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Technology Stocks : Micron Only Forum
MU 246.84+4.2%Nov 14 9:30 AM EST

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To: Skeeter Bug who wrote (43965)3/18/1999 8:54:00 AM
From: Carl R.  Read Replies (1) of 53903
 
No Skeeter, most people lose in options because like betting at Las Vegas, the odds favor the house. The options writers hedge their position, and nearly always win (but you'll learn that if you get into business school), the only exceptions being in the case of a large gap up or down. They also collect the spread in addition to the time premium. Option buyers on the other hand start out on day one losing the spread, and lose time premium every day. If you are a brilliant market timer you can make money trading options, but why play a game where the odds are against you?

Writing covered calls you still lose the spread, but at least collect the time premium, so the odds are in your favor.

I understand your preference for the potential of a large gain while limiting your potential loss. Buying options are much like buying lottery tickets. You can't lose much, and you can make a lot, but the odds are stacked against you. Me, I'd rather be the state and sell the lottery tickets, content in the knowledge that I'll make a nice steady, predictable profit in the long run.

Carl
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