Real Estate Investor · Phoenix, AZ · Member since 2009 · 1k+ posts · 1k+ votes
16y
I agree with Niman. It is important to have a good theoretical understanding of options in order to successfully use them in the long run. And when you study the Black Scholes model, make sure you learn about the assumptions underlying it. IMHO, the model undervalues long duration options.
One other important thing to understand when dealing with the financial markets is the types of errors in thinking that are common to our species. The field that studies this is called Behavioral Finance or Behavioral Economics. Learning a little bit about errors such as anchoring, recency bias, the assymmetry between our reactions to profits and losses, etc. allows you to exploit them for higher returns. If you want a simple book to read that talks about some of these errors, you could buy "Fooled by Randomness" by Nassim Taleb, who also wrote the harder-to-read Black Swan.
I think learning the techniques of options trading without learning the underlying economics of it is very dangerous.
Hales Corners, WI · Member since 2013 · 229 posts · 80 votes
11y
I am a member at Motley Fool Pro / Motley Fool Options and have been learning about options investing (not trading) for the past year. It has been very interesting and profitable. My interest and success with this method has been one of the things holding me back from getting started with real estate. I hold a long stock portfolio with options positions as a slice of the portfolio that I can play with to generate income and leveraged appreciation. I am also learning about hedging and bearish strategies.
It has not been perfect, I have made mistakes and lost some money on a few wrong trades that I chose to close out and take a small loss rather than salvage. I had a protective hedge that lost 100% of it's value, and I am a little dubious about a short position (my first time shorting) that is taking its sweet time for the thesis to play out, if it ever does. But the gains are definitely outweighing the losses, and I am working in smaller numbers and with a diverse portfolio while I gain experience, knowledge and confidence. I have more to learn about taxes -- most of my short term income will be taxes as ordinary income (isn't that like a flipper?) but my longer term capital gains will be taxed at lower rates. I am investing both within a taxable account and retirement accounts (Roth, Rollover 401k)
With stock investing, I am very happy that I can get excellent asset quality, and great leadership from the best CEOs in the world, for the price of just a few shares, and the transaction costs are tiny, and my investments are liquid!
I'm still very new at it but I am very happy with the ongoing coaching I am getting and I feel like options are a great tool to learn. I would not do it without coaching, however, the hand-holding and support are extremely valuable and a big part of why I'm doing well.
I am still interested in real estate and would like to work with real estate investing. However, I'm a little torn about splitting my attention between two in-depth methods, or trying to become very, very, very good at just one.
Perhaps if / when I invest in RE, I will seek out the same kind of partner / advisory service / coaching that I currently get with stock and options investing, rather than trying to learn it all from scratch and DIY.
Professional · Toronto, Ontario · Member since 2015 · 22 posts · 0 votes
11y
If anyone want to learn about stock option trading. Then he/she can enrol with Learn-to-Trade.com. Here you will get complete professional courses to learn stock trading. Get more details regarding stock option trading here: http://bit.ly/1FAJ3AK
Professional · Toronto, Ontario · Member since 2015 · 22 posts · 0 votes
11y
If you are in Toronto, then Learn-to-Trade.com can provide stock options trading training classes. They arrange 2 hours free workshop twice in a month which can help you to learn some basics in trading and you can also get experts advice on it.