that were dead

[@janusface6628]

Another excellent video! I have definitely learned more about investing from you than from any other person. I'm still eager for a video on investing for those people for whom index funds are not an option.

[@Unknown-jt1jo]

Index funds are an option for everyone in the US and Canada. Do you live in a country that restricts access to US equity markets?

[@janusface6628]

@@Unknown-jt1jo right, I'm outside of the USA. Due to my situation I cannot buy ETFs, just individual equities. I think in some countries, while you can theoretically buy ETFs the tax situation makes this disadvantageous (like in South America). This issue would also arise for people in countries where access to international equity markets is limited.

[@ThomasFullSpeed]

Great start to a great video. Thank you!

[@iron-Hide]

Excellent and accurate information. I find it quite interesting that statistically the lower income side of the market are the ones investing in options and cover calls.

[@RicardaWindsheimer]

Managing money is different from accumulating wealth, and the lack of investment education in schools may explain why people struggle to maintain their financial gains. The examples you provided are relevant, and I personally benefited from the market crisis, as I embrace challenging times while others tend to avoid them. Well, at least my advisor does too, jokingly.

[@TheRc0211]

Greetings from Hong Kong and Thank you Ben, I've been a loyal follower for years. Would you please consider making a video on trend following strategies (or managed futures or CTA), their merits in a diversified portfolio, and of their recent developments in the ETF space? Not sure if they are prevelant in the Canadian market.

[@DADA-pl4tm]

Glad you did this video, saw the news article and was wondering about the trading strategies they discussed in the article. I had the same experience you did of doing a google search and really not finding someone who did a general overview of the pros and cons and who it is meant for.

[@DerGesellschaftskritiker]

Good video! Yes, most (retail) traders loose money, a lot of money!

[@zacharias1558]

Great video, as always! One thing you didn't address is using options as a hedge. When would I, as an investor, want to use options to hedge risky assets? How do options compare to other hedges in terms of cost, risk, and risk-adjusted return?

[@BenFelixCSI]

Options tend to be an expensive downside risk hedge, and are likely inefficient for long-term investors.

[@zacharias1558]

@BenFelixCSI Thank you for the response. I'll stay away from options then lol

[@4.0.7.7]

Got the looks, the mad flow, the money, and now he’s 6’11. No wonder I can’t find a woman….he has them lined up for miles. Damn it Ben save some for the rest of us.

[@Adelina-293]

First you get the money, then you get the woman, then you get ended by Sosa's Terminator.

[@daviddryden7668]

@0:10 Jeez Ben, please leave some for the rest of us

[@krasimirivanov6627]

Great video as usual, Ben! What about covered calls on stocks or ETFs that one has researched and is willing to hold for the long term? Selling

[@BenFelixCSI]

Covered calls trade off option premium income for upside potential. There might be some volatility risk premium available to collect in there, but in general I'm not crazy about the strategy. I did a video on it: kzbin.info/www/bejne/j36vh5ePbd5rrK8si=1nmUWVLUQc1ARG70

[@Fred2-123]

You are giving up the potential large upside in exchange for a small income. You get to keep some of the gain if the stock goes up, but get ALL of the loss if the stock goes down.

[@stevenglowacki8576]

I certainly thought about this when I eventually managed to get up to 100 shares of some ETFs. But the problem is that the options are going to generally be valued fairly at the middle of the bid ask spread, and you're generally only going to be paying that spread. All the degenerate gamblers are going to have their trades taken by market makers because they're using commission-free platforms that earn their money by routing their traffic to those market makers. The market makers' pockets are basically infinite since they'll be hedging whatever trades they get to make when they earn large bid-ask spreads. I don't think there will really be any price inaccuracies because of that, and you will never get to earn the bid ask spread yourself. I personally like buying mutual funds over ETFs because of the spread on ETFs, though I realized that the tax benefits of ETFs likely matter more once I got into the tax bracket where capital gains were subject to federal tax, so I still buy ETFs in my taxable investments, but not in my IRAs.

[@doctornuclearum9102]

Love your videos Ben. Could you kindly consider covering risk premia strategies and research pertaining to it in one of your upcoming videos? Thanks!

[@robertross8565]

Excellent video. If you want to make money in the market, buy the market at a low cost and sit tight.

[@level10peon]

This is such an important video. I took an interest in both swing trading and short-term investing (holding 1-2 years) back in 2021, and was actually getting strong returns, even through the 2022 bear market. But then I got arrogant and seduced by the high potential upside of options and shifted most of my trading to options. In just four months I gave back 1.5 years worth of gains. Luckily I had the self-awareness to stop at that point, but had I continued I surely would have blown up my account. It was definitely a humbling experience.

[@HelnoIaint]

I got hooked on trading options during the Covid fed induced bull market and made a lot of money but gave it all back and some when the euphoria ended . Lesson learned .

[@BenFelixCSI]

I bet there are enough stories like this to write a book on it.

[@nfdisco3484]

Excellent advice and information as usual!

[@tiagofreitas7659]

Great video! Thanks

[@cryengine_x]

cool vid. i have noticed so many on twitter springing up touting options trading, and its good to see it debunked.

[@c4igrant]

I appreciate the video and has made me re-think running the wheel. Though I am successful at it, the "you don't now what you don't know" is always there, lurking like a "lion."

[@BenFelixCSI]

Also relevant: Covered Calls: The Income Illusion kzbin.info/www/bejne/j36vh5ePbd5rrK8

[@c4igrant]

@@BenFelixCSI Yep, watched that one as well. My strategy is to buy a stock/ETF that I like, hold for a year and then if the profit margin is where I want it to be and I am ready to sell (with about 50% profit), I then write covered calls against it to extract some additional money as I sell it.

[@Shvabicu]

I've only made money with options but then again I followed my own strategy and very specific setup with strict risk management. Though to be fair, I haven't traded in some time as it's currently not worth the time and stress it demands. Index ETFs have always been the foundation of my finances but it can be fun and exciting to go to the options casino from time to time.

[@wilkinsune]

Finally someone with sense.

[@grimkhor]

I think an interesting topic would be leaps as part of long term strategy in contrast to short term option trading from this video which imo has much more ground to stand on.

[@dfancu]

would that mean being a market maker and selling options instead of buying would be a worthwhile endeavour, assuming you have the capital to cover / roll them forward?

[@BenFelixCSI]

You’re not a market maker if you’re a retail investor selling options. You’re still losing on the spread. Selling options has other issues too. kzbin.info/www/bejne/j36vh5ePbd5rrK8

[@Dividend-Shark90]

What are your thoughts on ETFs and institutions who provide options based strategy funds with high income payouts ? Essentially throwing the option work at the “pros” for a fee but still garnishing high yield distributions

[@BenFelixCSI]

Covered Calls: The Income Illusion kzbin.info/www/bejne/j36vh5ePbd5rrK8

[@jackyeh7512]

Very well explained. Most retail option traders lost money by buying short expiration date call options with at the money or slightly higher strike prices. Why? Because the premiums are CHEAP. It's almost same as buying lottery tickets which even prints the chance of winning. Doing the exactly opposite will make money, like selling covered calls, one small premium at a time. Unfortunately, it takes larger funds to make consistent profit like the casino dealers.

[@josephlombardo1267]

Thank you, Felix, for the warning. I use covered call on non-dividend paying securities to generate income without having to sell the securities. I don't really see it as neither speculation nor hedging. What do you think about using options to generate income?

[@BenFelixCSI]

Covered Calls: The Income Illusion kzbin.info/www/bejne/j36vh5ePbd5rrK8

[@josephlombardo1267]

@@BenFelixCSI thank you for sharing (I made a couple of questions in the comment of that video). I actually don't think about the strategy as a way to make excess returns but as a way of borrowing against a security (premium is paid out first). I consider margin interest my opportunity cost, thus if the impact of option, spread and trading friction fees are less than the underlying security growth in the long run, I'm OK with the strategy.

[@geoffnaylor3734]

I was never dumb enough to expose myself to the risk of options, but I might be dumb enough to expose myself to total return swap based ETFs, because I hate paying taxes on my dividends! When is the video diving deep into the value proposition of those coming Ben?

[@zyyzzbrah]

Great video! However, I do think buying deep in the money LEAPS (1,5 year +) during substantial market corrections (any day now, right??) is a solid use of options. What are your thoughts?

