options (finance)
 

My uncle who is a venture cap guy suggested to me that I may want to consider trading options as a career. He said that the earning potential is incredible and that because I'd never be the work-for-the-man type and there are many parallels to poker, it may be something in particular where I could excel. One idea might be to do lots of research, learning, and work on my own, create and manage either a real or imaginary portfolio, do well (hopefully), show results along with poker/chess results to some young star option traders, get taken aboard, profit.



So a few questions for those that might be more in the know:

-are the parallels with poker really that strong?
-how feasible is his suggestion?
-what is the life of an options trader really like?
-how should I go about learning? I know nothing.
-suggestions, comments, anything. please dont restrict yourself to just talking about those bullet points. I'd like to know anything.

Re: options (finance)
 

options are ok, but swaptions are where it's at!!

you should probably research Sales and Trading as a general career path. this is pretty general, encompassing trading equities, bonds, derivatives and selling these products to institutions.

lots of monies to be made & the hours aren't bad.

Re: options (finance)
 

If you think about it, *almost* everything in life are parallel with poker [discipline, go with your gut, hard work etc].

Anyway, a lot of young poker players are going to realize that even though there are similar characteristics between poker and investing in the stock market, the minor differences between the two fields are enough to make the transition difficult. The most obvious one is the level of importance of decision-making.

In poker, making good decisions and avoiding mistakes will make you moneys in the long run. In trading, this concept becomes exponentially true. The reason is the amount of money you must risk in relation to your bankroll [or portfolio] to make a healthy profit. For example, a bad decision in a hand won't hurt your profits that much but buying the wrong stock can wipe out a huge portion of your profits.

Lastly, patience is a virtue in poker and investing. However, in poker, if you lose patience and start playing bad/making wrong decisions, at least you will get paid off your image in future hands. Mr. Market doesn't give a damn about your image.

Disclaimer: this is coming from a self-employed guy so perhaps it might not affect those working for firms/hedge funds, where you actually get a stake for your play [100% risk-free obv].

Re: options (finance)
 

OK even though this was mentioned before, I want to ask again:

Is poker alone enough to get in? Is there some kind of test I could do to prove that I'm good enough (or find out that I'm not) in lieu of a college degree that's actually difficult? (mine wasn't) Can I make up for bad grades?

Re: options (finance)
 

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OK even though this was mentioned before, I want to ask again:

Is poker alone enough to get in? Is there some kind of test I could do to prove that I'm good enough (or find out that I'm not) in lieu of a college degree that's actually difficult ? (mine wasn't) Can I make up for bad grades?

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You own portfolio.

Re: options (finance)
 

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where you actually get a stake for your play [100% risk-free obv].

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this is far from the truth

Re: options (finance)
 

Lots of parallels to poker, except the hours.

You might want to check out this poker related site about forex, a lot seems relevant about options.

Re: options (finance)
 

BH,

That is an awesome avatar

Re: options (finance)
 

JB,

The key factor you will need to determine is whether you fall in love with it. If one of the reasons you're looking at options/finance is "because the hours aren't bad", stick with poker. Options, and other trading/investing in general, requires inordinate amounts of independent studying to actually be able to think independetly from the rest of the "participants".

So you are basically looking for the same "feeling" that I assume you experienced in the beginning with poker. As in wow, I wanna do this 24/7, and even if I had 1 billion $$ already. Otherwise, just look for something else that gives you that same feeling -- there are many opportunities in finance outside of options trading that are just as independetly-minded and lucrative, but perhaps more abstract than mathematical(unlike options) -- such as global macro. Then there's also VCs and entrepreneurship. While poker and chess relate significantly to all of the above, it is probably impossible to pick a random poker pro and determine which one he will fall in love with / is most inclined towards. For example, a lot of poker players WOULD NOT make good options traders b.c. they hate math and excel in poker while eschewing math almost completely.

Your "plan" sounds feasible except that in the initial stage, I'd focus more on knowledge accumulation than on paper / small portfolio results -- because those will be largely irrelevant when it comes to actual big money results. Its like showing someone your .25/.50 NL stats to apply for a chance at 200/400. The ease with which you command the fundamentals / history is what will really matter, and it will easily show in a 1-hour conversation with any expert you wanna work with b.c. all you need to pick up are the "tricks" that still work in the current time (thus not yet published), and combine them with knowledge to generate new tricks and insights that will hopefully be 1 step ahead of the everyone else.

Re: options (finance)
 

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where you actually get a stake for your play [100% risk-free obv].

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this is far from the truth

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Besides hedge fund managers [or employees who are required to re-invest their salary/bonus into the fund], can you give me an example where the person running a fund is liable for losses? And even if he has a negative return, he still gets paid by the fund for doing a shietty job.