Is Option Trading profitable?

One tip I have for you:

Nobody, NOBODY, is capable of consistently predicting and timing the market to turn a huge profit. If you get some "tip" from a TV show, website, publication, or whatever, about some stock that is supposedly going to skyrocket in value and make everyone rich, you may be tempted to get in on this opportunity. But the problem is, if you've heard about this future increase in value, so has everyone else, and this has already been factored into the price. It's too late.

"But what about Warren Buffett? Doesn't he get rich just trading stocks?"

Warren Buffett is an actual businessman, and he plays an active role in managing every company that he buys stock in. He's not good at picking stocks, he's good at turning around failing companies and making a huge profit.

BlackHatBloom said:

Hey

Is option trading profitable? I am about to deposit 200$ with DragonOptions or WinOptions.... I want some advice

Thanks

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Hello!

It's not really appropriate to ask if option trading is 'profitable.'

People can make or lose loads of cash via any number of investments.

I don't believe any one investment can always and accurately be described as 'profitable.'

That said, Options trading has the potential to be VERY profitable.

HOWEVER!! It is also inherently very risky: if you're not in the money by the expiration date you lose 100% of your investment. You can, of course, sell the Contract prior to that time, but an out of the money Contract becomes near worthless if Expiry is imminent.

And even if you buy Options with an expiry months or even a year in the future, if the stock doesn't trend in the desired direction you can start losing fast. This is because Options decrease in value the closer you get to Expiry, so the effects of undesired movement in a stock's price are compounded by this time premium.

With stocks you can just NOT SELL for years and thereby pare losses or even come out ahead.

And, Options don't pay interest (i.e. no dividends).


So, all that said, my advice would be to allocate only a small percentage of your investment portfolio (<10%) to Options.

However if the $200 don't matter much to you than you can buy a few Contracts and maybe see some big returns. Or lose it all.

Options trading is very risky. It's a high-risk, high-reward venture. As such, it has a huge failure rate, but those who succeed make vast wealth. $200 isn't really the investment size that one enters this type of venue with... The fact that you even had to ask this question, combined with your investment size, makes it very clear that you don't know what you're doing. You should paper trade (trading without real money) for at least 6 months to a year before trading live (using real money). That will answer any questions that you have and won't cost you $200.