[Feature Request šŸ”§] US Options Trading

What Iā€™m talking about is the vote count. Some threads have red ones, indicating that they are trending right now, and that is what Iā€™m aiming will happen with this to bring visibility to what could revolutionise British stockbrokers.

What do you mean ā€˜red onesā€™?

Some vote counts are grey, but others have colour.

Itā€™s alright - Iā€™ll just ask support instead.

I thought they were just all pink unless the thread was closed etc.

Regardless there arenā€™t any complex algorithms which decide which threads are at the top it is just based on the date of the last comment so adding your vote + a comment to the existing thread does bump it up and gain more attention.

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Cant you lose more money than you put in with options through? Thatā€™s distinctly more risky than standard investing. Happy to be corrected if I have misunderstood as I have deliberately stayed away from options so far as I donā€™t know enough about them yet.

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Yeah pretty sure investing in stocks is nowhere near as risky as options :face_with_monocle:
Think someoneā€™s been spending too much time on r/wallstreetbetsā€¦ :upside_down_face:

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You canā€™t lose more than you put in when buying options, in that sense they are not riskier than stocks.

When writing options your losses are potentially unlimited, writing options tends to be much more restricted for that reason.

The difference is the price movements, options prices are (generally) way more volatile so relatively small movements in the underlying price can have massive impacts on the option price. For that reason they are generally more risky than shares. Options also lose value over time as they approach the expiration date, so you can lose money even if prices donā€™t change.

Companies donā€™t often go bankrupt, but loads of options expire worthless.

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Cheers @Cameron I obviously have lots of reading to do on the subject

No, there are four trades: buy/selling calls/puts (selling usually called ā€˜writingā€™, I suppose to avoid confusion with a put which is sort of like ā€˜sellingā€™ usually means (in terms of the underlying stock) in that itā€™s a bearish position).

You only ā€˜put inā€™ money when you buy an option (if you sell the option, i.e. ā€˜writeā€™ it, youā€™re the other side of that trade, and you ā€˜take outā€™ that money, the premium).

An option is the option to buy/sell (in the case of a call/put respectively) the underlying stock. But itā€™s not an obligation; so your maximum loss occurs when you donā€™t execute (a choice you make because executing would not make you money) and you lose the premium you paid.

Executing a call has an (potentially unlimited) upside of the difference between the strike price of the option (the price at which it executes) and the current (higher, or you wouldnā€™t be executing) price of the underlying. Executing a put has an (bounded by the strike price) upside of the difference between the current price of the underlying and the (higher, or you wouldnā€™t be executing) strike.

Writing options has equal and opposite (in the rawest sense, ignoring spread and market fees etc.) up & downside, so losses are unbounded only if you write calls. But youā€™re losing money you didnā€™t even ā€˜put inā€™ then (you got paid the premium), so hopefully you knew you were up to something!

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Thanks @OJFord appreciate the explanation

Is there such a thing as non margin options?

I think where they get a bad wrap is that we commonly see people losing $50,000 on contracts or going into minus balances?

If you only buy options you canā€™t lose more than you put in. The risk of losing more than the price of the option comes when you write the option. As the loss is theoretically unlimited you canā€™t really have a non margin way of doing that I donā€™t think.

I think rules on margin requirements are much stricter in the EU and UK, so I think itā€™s unlikely a retail investor could rack up that much of a loss.

Recently the margin limits have been capped significantly.

Personally, I donā€™t think margin trading is right for Freetrade.

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I think itā€™s relatively rare to get options on margin as they are already very risky, so almost all options are non-margin.

Wouldā€™ve been great to have this feature during the current chaos :slight_smile:

Pretty sure that the recent events will push freetrade further away from offering it though. :smile:

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Iā€™ve read the premiums on GME options are sky high at the moment though, you need a big move just to break even.

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I would love Freetrade to add the options trading to this app. Iā€™ve moved most of my money to another broker just so I can sell puts. Which is a shame. If Freetrade only allow selling puts and selling calls then realistically you never loose your money. The worst case is you end up with stock you didnā€™t really want which you can just sell or sell calls on. Very safe side of options trading.

That is a VERY rose tinted glasses approach :joy: :joy: :joy: In the real world, options opens Freetrade to have many many many more customers who lose money and probably mean they have to carry a warning like others that do options stating 63% of people lose money on option trading etc.

The reason for the warning is real and enforced for a VERY good reason and probably goes 100% against FTā€™s approach of responsible long term investing. In other words I wouldnā€™t hold my breath.

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