Does anyone ever option trade here?

[Hoosier Daddy]

It seems like most people here take the slow and steady approach to retirement. Anyone here day trading their way to ERE?

[Hoosier Daddy]

Or any other higher risk higher reward trading strategy than market returns or dividend investing?

[workathome]

Like putting all on #31 black?

[Hoosier Daddy]

Haha odds a little better than that I'd hope but definitely a lot riskier than buying stocks for sure.

[JamesR]

I'm too busy working a full time job to spend the quality time required to properly do options trading ;(

[slimicy]

I'll occasionally buy a way out of the money call option 6-12 months out instead of just going long a stock if I think buying a real position is too risky. I think of doing this 3 times I broke even once and lost money the other two... but I'm dropping one or two hundred dollars on the options instead of thousands going long, so I think it's probably saved me money.

Case in point, I wanted to take a gamble on the Greek turmoil, so I bought 10 Jan 2017 NBG 7.00 Call's for 8 cents. I look at it as purely a gamble, if I lose $80, it's not a big deal, and it stops me from committing a real amount to a position that I'm not comfortable with.

[Peanut]

I do day/swing trading with a significant amount of our money. I have no idea how to do options trading. I would also never short a stock. I try to follow news, sentiment, and momentum in buying and selling. Over time I just have less and less faith in managed funds, indexes, and high dividend companies.

It's a fact that most of the time we are in a bull market. Certainly true now, which is why I'm hesitant to leave the party just yet, although I would like some relief from the pressure these days.

[steveo73]

I trade foreign currency on margin. I'd call it swing trading if I would call me trading style anything at all. I basically take a position once a year and let it ride for a long time. I also trade with a lot less margin than I could and I have a small account. Its more like play money in my opinion. I don't expect to get rich off it but I do intend to do it probably till the day I die. I just enjoy it.

[sshawnn]

Or any other higher risk higher reward trading strategy than market returns or dividend investing?

Sports gambling in the United states is riskier / more rewardier. It's illegal, and you can lose or almost double your initial investment with each wager.

[IlliniDave]

I've never really considered it because I've never encountered any convincing evidence that it is a prudent long-term strategy with reasonably high expectations of success. Of course, I haven't spent a lot of time looking for such evidence. It seems people that get wealthy via derivatives in general are the ones that skim a fee from a pool of other people's money, or collect commissions off the purchase and sale of them.

But, at the end of it all I'm pretty much of a dullard when it comes to investing.

[almostthere]

I have been reading a bit about trading options lately. There is so much marketing hype around it that it automatically makes me distrustful. I have not yet found any evidence of long term returns either.

I would like to understand options completely not to trade but b/c I just might see the right opportunity one day to use them. Outside of rebalancing every year, I'll only make one or two trades in a year, but they are usually represent a substantial portion of my assets. Options might allow me to make large bets with much smaller money (I'm FI and thus I don't have my old salary money to place large markets bets with anymore) .

So I am not sure about trading but using them as hedges or as a way to make long or short bets every once in awhile might be interesting.

[workathome]

If you're interested in using trend following strategies and want to reduce drawdown, I think LEAPs based on 200 day MA might be a good hedging strategy. I don't know how to backtest it though.

You're going to lose money just trying to gamble using options though.

[jjapp]

I've been trading options for about 4 years now. I've found that it can be useful for leveraged longer term investments (greater than 6 months) and shorter term income plays. You have to be really careful about risk though. It seems like a lot of people over-leverage with options and blow up. I wouldn't say I've done exceptionally well with it but I've added a few percentage points of return a year to my core portfolio of dividend paying stocks.

[bad_LNIP]

I've never really considered it because I've never encountered any convincing evidence that it is a prudent long-term strategy with reasonably high expectations of success.

Read up on BXM. It has been crushing the SPY for like 2 decades. Very true on the markeing hype in general, although most of the BXM stuff is pretty boring academic papers.

It seems like a lot of people over-leverage with options and blow up.

100% correct.

I sell cash secured puts and covered calls on index ETF's about 2% OTM. I sell them weekly and target 1-2% per month as a goal. If I do that, I am thrilled. More often than not, I can do that. I don't own many individual stocks, nor do I invest in many. I think I own like 5 stocks with sub 1% portfolio positions. I prefer selling options as a way to trade them and try to mimic BXM and PUT as a strategy. CBOE has some excellent studies and reading on them, but in short, you can lower risk, about 30% decrease in volatility and slightly increase returns, 1-2% overall over time.

I don't like to gamble with my serious money. I'll play poker sure, but I'm generally not inclined to take a flyer on a call option with any serious money. For example, I would take a stab at SDRL buying 6-9 month LEAP calls, maybe... but that's about it.

I also like Closed end funds as opposed to dividend stocks 7-9% yields paid monthly in most cases. I own like 40+ CEF's in a variety of industries and strategies. MLP, option income, real estate, health care, etc...

[almostthere]

@ bad_lnip Nice response. Looking forward to reading on BXM.