8 Responses to “Is it possible to obtain wealth from trading options?”

1. Lori A says:

   June 2, 2010 at 9:59 am

   Theoretically yes.

   However MOST people accumulate wealth by investing. Trading options or forex is speculating, not investing. In other words, it is gambling. You can be well skilled and educated and still lose your behind very,very quickly.

   Such trading is at the top of the risk charts, so yes, potential returns can be impressive but they come with a very sharp potential for a complete loss.

   When you invest in stocks, bonds or mutual funds, you still have a risk of loss, but the odds of a total loss are slim, and you usually have time to get out before suffering a huge loss (unless you are also speculating with high volatility stocks).

   Investing is not speculating. Investing combines an educated guess (no one really can guarantee a profit) with a moderation of risk. A lot of research shows that most investors do not do better by taking on higher than average risks. In other words, slower and steady wins the race.

   As to tax issues. There are no benefits to short-term trading of any security. In fact all profits are taxed at your highest marginal rate. This is one more reason why trading rarely results in huge profits. By the time you subtract ticket charges and taxes you have to have a really big profit for you to end up with a better after tax return.

   There are conservative strategies for options when combined with stocks you own. These strategies can add income to your portfolio without being significantly speculative.

   People build genuine wealth by staying out of debt, by spending less than they earn, and by investing the difference wisely. If you start this as young as possible and routinely increase the amount you are saving and investing, you will build significant wealth.

   However, just as with playing in Vegas, speculating is gambling and while a few walk away long term winners, it is ONLY a few that do win. In the short term, anyone can have a measure of luck, but in the long run, it is pretty rare.

   The traders that survive on options and forex are big boys, with big wells of cash and years of training (and losing) behind them. They survive as much off the thrill as the wins.

   But understand this, any wealthy trader is never playing with his full pot. He still has most of his assets in more secure investments. In fact, studies have shown that those that take the biggest risks with some of their money, have most their money in ultra-conservative investments. This is how they balance the high risk choices they make.

   But if you’re still determined, start reading, take a class and paper trade (trading simulation) for several months so you can establish techniques and indicators that work for you. Until you have both skill and discipline, you might as well just take a lighter to your money.
2. fusionh2wlh says:

   June 2, 2010 at 9:59 am

   Probably not….Options are used mostly to protect investments and most options expire worthless…
   You would be better off talking to my son about day trading the dow index…
3. Lisa says:

   June 2, 2010 at 9:59 am

   Well sure, but you need to do homework. There are many free CDs that give you vital information such as TradeStation to help you get your feet wet and you have a broker assist you. You just have to have more capital on these ventures. You need to view shows like Squawk Box, or First Business where the Najarian Brothers have "Trade of the Day". I’ve been told that you do mke more money on the "left side of the balance sheet" (this way) than regular stock market trading.

   I disagree with the guy on daytrading. I think that takes a different skill set and a LOT of money to lose before you make any. You are really on a tightrope without a net here.
4. tsbr1963 says:

   June 2, 2010 at 9:59 am

   Re your question on options:
   This book is the bible of options math, strategy, creation, use, etc. I highly recommend it. I traded on the floor for 5 years right out of college. It is like highspeed chess. Extremely analytical, very fast paced, and a little bit of an art. I would recommend reading this THOROUGHLY before jumping into any of the "hype" websites and trading groups.

   If it were easy, everyone would be doing it.
   Can you obtain wealth? Yes. Without a doubt.
5. angrysandwichguy2006 says:

   June 2, 2010 at 9:59 am

   Sure, you can make money trading options or forex. Both fields, though, are run by the pros: amateurs generally get crushed. You need to be capitalized and understand that their is a huge learning curve. You also need to read and study, and take it slow–you will be a loser in the short term.
6. NC says:

   June 2, 2010 at 9:59 am

   Yes, it is possible to make money trading options. But most strategies require a serious math background and substantial computing power.

   As to currency trading, yes, people do know about it. What is your question?

   Tax benefits of trading options? None. In most cases, profits from option transactions are taxed as short-term capital gains.
7. Frank Castle says:

   June 2, 2010 at 9:59 am

   Yes.

   I suggest you to stay away from options if you have less than $100,000.00 USD

   I suggest you to stay away from Forex if you have less than $1,000,000.00 USD

   Top 4 Answerer in Business & Finance. (Vote for me. I just need 200 more votes)
8. kgirishraman says:

   June 2, 2010 at 9:59 am

   No idea about those..
   but can certainly teach you how to trade stocks and make money…

   Learn day trading online for free, day trading lessons free, free online trading course: