Options? Let's get real by Ana Maria Wilson
When it comes to speculating in options, most players are losers (in bottom-line, real-life-transactions) who fall into two groups: most novices, and the war-scarred veterans struggling to survive. Both groups, however, share the same passionate goal: to crack the code that will put them on the winning side. Because everyone seems convinced the key to the code is lying out there somewhere, the search usually steers to the rich and unending universe of trade literature on the subject. If it has "options" in the title, the read is on.
Let's face it, though. To the novice, most articles on options induce a severe case of MEGO ("my eyes glaze over") right about the end of the first paragraph. On the other hand, those who are more experienced dread the prospect of enduring (again!) the extended display of lexicon and explanations that is sure to follow. So I might as well give everyone the good news first. By the time you finish reading this piece you will not have once read a definition of what an option is or how it works, nor will I explain the difference between a call and its flip side, the put.
I will not confuse you with the fact that you can be long or short, the equivalent of saying you can buy or sell options. Mum's the word when it comes to leverage, strike prices, term, expiration, underlying asset, in-the-money or out-of-the-money options, near month, far month, volatility, premium, Black-Scholes formula, bull spreads, straight hedge, bear spreads, covered or naked writes. Least of all I will not explain some of the truly exotic strategies. Why not? Because having been on both sides of the market, as a trader and broker, my experience indicates that your chance of making any money consistently in options, when used for pure speculation, is in the ballpark of zero.