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Whether seeking income, mitigating risk or just speculating on price movements, investors are trading options in record numbers these days.

For those thinking of giving options a try, the following excerpt from the article highlights the risks:

Stephen Figlewski, a finance professor at New York University, formerly traded options professionally and enjoyed it. But he adds: "I'm not sure I'm any better off than having put money in a Vanguard index fund. Lots of strategies seem smart, and people can make money at it for years. But then suddenly the year their strategy fails, they lose everything they made before -- and more."

 

Submitted: Sep 6, 2009    Views: 180    Comments: 1    Likes: 1   


View Article: http://online.wsj.com/article/SB125202073403184971.html


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Comments Received:

Sol Nasisi
Sol_Nasisi

Options are fun to trade. They are like playing chess while trading stocks is like checkers. Not only is the performance of the underlying stock important but you have to factor in duration, volatility, etc.

Still, for most people it's probably better just to put the money into an index fund. Fees can add up for trading options and the accounting can be a pain.

Posted: Sep 7, 2009



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