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Market Measures

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Should We Buy Options?

Market Measures

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

A question tastytrade has been answering a lot during the recent selloff is “what if we buy options instead?.”

In this segment, we take a look at why buying options is, on average, not a profitable long term strategy from both a historical performance lens and a conceptual lens (analyzing implied volatility versus realized volatility).

We find that the only time buying options is profitable is the period right before a selloff, but since timing markets is nearly impossible, the strategy is not feasible long term.

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