Hi Cynic,
Appreciate your reply.
I’ve been trading for 5 yrs now, just equity shares and have an ok track record for directional trade.
Looking into options for leverage, do you think it’s worth while, or better with futures and cfds? ThNk you
Options definitely have a lot to offer, for those whom understand them well.
In my opinion, one of the biggest pitfalls, for newcomers to this market, is the tendency to severely underestimate the impact volatility can have on extrinsic (a.k.a. time value).
Hence my reason for recommending Sheldon's book.
Everything that I have ever wanted to know about the workings of the options and futures markets, was contained within that single volume. One of my biggest trading regrets, is that I did not find out about its existence twenty years sooner.
Delta (i.e. directional exposure to the underlying) is only one of many considerations when trading options.
(It is possible for traders to lose money despite having correctly forecast direction, conversely, it is possible for traders to make money, despite having misjudged market direction. Any trader who doesn't yet understand how this can happen, ideally needs to learn more about options before venturing into the options market.)
If one is confident with one's ability to forecast direction, then products such as futures and/or cfds might, serve as a useful preliminary step for broadening one's understanding of market derivatives.
When embarking on any new venture, one typically won't know just how little one knows, about how much more there is to know.
The things that one doesn't know, that they do not know, have the potential for financial devastation.
Hence the importance, for those engaging leveraged derivatives for the first time, of keeping net exposure as small as practicable, until such time as experience confers a more adequate understanding of such things as carry costs, market spreads, the impact of being margin called (or closed out) based upon "marked to market" policies/practices, broker platform quirks, exchanges prematurely closing due to triggering of circuit breakers etc.