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Indy Coug · 06-26-2007, 01:50 PM

Quote:

Originally Posted by Mormon Red Death

Well somebody has to be getting rich doing it. Otherwise why even have the market?

Because it makes sense for some institutional investors, who have a lot more capital at their disposal and a much different risk profile than most individual investors. They also have a host of investment experts monitoring their investments and know when and how to react to changes in the market.

That said, even they can and do get burned badly.

Trying to do this on your own is really taking your life into your own hands. BYU71 can correct me if I'm completely smoking pot here or not.

BYU71 · 06-26-2007, 01:54 PM

Option and commoditiy trades are done primarily as insurance hedges. You have a big long position in the market and you buy puts to hedge or insure your position. A Farmer wants to insure his corn crop so he hedges his crop with commodities.

Where there is a market there is the opportunity for the speculators to play that market. I have been in the business for 25 years and never have known anyone who made money over the long haul trading in commodities or options. Doesn't mean there isn't someone out there that has, but I don't know them.

I do know some who have read a book or bought a program to trade them and lost their shirts. As a matter of fact I know someone who just had to go back to work because he took a $500,000 hit using one of these failsafe programs. That is $500,000 on top of the $250,000 he made before he took the hit.

There is a difference between investing and speculating. Investing takes time and patience and you won't get rich quick.

06-26-2007, 01:54 PM	#12
BYU71 Senior Member Join Date: Jan 2006 Posts: 5,084	Option and commoditiy trades are done primarily as insurance hedges. You have a big long position in the market and you buy puts to hedge or insure your position. A Farmer wants to insure his corn crop so he hedges his crop with commodities. Where there is a market there is the opportunity for the speculators to play that market. I have been in the business for 25 years and never have known anyone who made money over the long haul trading in commodities or options. Doesn't mean there isn't someone out there that has, but I don't know them. I do know some who have read a book or bought a program to trade them and lost their shirts. As a matter of fact I know someone who just had to go back to work because he took a $500,000 hit using one of these failsafe programs. That is $500,000 on top of the $250,000 he made before he took the hit. There is a difference between investing and speculating. Investing takes time and patience and you won't get rich quick.