Yes. I "algo" trade equity options. It's strange to me that I don't see much mention of this answer given all the argument about stocks being a 50-50 bet.
Options let you just roll the dice on probabilities off the assumption that the market is effectively random. You can use them to push the 50-50 probability much further in your favor.
For example, I stand to profit nicely at the next expiration (May) of most of my options as long as the market doesn't move more than a stddev in either direction. It could go up, down, sideways, no matter. I will make money. If it drops significantly, I will lose marginally until my "insurance" (far OTM puts) kick in and I start marking money again.
Edit: A common beginner's option strategy is to write a put for a stock you'd like to own. If the stock stays flat or goes up, you make money off the premium. If it goes down, you now own that stock. You can now turn around and sell calls against that stock, collecting premium until you're forced to sell the stock because it's moved back up again. You only "lose" if the stock makes an extremely large move down (like going bankrupt, or a GE style dividend) and you're stuck with a stock you can't sell premium against. Far from the 50-50 bet most people think of when they think of stocks.
Not me, no. But if you've got a good money manager they can/will do this sort of thing if you ask. Otherwise, this is sort of how a hedge fund works--delta neutral portfolio management. You can always try to join one of those.
Thanks for answering my question, but I was being hypothetical. I just wanted to know what services do this sort of thing in theory, not like I have money I need to get involved in this idea!
Options let you just roll the dice on probabilities off the assumption that the market is effectively random. You can use them to push the 50-50 probability much further in your favor.
For example, I stand to profit nicely at the next expiration (May) of most of my options as long as the market doesn't move more than a stddev in either direction. It could go up, down, sideways, no matter. I will make money. If it drops significantly, I will lose marginally until my "insurance" (far OTM puts) kick in and I start marking money again.
Edit: A common beginner's option strategy is to write a put for a stock you'd like to own. If the stock stays flat or goes up, you make money off the premium. If it goes down, you now own that stock. You can now turn around and sell calls against that stock, collecting premium until you're forced to sell the stock because it's moved back up again. You only "lose" if the stock makes an extremely large move down (like going bankrupt, or a GE style dividend) and you're stuck with a stock you can't sell premium against. Far from the 50-50 bet most people think of when they think of stocks.