Dissenter wrote:I have done quite a few option trades over the years. At this point I feel like they are valuable when I see a technical pattern that suggests a big move may be coming. In these cases, I buy out of the money calls or puts as they increase in value very quickly when the stock moves in the expected direction. I've had a few profits of 500-1000%. Unfortunately, many of these are not profitable so I end up losing 50% or more of the premium when I realize the move isn't going to happen. For every huge gain there always seems to be many of these smaller losses that offset them.
The other negative with options are the huge spreads. It's not like stocks where there are a cent or two spread. With options you may have a 50 cent spread to get out which means a sizeable loss even if you get out when the stock is at the same price.
At this point, my view toward options is that they are useful and fun to play with when I see something that I feel strongly about and want to get involved with, but the spreads and the swings in equity require that I only have very small positions (less than 2%) in order to avoid big losses.
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