“The market can remain irrational longer than you can remain solvent.”
The proponents tout options as “the best of both worlds; unlimited profit potential with totally limited risk.” Sounds terrific! Why would anyone trade anything else?
With options trading, as with every other financial instrument, there are advantages...but there is no free lunch. Actually, there are probably more ways to lose money when trading options than with any other financial instrument. This is because you give something up for the limited-risk feature, but in certain scenarios it’s worth it to give this something up. I know folks who trade only options and wouldn’t think of touching futures. Many of these people do quite well. I ...