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Why buy stocks if you can trade options


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Posted

I am trading stocks from long but recently got into options. My question to stock gurus is why buy stocks if you can trade options for less investment and less risk?? I mean for long term..

for example..
 

current aapl stock is at 120$

aapl call for March 2023 is 60$ And for 60$ strike price. If price goes below 60$ In future you loose only 6k max.. But anything above 120 you are locking the price for 60$.

if you buy stock you have to shell 12,000$ for 100 stocks but you can get the same for 6k for 60$ call. Less investment and less risk.. 

FYI.. I bought 100$ call today for March 2023 for 30$ premium.. 

 

Posted

It's not less risk, you're missing out on dividends, and you're paying more for premium. The only thing that you're getting is a leverage to own more stock, but you're not actually owning them, and that is more risky, not less. But again, it depends on what you're actually doing. It doesn't sound that bad what you're saying tbh, but again as long as you're not investing a whole lot on it.

  • Upvote 1
Posted
9 minutes ago, TheRealBulBul said:

I am trading stocks from long but recently got into options. My question to stock gurus is why buy stocks if you can trade options for less investment and less risk?? I mean for long term..

 
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for example..
 

 

 

current aapl stock is at 120$

aapl call for March 2023 is 60$ And for 60$ strike price. If price goes below 60$ In future you loose only 6k max.. But anything above 120 you are locking the price for 60$.

if you buy stock you have to shell 12,000$ for 100 stocks but you can get the same for 6k for 60$ call. Less investment and less risk.. 

FYI.. I bought 100$ call today for March 2023 for 30$ premium.. 

 

😂😂😂😂😂😂

Posted
12 minutes ago, betapilli said:

It's not less risk, you're missing out on dividends, and you're paying more for premium. The only thing that you're getting is a leverage to own more stock, but you're not actually owning them, and that is more risky, not less. But again, it depends on what you're actually doing. It doesn't sound that bad what you're saying tbh, but again as long as you're not investing a whole lot on it.

Why you think I don’t own the stock and more risky?? My plan is to exercise the option in 2023 for the lock rate of 60$.. invest less now for current rate and take more profit in future instead of investing more and taking same profit.. 

Posted
15 minutes ago, betapilli said:

It's not less risk, you're missing out on dividends, and you're paying more for premium. The only thing that you're getting is a leverage to own more stock, but you're not actually owning them, and that is more risky, not less. But again, it depends on what you're actually doing. It doesn't sound that bad what you're saying tbh, but again as long as you're not investing a whole lot on it.

I get the dividend part but that’s very small compared to the gains.. 

Posted

you will understand as time pass by time decay will play a factor.... if  you have got $100 sp for 30 your break even for 2023 would be $130 ... right now your getting cheaper options because market is doing sideways ....

  • Upvote 2
Posted
31 minutes ago, TheRealBulBul said:

I am trading stocks from long but recently got into options. My question to stock gurus is why buy stocks if you can trade options for less investment and less risk?? I mean for long term..

for example..
 

current aapl stock is at 120$

aapl call for March 2023 is 60$ And for 60$ strike price. If price goes below 60$ In future you loose only 6k max.. But anything above 120 you are locking the price for 60$.

if you buy stock you have to shell 12,000$ for 100 stocks but you can get the same for 6k for 60$ call. Less investment and less risk.. 

FYI.. I bought 100$ call today for March 2023 for 30$ premium.. 

 

options are good only if its volatile.. time decay will be there.

Posted

I think as long as you go deep in the money like 60  you are right there is no much differ since delta is almost >90  even if it at the money if you buy 0223 calls you should be fine . Mostly people buy weeklies and loose money in options .

Posted
8 minutes ago, macha said:

you will understand as time pass by time decay will play a factor.... if  you have got $100 sp for 30 your break even for 2023 would be $130 ... right now your getting cheaper options because market is doing sideways ....

Yup.. current price is 120$ and 130$ would be my BE.. I am running out of cash otherwise would have bought that 60$ call enjoy the ride with half investment 😜

Posted
3 minutes ago, TheRealBulBul said:

Yup.. current price is 120$ and 130$ would be my BE.. I am running out of cash otherwise would have bought that 60$ call enjoy the ride with half investment 😜

deep in the money also doesnt fetch more money you have to see the gamma value... in the money are always best.....  but then stocks are like they don't have time decay.... and you can do naked calls with them to generate partial revenue ...

Posted
18 hours ago, macha said:

deep in the money also doesnt fetch more money you have to see the gamma value... in the money are always best.....  but then stocks are like they don't have time decay.... and you can do naked calls with them to generate partial revenue ...

Selling covered calls , if done right and patience is a money maker.....50 cents Evey week is 26$ give or take... that's huge when you add up

Posted

Nee daggara $6000 unte

Case 1: Buy 1 Call Option contract at the SP of $60 for $60 premium .

             So, you are controlling 100 shares of AAPL.

             If AAPL price goes up by $60, your profit will be 100* $60 = $6000. 

             And your account balance will be $6000 + $6000 = $12000

             If AAPL price goes down to $60, your loss will be 100 * (-$60) = -$6000

            And your account balance will be $6000 - $6000 = 0

Case 2: Buy 50 stocks of AAPL

             If AAPL goes up by $60, profit will be 50 * $60 = $3000, Account balance will be $9000

             If AAPL goes down by $60, loss will be -$3000, Account balance will be $3000

So, Options konte, account zero aipoye chances untayi. Stocks konte, you will atleast have something in your account that can go up after a year or two.

  • Upvote 1
Posted
8 minutes ago, hunkyfunky2 said:

Selling covered calls , if done right and patience is a money maker.....50 cents Evey week is 26$ give or take... that's huge when you add up

Exactly! in some weeks the stock may go up  a lot, but overall ga returns will be pretty good.

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