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Peter2150@xxxxxxx wrote:
>
> In a message dated 97-07-04 11:00:25 EDT, M.Turner@xxxxxxxxxxxx (Max Turner)
> writes:
>
> > Taking the next step and putting up the cash; now what is the situation (in
> > a nutshell) regarding the trading with options as opposed to futures
> > contracts?
> >
> > Sorry if this has been covered before. Perhaps someone might be kind
> enough
> > to relay the appropriate comments on to me.
> >
>
> Max
>
> Without going into deep thought there are two immediate things that
> come to my mind first. Note with options, I am talking about purchasing
> either puts and calls. Spreads, writing options etc are another ball game.
> To me there are two immediate advantages to futures. 1st.. With options
> you have to be right about direction as you do with futures, but with options
> you also have to be right about time and volitility. If the move I expect
> comes, but is slower and shallower than I expect I can still lose with the
> options, with futures, at least I'll make something.
What about putting the shoe on the other foot and selling options? Then your
disadvantages turn into an edge! I can be entirely wrong about price but if
the movement is slow enough and volatility declines sharply, then I still profit
even if I'm wrong.
2nd. At tax time.
> With futures you only report 1 number, your net profit or loss at the end of
> the year. With Options its each trade.
For options on futures it's just one number, conveniently reported on your
yearend statement.
>
> I am sure there are other things and some may disagree with me. Okay
>
> Pete
The main issue I've found between options and futures traders is that the two
are often like ducks and rabbits; they don't mix or cross! But why not? The
bigger your bag of tricks, the more your edge. Both are just tools, meant
to be used to take exposure or lower risk as the trader sees fit.
Phil
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