[@BenFelixCSI]

Buying LEAPS any time can make sense since they just offer leveraged exposure to an index. I wouldn’t use them to time the market but they can play a role for young investors who want leverage. Thats different from trading options though.

[@VikRR.]

Hey Ben 👋, good job as always. Please do video on CFD trading as well🤔🆕

[@relaxingricky]

I had to watch this twice..... excellent 🤙🍷

[@user-px2yi5ir4g]

Can you make a video on what you would consider responsible uses of options? Like you said in the video, when you search options on KZbin all you find are traders and it is difficult to find evidence backed information. I’m personally interested in using options to increase leverage (LEAPS) and the advantages of using them over other forms of leverage. I’m also curious of when (if?) you would use them as to hedge.

[@onepocketslim]

Sound advice. I'm fairly new to options, but I've had success with covered calls and some cash covered puts. Selling and collecting premiums is boring, smaller profit, but I'm also not losing my a$$ swinging for the fences.

[@BenFelixCSI]

True but there are still issues there. Covered Calls: The Income Illusion kzbin.info/www/bejne/j36vh5ePbd5rrK8

[@DekarNL]

I watched Ben Felix for years and I own low cost, globally diversified ETFs. I'm set to be able to afford my kids' college tuitions ánd pay off my house by the time I'm ~60. There is no need to take any more risk!

[@robert-9754]

Hey Ben, could you tell us which investing/ finance books did you have behind you in other videos? They were always out of focus, so I couldn't make out their authors and titles. I am still interested in broadening my investing knowledge though. Any chance that you could share (maybe a photo at least or maybe even do a video about them) some of the titles that you have and that have made an impact on you? I obviously already know about the Intelligent investor and other well known books.

[@TZCoder]

What this video and the research fail to take into account is that I am special!

[@BenFelixCSI]

We are all special.

[@LoveIstheAnswer696]

Best channel on KZbin.💯

[@jimbojimbo6873]

This guy can’t seriously be 6’10 no one person can have so much going for them surely. Edit: nope, guy is legit 6’10…

[@ihatenegi]

Are selling covered calls and cash secure puts really a less risky form of options trading strategies?

[@BenFelixCSI]

Different but still not great. Covered Calls: The Income Illusion kzbin.info/www/bejne/j36vh5ePbd5rrK8

[@ihatenegi]

@@BenFelixCSIThanks for replying so quickly, will definitely take a look!

[@123lowp]

Only sell a covered call when you definitely want to sell at that price. If you do it consistently, you will sell many times when you didn't really want to.

[@mistersheikh7718]

Was cool to find out you work in Ottawa, small world haha.

[@jerodburnett6422]

How bad is long term cash secured puts on broad indexes like VT vs just holding the stock? Since stock markets typically go up I figured that would be a decent strategy for most young investors

[@BenFelixCSI]

Covered calls have a similar payoff. My thoughts: Covered Calls: The Income Illusion kzbin.info/www/bejne/j36vh5ePbd5rrK8

[@jerodburnett6422]

@@BenFelixCSI makes sense, thanks for the reply!

Currently the way I use it is that from time to time I buy a call option with really long expiration (i.e. 2 years) on a stock I believe in. Then if I'm right, there's a meaningful result as opposed to just buying the stock with limited budget. My primary portfolio is built from ETFs and I recognize my option trades as gambling.

[@water3745]

Thanks. This conclusion seems pretty obvious. What I'm curious about is whether retail should even use options as a hedge. If market is efficient in a zero-sum game, shouldn't retail just stay away from options at all?

[@k.h.6991]

The problem is,market efficiency only works long term. Short term, it's more of a popularity contest.

[@k.h.6991]

There are always going to be people with the smarts and the personality that can make options work. The problem is: they're a very small minority. Yes, most retail investors who dabble in options, are fooling themselves. And if they've won big, they should use that money to buy or pay off their house, set aside money for retirement etc. and most people shouldn't even try.

[@OneEyedKing]

If you've bought the spot price and then want to cover call with shorting put option - can you use OPstrat to calculate to help hedge? Or is OPstrat calculations only useful when not cover calling

[@papacharlie-niner148]

A call, a covered call, and a short put are all bullish directional trades. So they cannot hedge each other for directional risk. If you are long stock or a call, you would go long a put or short a call to hedge directional risk.

