Opinion

Felix Salmon

Counterparties

By Felix Salmon
May 26, 2010

JPMC removes its “overweight” rating from National Bank of Greece. How did that work out? — Jeff Matthews

Retail investors are trading options again. This can’t end well — Bloomberg

Max Abelson’s BankSimple profile — NYO

“Nashville has twice as many degree-holders as its population density would predict. Detroit has less than half.” — Extraordinary Observations

What if They Closed 42d Street and Nobody Noticed? — NYT

Comments
3 comments so far | RSS Comments RSS

Retail investors can learn to earn profits when using options. Despite your belief that they can’t.

The press gives too much space to negative ideas about options and ignores all the evidence that options reduce the risk of investing.

Reduce the risk of investing. What’s bad about that?

I agree that the majority are under-educated and use options to gamble, but it does not have to be this way.

Some of us truly want to help investors learn about using options intelligently.

Regards
http://blog.mdwoptions.com

Posted by MarkWolfinger | Report as abusive
 

Use properly, options do reduce the risk of investing. However, I think the majority of retail investors who buy options see it as a leveraged bet — instead of having to shell out ~$10000 for 100 shares of SPY, they can buy options instead where the upside is much greater. Of course, so is the downside.

Posted by MarshalN | Report as abusive
 

“Retail investors can learn to earn profits when using options. Despite your belief that they can’t.”

They CAN, but on average, WON’T.

“…ignores all the evidence that options reduce the risk of investing.” When done properly by knowledgeable traders. Retail investors who are trading options will generally not be knowledgeable traders.

“I agree that the majority are under-educated and use options to gamble, but it does not have to be this way.” Your optimism aside, while it doesn’t have to be this way, it WILL be this way. That’s Felix’s problem with it. A pessimist is an optimist with experience.

Posted by SteveHamlin | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •