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Strategies & Market Trends : Roger's 1997 Short Picks
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To: Pancho Villa who wrote (7754)12/4/1997 2:09:00 AM
From: hasbeen101  Read Replies (2) of 9285
 
With all due respect to people who use options activelly, I must say that people at SI seem to use options too much [and also trade too much]. IMO, options are expensive lottery tickets and should be used only in rare ocassions, if at all.

FWIW Pancho I tend to agree with you. Because options have a finite (and short) lifetime, the transaction costs are relatively high. It's really critical with options to ensure you have low brokerage costs. But you still have to cross the bid/ask spread at least halfway (on average), and that costs dollars.

As you say, markets are fairly efficient. You're doing realy well when you can buy or sell mispriced stocks. Trying to profit from mispricing through options is even harder.

One of my clients is a funds manager where there was a change of management a few years ago. The old management were truly dreadful. And they traded options a lot. Many successful equities managers trade options rarely if ever.
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