Zeev's Turnips Patch-No Politics (ZEEV)

[johnnieb]

just picking up on your comment on the time decay disadvantage of options which is, of course, absolutely right... but... there are a number of advantages in using options as well and, for those taking a relatively short time frame for their trades of, say, a few days, the time factor is less of a problem, although with their wider spreads they're not as suitable for rapid intraday trades; one advantage is that there is a defined downside limit (the premium) which, in the case of puts, addresses your previously stated aversion to shorting because of the 'runaway' risk; then, with slightly out of the money entries, the loss in the event of a move in the adverse direction will tend to be less than in the case of a cash trade.

commissions of course tend to be higher and, oh!, those spreads by comparison with cash, but, not all bad if used in the right way...