Thursday, August 26, 2004

Make money with option trading? 

My earlier post suggests that Singaporeans feel financially insecure. Which is probably why money-making schemes abound.

One that seems to have become particularly common over the past year or so involves option trading. There seems to be a number of practitioners who are advertising their expertise and inviting people to attend their seminars. With the unemployment rate being as high as it is now, I guess there is likely to be more takers for such schemes.

While their entrepreneurial spirit is admirable, some of the advertising copy used is a little hard to take. For example, there is one in The Straits Times yesterday (this is not the first time I’ve noticed it) that says: “Make money safely, consistently...and retire early.”

Sounds like a free lunch. Probably tastes like one.

Option trading can be extremely risky, especially if you’re writing them. Option buying is much safer, but option buyers normally lose money consistently, not make them. I wonder how many poor souls have lost money getting involved in option trading.

Retire early? Probably. Once they’ve lost all their capital, they’ll have to retire from option trading.


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