Stock Derivatives, Are They Good for You?

Every couple of years, wall street comes up with some new investments.  Every couple of games, Las Vegas determines some new items to bet on, like the length of a super bowl power outage.  Every couple of hours, a new product or service hits the market place as the hot new item.  Should you hop on board?  Does anyone remember what a CDO is or what happened during the sub prime mortgage crisis?

A put, a short, a call.  An option.  A futures contract.  Purchasing stock on the margin.  The further you get away from the actual product you are buying, the more fees and middlemen there are.  Doesn't this mean that there is a larger spread and that it is harder to make money in these areas.

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Do you think you have some advantage that other's don't have?  Do you think you see something that they don't?  Did you know most of the people who invest in these areas tend to believe that they have some edge and that their research is good enough to beat out the competition?

What do you think?  Can you make money trading derivatives?

This post was reposted from http://finlit.biz/retirement-2/stock-derivatives-are-they-good-for-you/, originally written on February 6th, 2013.