I don’t buy options. I buy common stock. When someone asks why, I say: shares held in a cash account belong to you — your broker has no right to force-sell them. The words “margin call” basically don’t apply. And look at the people playing leverage and derivatives: why does someone always get liquidated? Because those instruments are gambling in essence.
My audit for any such product is one question: if I buy a put, or sell a put, is my expected return positive?
Run every exotic through that question and the common trait appears: the seller has computed the odds precisely, and every layer of the product is designed to skim you. You chase the big payoff at small probability; it collects a steady spread at high probability — either way, the financial institution eats. Calls, puts, covered calls, accumulators — after the whole circus, plain common stock beats them all, because all of it is still betting against someone, and your opponent at that table is a professional.
Someone will say: selling options for premium is a steady cash flow. Sure — until the one day a black swan takes back three years of premium in a morning. Cash flow whose expectation you haven’t audited is borrowed money.
So my position is simple: common stock, plus time. Don’t stand at the gambling table; be a shareholder of a long-lived business.