[@JK-rv9tp]

It is possible to trade options profitably at relatively low risk, by selling covered calls, like many ETFs do. It's possible to make 10+% per year. But, you have to put quite a lot of time and effort into it and the options market in Canada is pretty small. You pretty much have to do it by selling calls on the US exchanges.

[@BenFelixCSI]

Covered Calls: The Income Illusion kzbin.info/www/bejne/j36vh5ePbd5rrK8

[@maemorri]

I'm curious how they calculate that prices on at or near the money options are relatively high. The only way I can figure is that the expected volatility of options that are far from the money is higher, and thus delivers more "bang for the buck". Is that really a meaningful measurement. Generally volatility is a bad thing in investing.

[@YourSkyliner]

Who are you and what have you done to bald Ben Felix?!

[@bryannacaldwellsoccer]

Thank you for your video!

[@pandugeet]

The saviour that we all need.

[@Barbenheimer2001]

Ayres and Nalebuff suggest using options as leverage to increase exposure to equity markets early in a person's career (assuming they have a stable job that does not depend on the performance of the stock market so that their future earnings can be thought of as a bond). What do you feel about using options to emulate, say, 200% exposure to the global stock market (assuming the person implementing the LEAP strategy is an emotionless robot who will continue to invest with leverage until they're reached their Samuelson Share even if they get completely wiped out early on)?

[@BenFelixCSI]

It can make sense on paper but I don’t know any sentient emotionless robots. Investing With Leverage (Borrowing to Invest, Leveraged ETFs) kzbin.info/www/bejne/gp2WhXZ7r5maZ80

[@rohanphilip665]

Fantastic video!

[@ThomasSlaney]

Nicely said. At least lotto tickets cap your loss at the $2 purchase price.

[@soogasooga]

well to be fair if you're buying options, your losses are capped at the purchase price too.

[@4rthurzz]

Can anyone explain? Doesnt the extrinsic value of options mess with market efficiency?

[@FlyingSagittarius]

The options market is zero-sum, and actually negative-sum once commissions and fees are accounted for. Quantitative trading firms are deploying complex trading algorithms to extract massive quantities of money from the market, and retail traders are paying the price.

[@ericshang7744]

Hair made you so proud🎉

[@JakeG895]

What about the stats on retail traders writing options?

[@orbital1337]

Trading against companies like Citadel, Jane Street, Optiver, etc. with the expectation of making money is peak Dunning Kruger imo.

[@BenFelixCSI]

🎯

[@Unknown-jt1jo]

I once interviewed with Citadel in Chicago. It was the only time in my career when the company flew me first-class and put me up in a 5-star hotel. All that money has to come from somewhere.

[@gormanthomas8135]

But surveys show that 65% of Americans are above average intelligence?

[@brock8232]

Ben Felix financial advisor by trade, warlord giant by destiny

[@electric-fire21]

It’s so true, only the people that are lucky and make money will post about it, if someone loses money they won’t post it on social media.

[@Asdayasman]

Please google "loss porn".

[@grodrigues3]

Ben, you made a video about investing with leverage and explained that it was rational and optimal for young investors (if they buy back). If you are buying LEAP options on a diversified asset, is that the kind of leverage that video is suggesting.

[@BenFelixCSI]

That would be a responsible use of leverage, as opposed to the type of trading / gambling the video addresses.

[@jacob_90s]

Patrick: Extraordinary claims require extraordinary evidence Ben

[@Supe063]

It would be very interesting to get your take and statistics on Institutional investors employing options trading as well.

[@BenFelixCSI]

One of the studies I mentioned finds that institutions are profitable on average. Institutions also likely have more discipline, lower costs, and more sensible uses for options.

[@apothe6]

Sometimes people need to learn this lesson the hard way

[@Ruepel]

Thank you!

[@Feds_the_Freds]

I think, it would be interesting to get a deeper look into selling options. I very much suspect that the fees and capped upside make this not smth worthy to be pursued.

[@BenFelixCSI]

Agree. Covered Calls: The Income Illusion kzbin.info/www/bejne/j36vh5ePbd5rrK8

[@speucey]

Ben -- What about buying LEAPS on index ETFs as a mean of obtaining leverage for younger investors for lifecycle investing?

[@BenFelixCSI]

That’s more like investing than trading options. Kind of like buying an index vs. day trading.

