Can option investors really beat S&P 500?

Question

The best investors like Buffett, Dreman, Lynch and the best and consistent fund managers never believed in options trading. Not even Covered Calls. Why is such a hoopla about options then?

In the long-term, can it beat Buy-and-Hold investing? Do you know of any successful options investors?

Answer 1

Yes, and it's easier than you think.

Buy QQQQ's or DIA or SPY or SPX and you're already managing your portfolio of 30 to 100 to 500 stocks. Just keep them, and you're already matching the market and beating over 75% of the mutual funds out there!

Is that good?

Yes, but you can do even better!

Ok, continuing on.

Now that you're already doing what many managers who underperform you get paid hundreds of thousands of dollars to do, would you like to beat them?

Here's how!

Covered calls.

So now you own DIA (dow 30 ETF) and it's been trading say around 115. You could sell options on the 120 or some way out of the money point to squeeze another 1-2% or so a month (depending how aggressive you are).

If you get called out, you're doing well (in this case 5/115 + the premium for the month that you got for the option you sold), but since 90% of options typically expire worthless, that 1-2% is now additional income on top of matching the performance of the market!

You are now beating the market!

No strings, no gimmicks, no magic wands, no smoke and mirrors. Just education.

Knowledge, discipline, and execution is the difference. You can do it too!

If you have any questions, just let me know.

I hope that helps!

P.S. And yes, you can do even better than this, but education is the key. You don't know what you don't know until someone tells you what you don't know! :-)

Answer 2

It all sounds nice because America is on the tail end of the biggest boom in it's 200+ year history. But with the baby boomers retiring, around 2009 or 2010, America will go through the exact same thing that Japan went through in the 80's; ten years (at least!) of a flat stock market. If you're looking to invest to save for your family and your retirement, don't count on broad mutual funds from 2010 to 2020 or 2025. Options carry a lot more risk, yes. If you don't have the skill and won't devote the time to managing options investments, stay out of them. But at least do yourself the favor and invest in stock areas that we know will do well over the next ten years, energy companies (oil, electric, etc), pharmaceutacals (all those aging boomers will pop a lot of pills), and procter and gamble (people will continue to shower, shave, and brush their teeth even if things get really bad.)
Don't buy that BS that you're not losing money as long as you hold it until it comes back up again. You lost tons of money you could have made in other investments. Good luck.

Answer 3

Speculative options trading is more risky so it has a potentially higher return than buy and hold. I would still rather invest buy and hold style than with an option unless the option is part of sort of hedging strategy.

I do know of a friend of a friend who took a stock portfolio worth about 10K in the early 1970's and made millions simply by selling call options on the stock he owned. Be aware that about 90% of options are never exercised so it really didn't cost him very much. So, you could start a stock portfolio and decide to sell call options later on.

Answer 4

I know people who are options trader.

I do not know any (SUCCESSFUL) options traders.

you can lose your a** faster than any other typ of investment that is out there.

Both of the people i know paid the 1,000 dollar i think it was to get all there option information, It's good for a year then you have to pay more fees. they have not made any money at it.

you want good stocks to buy right now,

1, ford symbol F
2. Intel symbol INTC
3. Microsoft

very good buys, l"d look into them

Answer 5

yes but short trading options is very risky but with risk and volitility you can gain more than the ten year average on the s@p

Answer 6

yes