The opinions expressed in these forums do not represent those of C2, and any discussion of profit/loss
is not indicative of future performance or success.
There is a substantial risk of loss in trading. You should therefore carefully consider
whether such trading is suitable for you in light of your financial condition. You should read,
understand, and consider the Risk Disclosure Statement that is provided by your broker
before you consider trading. Most people who trade lose money.
Checking the strategies on C2: there are almost no option trading strategies who are profitable on a long term basis (+5 years). I’m not talking about short strangles or other strategies that only involve selling options, nor about strategies that are only 1 year active (while they might be good, they still have not proven to be long-term profitable).
There should be many traders who are mainly buying options (index / shares), but very few on C2.
Why is that? Is it really that hard, or almost not possible to find an edge with an options strategy? Is it because one can not define risk per trade properly (stop losses don’t really work with options like they can with stocks or futures)? Or do profitable options traders just don’t find their way to C2? Are there other reasons?
Main reason to trade options is to earn more money on the smaller accounts, so risks are higher by default in option trading. Increased risks lead to early crashes.
The explanation is very simple: very few investors trade or even understand options.
Go to your local bar for example and tell your friends that you bought 500 shares of Microsoft, they will quickly understand. But tell them that you bought 10 deep out of the money April calls of Microsoft and watch their reaction. Most of them will simply stare at you and scratch their head.
Only sophisticated traders use these financial instruments, because they require much more knowledge and research.
And that’s why you don’t see many option strategies on C2 (profitable or not), and not because option trading is inherently risky.
