TLDR: Currently paper-trading CCs and CSPs. Not sure if I should learn directional bets and start trading them. Comfortable losing $500-$700 p/m to fund this once I move to live trading.
Context
I have been paper-trading options for the last three months and I feel comfortable with low-risk income generating strategies. I would now like to understand if directional bets are worth learning and executing (buying calls and puts).
Background info
- I am a high earner, but not rich. Looking for additional income (Extra $10-20$k per year).
- I am a long-term stock investor (5yo).
- Currently paper-trading $NFLX covered calls and & cash-secured puts only.
- I'll start trading live when I feel comfortable enough with options.
Context
- CC and CSP are evidently great for generating consistent income (2-5% per month), but I am young, so I'd like to take a risk and start making a directional bets.
- I am drafting a long-term bull case for $NFLX as I believe it will well exceed $100 within 3 months or by YOE, depending on market conditions.
- I am comfortable losing about $500-$700 p/m to fund these bets once I move to live trading.
Question
- Are directional bets too much like gambling? Is it even worth the money? I'm not sure if I should just buy more $NFLX stock instead.
Thanks!
Would it be smart to start making directional bets?
byu/Traditional_Low_7219 inoptions
Posted by Traditional_Low_7219
3 Comments
Gamble for free. Fund your addiction by selling otm covered calls on your nflx stock a few months out and buy otm lotto weeklies. If you want to be smarter hedge with a few qqq puts or even better just buy more nflx stock with the money you earn from your cc instead of buying the weeklies.
Directional bets are fine fwiw, but nobody knows what tomorrow brings.
I think leaps will fit you, some spreads too may satisfy your itch. But keep in mind at which type of market are those two best applied.
Stay away from short term directional bets, reserve those for special occasions perhaps.
I typically allocate only a very small portion of my portfolio for directional short term trades but thats just me.
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You’ll get what you put in. So given that you are asking here it’s likely you are gambling.
Why do you think that you have an informational edge on the market? For the tickers you are likely to get an advantage, the options volume is likely to be shit (I don’t think NFLX is the an analyst made have missed something).
That being said, I made money hand over fist shorting quantum, so opportunities do exist.