Picking an Industry?

[DoctorT]

Hi!

I am learning about options trading but I want to start collecting data.

Before selecting a stock for trading options (the underlying stock), I want to select one industry. Assuming that the upward economic trend and the bullish trend in the markets will continue in 2018 and based on general knowledge, not investment knowledge, four industries pop up: technology, healthcare, construction, and defense

Which would you pick?

Thank you!

Doctor T

 

[beagle9]

Hi!

I am learning about options trading but I want to start collecting data.

Before selecting a stock for trading options (the underlying stock), I want to select one industry. Assuming that the upward economic trend and the bullish trend in the markets will continue in 2018 and based on general knowledge, not investment knowledge, four industries pop up: technology, healthcare, construction, and defense

Which would you pick?

Thank you!

Doctor T

. My guess would be technology and defense. Healthcare is to screwed up, and construction could be big again, but not sure with all the turmoil going on with immigration, and brick & mortar slowing down due to Amazon and other on line shopping Giants / businesses booming along with Bitcoin etc. now.

Will just have to wait to see how the infrastructure bill takes shape, and what will be done in that situation.

 

[DoctorT]

Dear Beagle9,

Thank you for your reply.

Doctor T

 

[william the wie]

Disagree with your strategy on picking a sector but as long as you stick with selling not buying options you should do well.

 

[Tommy Tainant]

I would never invest in anything that I did not have a good understanding of that market.
What industry do you work in ? Who is doing well ? Who supplies your company ? Is your employer expanding or contracting ?
Which local stores are busy ? What new products are dong well ? What are your friends talking about ?

Even then you can get it wrong.

 

[DoctorT]

... stick with selling ...

Dear William,

Thank you for your reply.

Right on! I keep reading that most (some say 80%) options buyers loose money. I asked myself, if they're loosing money, who's making the money? Intuitively, the answer is the options SELLERS.

I am planning to to start with buying because, to start with selling (which is higher risk), I wanted to have sone real world experience.

Doctor T

 

[DoctorT]

I would never invest in anything that I did not have a good understanding of that market ...

Dear Tommy,

I agree. Unfortunately, I am retired and my last job (where I was CEO) was in the in-flight duty-free industry, which is a rather small industry.

Doctor T

 

[Mr Natural]

Look into ETFs (Exchange Traded Funds).

All the benefits of mutual funds without the fees and they trade just like stocks.

 

[william the wie]

... stick with selling ...

Dear William,

Thank you for your reply.

Right on! I keep reading that most (some say 80%) options buyers loose money. I asked myself, if they're loosing money, who's making the money? Intuitively, the answer is the options SELLERS.

I am planning to to start with buying because, to start with selling (which is higher risk), I wanted to have sone real world experience.

Doctor T

More money at risk in selling than buying but that is due to much lower risk. Like an insurance company or bookmaker. But don't buy options ever, study up on low popularity numbers in the lottery and go there for much better returns than buying options. Also professional over and under firms in Vegas make decent returns, something like 5%/wk for their clients and again better returns and lower risk than options.

 

[DoctorT]

Look into ETFs (Exchange Traded Funds) ...

Dear Mr. Clean,

Thank you for your comment.

I am invested in ETFs and doing very well. I am looking to leverage a small amount of capital by trading options.

Doctor T

 

[HaShev]

Out of your list; technology, construction, and defense already have risen well enough to say
their future improved earnings is priced in.
Some Tech, and a few construction related companies are late to the party and might have leg room but most are at their inflated peaks with more downside and risk then reward. Healthcare is predicted to continue to lag or even get hit harder, and most are very poor at earning profits and careing about their stock holders.
The only value with growth and safety income comes from the many low price ranged Corporate Capitalization and investment type companies, especially when they get taken down during corrections.
Buying low range and selling high range usually nets 50-100% and 8-10% dividends waiting for the run ups.
Some high divy banks have room to run as well, so some financial sector and maybe some industrial companies with big new contracts.