There’s something peculiar about how society views financial speculation. Call someone a “speculator” and you might as well have called them a murder.
The word carries baggage—images of reckless gamblers throwing money at volatile markets, disrupting the natural order of things. But nobody talks about the fact that you can speculate in either direction.
If you try to go the route of buying options and not selling them you are putting yourself at risk, you probably shouldn’t but if you do try and keep the risk small.
The Hypocrisy of Speculation Shaming
Society seems perfectly comfortable with people betting that stocks will go up. Buy and hold? That’s “investing.” Dollar-cost averaging into index funds? “Responsible financial planning.” But suggest that a company might be overvalued and buy puts? Suddenly you’re a market manipulator betting against the American dream.
The reality is that both bullish and bearish speculation serve the same function: price discovery. When you buy calls, you’re betting prices will rise. When you buy puts, you’re betting they’ll fall. The market needs both perspectives to function efficiently, yet only one direction gets moral approval.
My Journey Through High-Risk Waters
Several times I have jumped into the world of buying options trading and have focused primarily on oil and leveraged ETFs like FAS (the 3x financial sector fund). These are high-risk, high-volatility instruments that I absolutely do not recommend for most people.
I can’t even recommend it for myself, if I’m being honest. The results were going fairly well, until they weren’t.
Every significant gain seems to get wiped out by an equally significant loss. It’s the classic options trading experience—exhilarating wins followed by humbling defeats. The math is unforgiving: even if you’re right 60% of the time, the asymmetric risk of options can still leave you flat or negative.
The Only Strategy Worth Considering
If I had to distill my experience into advice, it would be this: only trade options in the direction of established long-term trends, and only when technical analysis suggests oversold or overbought conditions.
The logic is simple:
- For calls: Wait for a long-term uptrend to hit technically oversold levels
- For puts: Wait for a long-term downtrend to reach technically overbought conditions
This approach aligns your speculation with the broader market momentum while timing entries at potentially favorable risk/reward points.
When Politics Breaks Everything
Oil prices have been my personal achilles heel here. The trend should be good, bet against a loosing industry facing major market disruption as most of the world buys up electric cars.
But just when technical analysis suggests a clear setup, geopolitical events can completely upend the fundamentals overnight.
The recent tensions with Iran are a perfect example. Technical indicators might scream “oversold” or “overbought,” but if political developments can swing oil prices 10-20% in a single session, your carefully planned option strategies become little more than expensive lottery tickets.
Speaking for a friend.
The Bottom Line
If you’re going to speculate with options, do it with money you can afford to lose, stick to liquid markets, and respect the leverage you’re wielding. Don’t let society’s arbitrary moral hierarchy about market direction cloud your judgment about risk.
Most importantly, t being right about direction doesn’t guarantee profit in options trading.
Timing, volatility, and time decay all conspire against you. Even the most sophisticated strategies can be rendered useless by unexpected political events or market volatility.
So be the gambler if you choose. But be an educated one who understands that speculation—whether bullish or bearish—is just another form of betting on an uncertain future. The market doesn’t judge; it simply pays out based on what actually happens, not what we hope will happen.
