I’m sorry I upset you, I didn’t mean to. I appreciate your reply.
Chris was saying that his bond futures can be volatile if they are maxed out irresponsibly. He was saying that it is not risky in the way he does it with a max 5% trade and a stop loss, but it could be risky and irresponsible without those measures. I didn’t interpret him to say your trades are risky.
Zeal Intelligence doesn’t recommend options, although they list the Zeal Speculator positions in the newsletter I get.
On page 8, column 2 they list “Stock Options Speculations Warning! VERY HIGH RISK…For Experienced Traders Only” This is where I found the COP calls.
Zeal considers the COP calls Very High Risk.
If there was a 50% chance of crashing in a plane, I wouldn’t be flying. Plane safety is higher than ever. USA Today had a front page story on Saturday, about the higher airplane safety. Today, you have one chance in 10 billion or something like that, of dying in a plane crash. It was a soothing story to read as I was getting ready to board a plane.
Probabilities describe the chance of an outcome. You have a 50% chance of a coin landing heads, because half the time it does land that way. You have a .00000001% chance of dying in a plane crash, because only 1 out of 10 billion people are killed flying. You have a 90% chance of your options expiring worthless because 900 out of every 1000 options expire worthless.
I don’t know if the 90% figure is lower for professional traders, higher for amateurs, or how you can improve the odds. Perhaps Zeal has a 70% chance of options expiring worthless, because of their superior research skills. It would be a fair question to ask them.
I don’t know anything about Steve Forbe’s investment track record, his knowledge of the oil market, or his YTD returns, so I can’t really go by his assessment of future oil prices. This is a topic I’d like to know more about though, and would appreciate information if you have it. What is Steve Forbes’ reason that oil prices will go down? To me, it seems that global demand keeps rising, and oil output is maxed out. They can’t increase production further, and Zeal’s July newsletter states that high oil prices are here to stay; the current prices are based on fundamentals, not speculation. They are recommending two US major oil producers as stock holdings for the conservative investor (that’s me). But I would like to know if there are any flaws in that logic. What leads you to believe oil prices will come down, and how will that affect the oil producer stocks?
If you feel good about it, and have satisfied yourself that you can live with the outcome of your decision, then that’s all that matters. It doesn’t matter what Chris or I say.
I think a debate such as this only serves to help each of us understand our investment ideas better, and make improvements in our strategies.
What I got out of this was that my initial consideration a few weeks back to buy options, is expired. It’s not for me after all. Perhaps for you, it’s confirmation that it is a viable investment.
I appreciate the exchange of ideas, and thank you for your correspondence.
