Option trading?

Options would be a great differentiator for 212 as the only other providers are Tasty works or interactive brokers - neither of which have the UI or ease of use as 212 :eyes: @David

as someone who full time trades in options they are options are very very very different to other instruments. Options will require its own dedicated and specialised interface to trade. If you introduce options as “one of your product” (like degiro does) it will be very little use. I keep pasting screenshots from tastyworks and you can probably tell it looks nothing like an “ordinary trade interface”

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Have you used Tastyworks to trade options? i’ve been watching Tastyworks training videos https://tastytrade.thinkific.com/ which are very informative.

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Yes I have been exclusively using tastyworks for a few years for options.
If you have questions about the platform feel free to shoot and just for the shameless plug here is my referral link :smiley: https://start.tastyworks.com/#/login?referralCode=DWJAS3BX27

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some screenshots on my previous post which should probably also underline the need for a completely different UI

ohhh i am about to flood your inbox as Option basics are still a head explosion for me haha

Random question, are Options tax free? i understand CFD was until April 2020, leaving only spread betting tax free.

Options are not tax free for UK investors.

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I am really interested to have the opportunity to trade options, there is an abundance of content out there to learn and to me some option strategies seem to be safer than CFD. I am not sure about how safer it is or what strategies can limit the loss effectively, but I would like to at least have options in practice mode and get to familiarize myself with them.

I am paying income tax on option profits.
They are eligible for CGT but it is not realistic to hold an option for a duration longer than 1year (except LEAPs) so income tax it is :frowning:

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But if you exercise the option, you can hold the underlying security for a year or longer right? :thinking: (On a buy one say for stocks or… 50 million barrels of oil, now where will I store it)

I am not sure about this one, I have never ever called an option, If everything goes well I hold them for less than 2 weeks usually.

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Sooo @David it’s a maybe yeh? Need to beat free trade etc to it :eyes::+1:t3:

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I mean that’s fair enough if you just want to trade them, I was thinking of using them to potentially grab bargains by exercising them :joy: it could work…

Far be it for me to jump into this conversation so late but from what I understand CFD’s are way riskier than Options, options effectively allow you to hedge your trades and reduce your principle size among other things which can shift a trade more in your favor

CFD’s are basically instruments that allow people to take on margin, and usually way to much which is why most people who trade them loose… and that’s about it

And sure Options trading is more complex that CFD’s but stop me if I’m wrong but if a person cannot be bothered to take the time to learn and understand a tool then they frankly shouldn’t be investing there money… they should put it in a bank account and leave it

you are right in that is a “tad” too late to jump in. so pardon if I don’t feel like re-entering the topic just to explain the same thing again with different words.

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typical Trading 212 user using options to “hedge”

  • I got 0.49 TSLA shares
  • I am invested in Tesla way too much.
  • It’d be detrimental for my overall portfolio if the share price goes more than 6% down.
  • Let me buy 5% out of the money puts to cover my losses over 5% if it happens.

:point_up:
This does not sound real to me, so… with all due respect, you are plain out wrong. I’ll have to agree with @Dao (also 1 option contract = 100 shares… so fractional options?!? :clown_face::clown_face::clown_face::trolleybus: )

Although “hedging your trades” being one possible usage of options, this is the least effective way of defining them. No one but sizeable institution grade investors will be even using this approach.

On margin, your risk is amplified by your… margin (This involves any method of trading with pseudo borrowed money, including CFDs) 2 x Leverage you can loose 2x underlying asset. If the asset moves 3% your investment can move 6-7% depending on the spreads.

On options your risk is amplified by the movement you are buying/selling VS Implied volatility for that strike(delta and the rate of change on delta -> gamma) For example no one expects Coca Cola shares to do “jump moves” so it has very low IV. If you are holding a KO Call with an expiration in 2 weeks, and if the price of KO drops 3% tomorrow, it is highly likely that your investment will loose 80-90% for that 3% drop. Because at the end of the expiry you are either in the money or you got 0 (zero)

Just to over complicate things you also can trade options on margin which I highly recommend avoiding. You’ll need significant amount of holdings with a certain percentage liquid to even enable that.

Every day your investment in options will decay (theta) and you are loosing money, constantly unless the underlying asset price is moving towards the trade you made.

Yes it is slightly more complicated than simply buying and selling an instrument on margin, and yes of course you can educate yourself (and you should) but learning these does not make option trading less riskier. It is by far most volatile form of investing.

One saving grace is it looks scary enough to new users and they run away, before doing something senseless. On CFDs, users sees a share that is hyped enough and just hits buy.

Option trading is coming next year, it’s one of the top 5/3 requested features. The team told me/us it’s not in their plans for this year, because they clearly worked on other cool features like pies and adding new stocks and exchanges.

Next year I am super excited to get all features we’ve been waiting for.

Talking here about the benefits of options over CFDs is useless, because T212 doesn’t offer them yet. Options are more sophisticated and complicated instruments by nature, CFDs are simple and offer the average Joe and also the pro to just go long and short synthetically without owning actual shares, hence readily available from most brokers.

People will not stop using CFDs and people will also not stop requesting/using options also, T212 will bring them and all other good things next year - they don’t want to and will not miss a feature that could be a deciding factor between them and another broker.

Until then, I advice everyone who is requesting options, to go the most requested features post (Most wanted features Survey (Reloaded)) and vote for options and wait till it’s shipped!

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:point_up: this is so true, and a lot more useful than my “wall of text” :slight_smile:

I guess, I just get triggered when people pigeonhole options as “hedge instruments”

edit: ok for people asking for option trading resources, I’ve recommended this a few times but here it is again, Sasha (I am in no way affiliated with this guy) has a good coverage, starting from the very basics and fundamentals.

if you go to the options playlist, there are like 100 videos, ranging from 2 to 20 minutes. It starts from very basics like “what is an option” “call vs put” etc to, common strategies etc.

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I guess, I just get triggered when people pigeonhole options as “hedge instruments” - It depends on your own goals, and how much money you have to put to work. and with respect if people are asking for the ability to do options trading unless your the guy in charge its not really up to you to tell people what to do with there money… Although I do appreciate your incite…

All this said personally I would stick to keeping trading 212 as an investment platform… as far as trading goes Id used something like Tradestation, T212 isn’t really at the level you want for trades just yet…

I just googled Sasha Evdakov, with respect to the guy I cant see any details about his employment history… has he worked for an investment bank or a hedge fund? does he have a public trading record that is independently backed up? One of his books is about trading penny stocks with a TA strategy, who in there right mind would trade penny stocks??? your just begging to loose money… yea… if you have any sense you will not follow this guy…

I’ve looked into equities and options trading courses… Best I’ve been able to find so far is this place (I’m not connected to them), much more focused on fundamentals and not on TA which in my opinion is what gets most traders into trouble and makes them focus on smaller time frames…
if your not interested then that’s fine but now on please try to avoided recommending trading courses ect from people who don’t actually have an professional experience trading

https://www.itpm.com/education/

Sigh… this feels like high school debate team dejavu.

This precisely is my point, thanks for making it again. Options has 101 different uses, hedging is just one of them, Neither myself nor anyone else should pigeonhole how they are used. And first five lines of my post specifically emphasize this -low risk- is usage is highly unlikely in T212 user base although probable

The guy I’ve posted is a youtuber he is not an academic, nor a hedge manager… The questions people ask and the “2 minute videos” I’ve mentioned are on very basic things and fundamentals. As basic as “what is a call option?”

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