Dominick, yes you are right, "a fool and his money are soon parted." I would simply add that with options, "a fool and his money are very quickly parted."
And I absolutely, completely disagree with anyone who asserts that successful options strategies can be engaged in by one who has not first mastered the art of trading. Options strategies are an entertaining intellectual exercise. But when the reality of the emotions of fear and greed come into play with an inexperienced investor, things can, and do, quickly go to hell. This is especially true when one is trying to both master the movement of the markets and individual equities, and at the same time fight against the insane spreads and decaying value of most options. Can you imagine taking a friend into a casino to play blackjack when he hasn't mastered the basics of the game itself? And now, tell him that in order to walk in the place, he has to pay the doorman 10% (the spread) just to get in. Oh, and on top of that, my friend, if you don't beat the house odds in four hours (a decaying asset), well, they're going to take some of your chips off the table. Would you take that bet? Possibly, if you were a highly experienced card counter and were fully confident of beating the house odds, which were already against you. Otherwise, well, back to the fool thing. |
