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  • Option trading educational resources

    Hi,
    For those who sell/buy options:
    1. Can you recommend any comprehensive educational resources?

    2. How profitable is it compared to stocks, especially if you trade in a taxable account?

    3. Anyone does in a tax-deferred account? Any limitations?

    Thanks


  • #2
    https://www.tastytrade.com Is probably the most comprehensive resource regarding options trading.

    Options can magnify winners as well as losers. All gains are stcg unless you buy options/leaps 1+ years out. I’ve made and lost a lot of money over the past 2 years with varying trades. I use some particularly risky strategies but there are some much less risky ones as well. For the most part there’s no wash sales with options trading so winners and losers cancel out.

    Depending on your brokerage some strategies may be limited but the basics should be available.

    My disclaimer is most don’t need to learn it but it can be fascinating and profitable. Start small and only with play money until you get the hang of it.

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    • #3
      Originally posted by chrisg202 View Post
      Hi,
      3. Anyone does in a tax-deferred account? Any limitations?

      Thanks
      You can easily sell covered calls and cash secured puts in your IRAs and 401ks, I do it in my Roth at vanguard and in my solo 401k with fidelity. Very easy to apply for both

      Comment


      • #4
        Originally posted by Nysoz View Post
        https://www.tastytrade.com Is probably the most comprehensive resource regarding options trading.

        Options can magnify winners as well as losers. All gains are stcg unless you buy options/leaps 1+ years out. I’ve made and lost a lot of money over the past 2 years with varying trades. I use some particularly risky strategies but there are some much less risky ones as well. For the most part there’s no wash sales with options trading so winners and losers cancel out.

        Depending on your brokerage some strategies may be limited but the basics should be available.

        My disclaimer is most don’t need to learn it but it can be fascinating and profitable. Start small and only with play money until you get the hang of it.
        Thank you
        So tastytrade was enough for you to learns al the ins and outs? no additional courses before starting your first trade?

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        • #5
          Honestly it was very confusing at first. Just another language. I watched tastytrade and other YouTube videos multiple times to finally understand it. But nothing teaches like real life.

          I do think there are paper trading options out there as well.

          Comment


          • #6
            Word of advice: never short gamma, or it will liquidate your portfolio in a heartbeat.

            Comment


            • #7
              I'd like to hear some mistakes people have made...

              Comment


              • #8
                My biggest mistakes have involved selling naked calls and not hedging appropriately. Specifically lately on AMC and TSLA.

                Then being stubborn with my thesis and revenge trading/doubling down. Emotions are difficult to control when you're seeing big red numbers in your portfolio and can lead to panicking when if you let the trade play out you'd be ok in the long run.

                So do your research, pick appropriate strikes, don't trade on emotions, hedge appropriately. Ultimately the market can stay irrational longer than you can remain solvent.

                Comment


                • #9
                  Originally posted by Otolith View Post
                  I'd like to hear some mistakes people have made...
                  Being short uncapped gamma. Dont do it.

                  Dont sell naked calls/puts.

                  I think if you want to understand options sure read a bit, but you really have to trade. Very small size just to get a feel. There are a couple of books that are decent, but the best way is to take some money, sit by the fireplace, tell yourself you dont care if you lose it all (and the extra in your wallet) and then toss it in the fireplace. When you realize it wasnt play money and your not happy about it, take an equal amount you def didnt want to lose and throw it in the fire.

                  That is the best synopsis and education you can get.

                  Comment


                  • #10
                    Originally posted by chrisg202 View Post
                    Hi,
                    For those who sell/buy options:
                    1. Can you recommend any comprehensive educational resources?

                    2. How profitable is it compared to stocks, especially if you trade in a taxable account?

                    3. Anyone does in a tax-deferred account? Any limitations?

                    Thanks

                    It depends how you do it. Options can be used strategically to lock up gains and reduce risk(how the pros use it) or can be used to jack up leverage and yolo ( how amateurs use it).

                    overall for most docs not necessary and probably not worth the risk reward IMO( as someone who short terms trades options depending on the situation).

                    dca into spy with 90+% of your dough and mess around with the rest if you must. For most docs that is plenty.

                    in general options overrated and most people get wrecked. Anyone trying to sell you a system on YouTube is full of crap. If their system actually worked they wouldn’t need to sell you anything. There are tons and tons of “ options system teachers “ that are plain and simple grifters.

                    Comment


                    • #11
                      What’s your goal? If your goal is to make money then you should probably find something else. If your goal is for entertainment and you don’t mind losing a bit (like at a casino) then have fun.

                      Comment


                      • #12
                        https://www.optionseducation.org/

                        The options industry council has a decent amount of info. I read trading options for dummies, which is a decent starting point with lingo. The options insider radio network also has their own app with a lot of podcasts on basic and more advanced stuff (the episodes date back to 2010 or so, which is only available on their app- their most recent episodes are on apple podcasts).

                        There is a lot to know about the greeks (delta, theta, gamma, vega, rho).

                        Risk management and position sizing are important. I also thing it's good to trade something you are familiar with, rather than YOLOing.

                        TOS with TDA and Etrade both have paper trading when you set up accounts. Level 2 trading allows for directional offer side trading, as well as verticals (basically, something with limited losses).

                        A reason why it's not popular in the WCI community- most physicians will make more doing their day job (you aren't going to have a negative dollar day in clinic-- usually). There are also tax implications, and many of us will pay 32% or more marginal taxes on the STCG. ANNND- you spent a lot of time in school to learn something that makes more than the average person, so you should maybe stick to that.

                        Protective put is probably an option many long term buy and hold investors should learn. Dave Dredge proposes that the best strategy is a long equity, long vol strategy... so you can buy SPY and have a protective put that you roll depending on the direction of the market. Allows you to keep your foot on the gas, but also have the brakes available when the market goes down. This apparently would've beat a 60/40 portfolio, but I haven't verified if that statement is true.



                        Comment


                        • #13
                          “Lock in gains”… let’s say my SPY spikes, and I need to ‘sell’ 100 shares to rebalance to my desired allocations, plenty of cash in account available. If I don’t want to incur taxes, is there a way to effectively do this with options?

                          Comment


                          • #14
                            Nope, taxes are a part of the game.

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                            • #15
                              Assuming you have standard purchases of SPY or whatever index with your paychecks, your cost basis on lots of shares could be different. For long term holds, it's probably best to sell whatever lots will incur the least taxes. Or, if rebalancing, just doing it by purchasing more of what you're desired AA is.

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