The 3 Most Common Mistakes Investors Make When Investing In Options & Derivatives

Alicia Badilla By Alicia Badilla, 3rd Apr 2012 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>Business>Investment

If you are new to investing in Options then read about the 3 most common blunders investors make when dipping a toe in the water.

#1: Fees

Options are full of risk and are one of the most complicated trading vehicles to master. That is why so many new investors are drooped into paying high fees.

-Good idea: let a professional trade options for you.

-Bad idea: pay exuberant upfront fees to that professional.

If your trader charges an upfront fee above the .02% level you might want to question her or her actual ability to make you money. Traders who make a percentage of the profits are truly incentivized whereas if you have hired a trader who makes money win lose or draw …you might only start to grow wise after it’s too late. You will start to realize this about the time your money starts to go out the window when you end up feeling like a number to a broker who needs volume of clients rather than successful trading. It is the number one mistake new options investors make and is usually a very costly one. It usually takes a couple trades to get it figured out and if you take into account that some of these ruthless firms charge as much as 20% or higher (mind boggling)…you may already be down 40-50% before you realize what has happened.

#2: Taxes & Trusting AN LTG

Define LTG: Lying- Thieving-Government. Investors must find a situation where you can invest privately through a tax-haven brokerage. Most governments will do anything to keep your money from going outside the country.

Look at the USA for example…the US government has cracked down so hard on this that many international banks won’t take US customers as clients. They are actively ending relationships with the US customers who have had accounts for years. Tyranny is the result of unchecked big government, over-regulation, power and greed.

What is the present mode of politics all over the world? From Australia to Europe to the US, everyone has seen the campaign so far in 2012. It’s a politics of fear… formulated as a defense against potential victimization, harassment and excess. These are the only uses of legislation anymore. It is now about: because you are so free, everything is prohibited.

The world is quickly moving towards crypto commerce, this has been facilitated by the internet, decentralism that will expand free spheres of action until a new free world emerges. This dying class of ignorant and religiously dogmatic brainwashed political zombies will be left wondering why they are dying broke and disliked. Real estate always goes up in value? The USD & Euro will never crash? I can count on a government based retirement that hold shares based in the value of a fiat currency? The greatest transference of wealth in the history of mankind may take place over the next few years as a looming sovereign debt and fiat money crisis unfolds. Governments around the world and the investors who trusted them will get wiped out from holding on to the old way of doing things.

There is a political class who are desperately trying to hold on to any shred of power they can. They are the ungrateful spoiled children of history and their time is over, it is simply a question of how long can they cling to the vestiges of power that were build up in the 20th century. How can you find a place to invest in volatility privately? Here is a list for international brokerages who work on a percentage of profits and can supply exposure from everything from Credit Default Swaps to Options on any commodity including Gold:

Global Commodity Group Central America

Read More From Author Alicia Badilla Here

#3: Do things right the first time.

Have you ever tried to fix a washing machine or a car, sinking a ton of money into it only to find out that the answer was to buy a new one? If you are like most humans you have something called emotions. These emotions like fear of the unknown or fear of risk keep most investors from having staying power in the market. They invest to little to late.

Options are volatile and to profit from the mountain tops you have to have the stamina to ride out the valleys. Most investors can only take a few hits before having to call it quits. That is why the smart money(big money) usually wins. They are not necessarily smarter but just have more ammunition and can stay in the game long enough to win.

If $100,000 USD is more than 20% of your portfolio and you are in your 60’s then you may want to consider another investment vehicle like farmland or physical gold.

More From This Author:
The Cocoa Conundrum


Gold, Mistakes, Option Investing

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author avatar Alicia Badilla
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I'm a Traveler/Writer/Investor At times I interview interesting professionals. Thank you for reading.

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author avatar Rose*
8th Mar 2014 (#)

A good article on a complicated topic

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