Saturday, May 25, 2013

Stock Options? No.


In a study comparing investing in stock options vs. investing in stocks, prepared for the New York Times, the option investors made only one-fifth as much money as those who didn’t.
I see stock options investing as a get-rich-quick scheme best avoided by those new to the world of investing and at best a dubious idea for experienced investors in common stocks.
Yes, there is a potential for financial gain for even newcomers to puts and calls, but the potential for loss can be far greater. Writing in the New York Times of May 24, 2013, Nathaniel Popper cites a study involving 68,000 retail investors. Those who traded retail options “lost an average of 4.5 percent each month.”

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