[@Fred2-123]

Buy deep ITM LEAPS as far out as you can. You can get 2X to 3X leverage at a implied interest rate of 3%-5%. XSP is S&P500 options.

[@foto21]

I think it's good to learn how to trade options to get the mystery out of your head. However, many of them don't work. And if you SELL options, you can blow up your portfolio pretty good, and LONG puts have like a 95% failure rate. On top of that, now options data is readily purchaseable by pros betting against retail, which may not seem to refer to a small trader specifically, but if you're doing what a mob of people is doing, then the MMs will rig your trade to fail, whether or not it would otherwise.

[@jonathankr]

Ok, now jokes aside... isnt buy an out of the money put of the sp a decent hedge in case we drop? Warren is going to soo much cash now. Sp avg PE is almost 30. I dont know when it will correct, but cant i just a ootm put option?

[@BenFelixCSI]

It’s expensive insurance. Unless you can predict the future it probably doesn’t make sense for long-term investors.

[@vicgill1980]

This is a mandatory public service announcement for us retail investors…thank you Ben

[@DavidHMacFarlane]

I did my Masters at University of Toronto in significant part because I wanted to study with John Hull, the author of THE textbook on options and derivatives. I did three graduate level semester long course on options and derivatives. I would never trade options. I look at the banks advertising their options platforms to retail investors, and I think it's just obscene.

[@philb6079]

I've started trading options a few months ago and have had a lot of success with it. I have a lot to learn but from what I see smart options traders are like good card counters.

[@luisoncpp]

Hmm, I think they are even rarer, counting cards just requires to follow a well documented algorithm that doesn't change with time, but for options there is not an algorithm that always works.

[@ydderynnad]

The "degenerate gambling" aspect is the appeal, no? I have a tiny bit of money in my "F*** Around & Find Out" account (completely separate from my "real" brokerage which is, you guessed it, low cost index funds) in which I trade options. Or, more accurately, in which I donate money to Wall Street. I've never put myself in a position where I can lose more than a couple dozen dollars but I've made enough to cover rent one month (I live in Guatemala; rent is very inexpensive). I'm under no illusion that this was anything but luck and it scratches that gambling itch because I know more about finance than any sport. Just like any other type of gambling, once you lose more money than you'd pay for the "fun" aspect, it's time to walk away. Don't listen to me, tho'. I'm only 5'8".

[@BenFelixCSI]

If people realize that’s what it is and act responsibly (to the extent that gambling can be responsible) that’s fine. The problem is when people are under the illusion that this is a profitable strategy, which is how many brokerages promote it.

[@ydderynnad]

@@BenFelixCSI True, my brokerage was pretty aggressive trying to get me to trade options. There has to be a reason for that; they certainly weren't making it available out of the goodness of their hearts.

[@BenFelixCSI]

Exactly. Major conflict of interest.

[@RabianskiT]

@@ydderynnad I agree with you. I also enjoy some highly leveraged derivatives once in a while 😂 But some people really think that these instruments are investments… and that is scary 🫣

[@123lowp]

​@@BenFelixCSI Well, I made 302k on GOOG earnings this week with options

[@Austin-fc5gs]

This fraud is outrageous! Would also love to see you interview/talk to patrick boyle

[@patrickshanghai2064]

this is good!

[@ddude27]

Sigh... What bothers me most is when big institutions create massive issues like 2008-2009 then nothing really changes. It's extremely sad to see how the law enforcement agencies have real no power to bring down these trading companies simply because they have so much money and time to get off basically Scott free. I wish options didn't exist because of the fact of leverage exist in them for people to exploit even if they are used as a hedging tool.

[@GuruFernandez]

So for those of us who don’t treat options as a casino - how do you feel about option selling? Specifically cash secured outs and covered calls.

[@BenFelixCSI]

Covered Calls: The Income Illusion kzbin.info/www/bejne/j36vh5ePbd5rrK8

[@stright9607]

I heard that Ben is planning on taking up modeling soon

[@cryptoricardo]

It can be simple: sell weekly puts and use the premium to buy LEAPS. That's assuming the bull market still has a year or more to go. In a bear market, sell weekly calls. BUT more importantly: have a plan and stick to your rules otherwise you are indeed gambling.