[marojejian]

Why should a retail investor never buy derivatives? spreads?

[pid-1]

Retail investors do not have access to systems that calculate risk, margins, pnl, etc... and generally also don't have the necessary knowledge and market data to price such instruments correctly.

Most ppl are better off KISSing and lowering risk by selling equity for fixed income.

[jurgenburgen]

Ironically you can use AI tools to get some idea of how to trade puts.

[sitzkrieg]

this hasn’t been true for years. retail investors can’t get advanced risk suites from any normie broker these days

[dboreham]

Not the parent but I'm guessing: a) it's expensive and b) you can shoot your feet off.

[inigyou]

You almost always lose a lot of money if you're seeking safety. Protection from downside risk on your S&P500 investments may cost 20-30% of your investment at which point you're better off just selling the investment and hoping it doesn't go up by that much.

[solumunus]

> Protection from downside risk on your S&P500 investments may cost 20-30% of your investment

What? Absolutely not.

[inigyou]

What did you buy and for how much?

[solumunus]

You would buy puts. How much to spend is really up to you, but you can definitely get meaningful downside protection for much much less than that.

[inigyou]

And what is the cost of full downside protection? It necessarily exceeds the full upside, or else everyone would do it.

[baq]

It’s scaremongering, you can learn all this stuff.

However! If you don’t want to learn and want to get rich quick instead, stay away.

[baal80spam]

It's all about getting a call from the dreaded Margin.