SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe)
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: KFE who wrote (2228)7/20/2004 7:24:21 PM
From: TimF   of 2241
 
The 80% is 1 - An approximation and 2 - only applies to options held to expiration. Since most options are not held to expiration it doesn't give a good feel for your chances of making money buying options unless for some reason you always hold to expiration.

Even then it can give a distorted picture. It makes it seem like holding a long option to expiration is a losing strategy. But this isn't really true overall because often those who have gains from holding long options to options expiration will have gains that exceed the loss of those whose options expire worthless. If you are long options you losses are limited to what you paid for the options, but your gains are in theory not limited, and even in practice if you have a gain its not rare for it to be larger then the amount spent/risked on the option buy.

In other words the 80% figure is in some ways accurate but its not very meaningful.

Tim
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News