NO options nohow – danger for new investors!
Part 1 of 2 White Top View series, The option of options
Options have no place in the portfolio of anyone new to investing. You must master investing basics before you consider looking at or using any derivative.
Options are a type of derivative. Derivatives are financial creations “derived” or based on a real asset. They are bets on a future price for the underlying asset.
Extreme losses can be quickly realised when you get ahead of yourself while learning to invest. Getting into derivatives too soon can be a danger to your wealth.
You can quickly cause yourself serious portfolio harm by playing with financial explosives! I am not saying options are bad or to avoid them forever. Just that they are not for beginners.
To build wealth, begin with learning basic investing. First understand the basics of stocks, stock markets, sectors and any specific company that interests you.
The question was posed by a keen new student of investing
Anyone new to investing, let alone trading should not begin by trading options. Options are for trading, not investing. Advanced traders profitably use these financial tools. However, we must learn to walk first.
A clumsy option trade can be a loser from the beginning. Used prematurely or inappropriately, options can also quickly blow up an account.
This exotic explosive stuff must be well understood before handling. Do not explore this extremely risky territory on your own. Qualified guides can be very expensive and hazardous to your financial health.
There are multiple other ways to significantly improve portfolio performance. Learn basic investing possibilities first. Then learn several different strategic approaches before you consider trading or using options. These comments are all directed at beginners.
Next time we will take a brief look at some basic option questions and how to safely learn more.
Have you profitably used options? Let’s talk about it.
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White Top Investor
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