Monday, March 10, 2008

Can Investor Trade in Option?

I had a question from my good friend on his -Option trading- strategy approach incase he has made any mistake in it.
I did not yet responded on his strategy, but instead posing a fundamental question on his style and if he has actually chosen the right path for himself.
A reply of an email archieve is copied as below and edited to avoid any privacy breach that may affect the respondent.

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Seriously bro, I had a brief discussion of you with my uncle in singapore. The reason is because you started and showed me that you're an avid PURE INVESTOR. However, option is mostly used as a speculator/Short term trader to make money.
Pure Investor like Warren buffet, does not know and understand TECHNICAL INDICATOR. things such as charts, volume, MACD, ROC or candle stick charting. while Traders do not really care about the company's profitability of financial reports.
THIS are two different world.

What is my question to my uncle is , "if someone has never/ almost never buy a stock in his life, and he is always been reading "Investor" books and he is a pure INVESTOR, can he do well in OPTION trading? "
Well, it can be a easy question and a tough one. Easy is that the logic says the tool you're using is WRONG, but it can be hard to answer if you DO make money although you have Investor brain and the wrong tools to trade.

Anyhow, Try to answer it yourself.
All the best,

KenZ

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