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Strategies & Market Trends : Are you considering quitting your dayjob to daytrade?! -- Ignore unavailable to you. Want to Upgrade?

To: SpongeBrain who wrote (85)	1/17/1999 3:01:00 PM
From: J. P.	Respond to of 611

<<Options: Losing everything you own?!?! Please explain.>> Hey, options pit guys can screw you in more ways than are in the Karma Sutra. If you have money management skills, you will be better off, because you won't be risking your net worth on a single trade. Selling naked calls or puts is crazy, nuts, insane, suicidal! Your risk is theoretically unlimited, since you are leveraged and the stock can move infinitly upward on a sold call, or down to zero on a sold put. Buying strips, spreads, straddles, butterflys, credits, etc. etc. etc, are fairly complex, limit your potential for loss, but you have to be very very educated to fully understand all the implications of each strategy, and the exact effects of the movements of the underlying to know where your profit points are. You can get screwed if you pay too much in premium. Case in point is Dell before the last earnings announcement. The premiums were super super high in anticipation of the report, Dell came in at the whisper, and the stock sold down. The premiums on the calls eroded like pouring liquid drano on a snowball. So if you were holding calls(my hand is raised) you lost more than half your money the second the market opened the next day. There are many more examples of this.

To: SpongeBrain who wrote (85)	1/17/1999 3:09:00 PM
From: Impristine	Respond to of 611

losing everything you own, please explain, is there something which was, left out, something not spelled correctly, is it possible to lose, everything you own, over, and over, and over, again, is that actually possible, can a person, lose a small fortune, and never learn the lessons, never find the answer, never learn from mistakes, is this all about an expensive, education, is that possible, is this paying one's dues, can a person lose a quarter mill, or a half mill. several times, can a person lose it really really fast, can this happen 3 or 4 or 5 times, is this actually possible, is this a small amount for many, is this a huge amount for a little guy, can little guys get hurt, can big guys get hurt, is it possible to lose everything you have, is this actually possible.....LOL.

To: SpongeBrain who wrote (85)	1/17/1999 3:28:00 PM
From: melinda abplanalp	Respond to of 611

Sponge I can not tell you what good timing this thread has. The thought has crossed my mind...several times. It is more a thought of...if something goes wrong with the old career this is an option. I saw this thread last night and couldn't wait for the posts to start rolling in. Thanks...I am enjoying this. And thanks everyone for posting your experiences!! Melinda

To: SpongeBrain who wrote (85)	1/17/1999 11:29:00 PM
From: MKTBUZZ	Read Replies (2) \| Respond to of 611

Thanks for asking about my experience. I quit my job in March of 1998 to trade full time. I do not want to provide details, but this is briefly what happened: The first month I made over $30,000. I started having swings of over $10,000 a day. One morning I made over $6,000 getting in and out of a trade within twenty minutes of the market being open. The second month I kept pushing the envelope thinking I was on top of the world. I stopped exercising sound judgement and thorough research. I started to trade in crap companies that were “the next big thing”. The ones with graphs that go straight up and straight down. It cost me big. I got wiped out and many people told me to declare bankruptcy. I made a call and got my job back. One of my friends said I drank a tall glass of pride. I was one paycheck from bankruptcy. I've been able to turn things around the past six months. I went back to the basics and in essence this is what I learned: The fantasy of trading is that a sudden transformation will bring a total change in one's fortunes, bypassing work, luck, self-sacrifice, and time in one fantastic stroke. The reality is that trading requires hard work, a bit of luck, a fair amount of self-sacrifice, and a lot of patience.

To: SpongeBrain who wrote (85)	1/18/1999 1:58:00 AM
From: SkyDart	Respond to of 611

>>Options: Losing everything you own?!?! Please explain.<< Please allow me to explain. Options are gambling --more so than net trading--. The buyer of the calls and puts and spreads [Bullspread, Backspread, Butterfly etc. --MUST READ: Option as a Strategic Investment by McMillan--New York Institute of Finance--1980] rapidly becomes addicted to the potential for extraordinary gains. Why do studies show that 95%+ of buyers of options lose? Because of the terrible disadvantage of slippage [difference in bid and ask that must be paid to get in and paid again to get out] and because of the huge commissions. And because the buyer can be dead right about the direction of the stock but lose everything due to bad timing. Time decay of options is inexorable and almost always fatal to the buyer. Sure, the converse is also true. That the writer of the covered call makes money 95% of the time. But when people speak about options trading, they are referring to buying and selling them. Dart