Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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 : The Covered Calls for Dummies Thread -- Ignore unavailable to you. Want to Upgrade?

To: Uncle Frank who wrote (4680)	12/21/2006 5:15:14 PM
From: TimF	Read Replies (2) \| Respond to of 5205

I'd contend that buying calls is never less risky that buying the stock. It depends on how your measuring risk. As a percentage (assuming the same stock) it isn't less risky. But since the amount invested can be lower it can be. Buying calls or puts is very risky in terms of percentage of invested capital. But it isn't very much like sitting across from a Vegas dealer. The dealer has a built in advantage. Good luck. If you decide to go long on calls or puts, post your results. I'd love to see you prove me wrong. My personal experience is mixed, and also not particularly important in terms of proving anything. If I had an unblemished perfect record of many trades that all won or all lost, it would speak more to my trading ability or luck then to the expected net return of the strategy. Overall buying options should have the same expected return of selling options. Higher risk, but higher possible return. If your trying to avoid risk its usually a bad strategy (depending on exactly how you do it and how you are measuring risk), but there is no built in house advantage that you have to overcome. Well perhaps you could say that the big wall street actors have an advantage, but if so that advantage also applies against people who sell options.