Options Trading & Directionality
One of my personal goals each year the last few years has been to upskill in how I invest, in particular my personal long term investments. I’ve always had the philosophy that it is something that keeps me sharp, but allows me to explore other businesses and through that better understand my own.
This year on the list is to better understand Options Trading, having been a skeptic, I’m beginning to scrape the surface. The best explanation I’ve heard is, it’s options are about directionality, you’re buying an option on a direction of a company.
So, I’ve started with a few hypothesis, I believe this company is going in this direction, then found information to stack up and against that hypothesis. Then you buy an option on that.
I like that ethos, when you’re building a business you have to make lots of decisions on directionality, it’s not that you know precisely (although you probably have a gut feel, it’s that you think things are heading that way, and you need to adjust. Of course as the future becomes nearer you can get more predictable.
Then you can band your team around that, we’re going this way.