You might assume that speculating with options and playing fantasy football have very little in common, but you’d be wrong. To start, both have become more mainstream lately — equity options volume surged 30% year-over-year amid to record high levels, according to the Options Clearing Corporation (OCC). Fantasy sports, meanwhile, maintained its popularity during a pandemic thanks to sports gambling platforms like DraftKings (DKNG). Leagues are still commonplace, yes, but daily fantasy and a variety of other games are roaring in popularity. Still, the options and fantasy arenas can be scary places for rookies. So while the playing fields are evolving over the last six years, the keys to success on both fronts are actually fundamentally similar.
With the 2021 NFL season set to kick off a week from today, and fantasy football fans (including myself and several of us here at Schaeffer’s) busy with draft preparations, we thought we’d examine the eerily parallel path to both options-trading and fantasy victory. So, whether you’re about to embark on your options-trading journey or start laminating your cheat sheets ahead of draft day, make sure you obey these 10 Commandments:
Commandment 1: Thou Shalt Not Play If Thou Can’t Pay
Options: Don’t risk precious capital if you can’t afford to lose it. When playing with options, you’re going to have some losing trades along the way — it’s inevitable. As such, it’s not wise to wager bill money or your life savings — no matter what kind of “hot tip” or “good feeling” you have beforehand. As Schaeffer’s founder and CEO Bernie Schaeffer says, “Intelligent trading decisions are rarely made when ‘scared money’ is involved.”
Fantasy Football: Simply participating in a fantasy football league is fun. However, it’s even more fun when you win, obviously. Don’t be that guy dodging your dues — it’s not fair to the winner at payout time, or the commissioner who has to take a baseball bat to your knees. If you don’t want to fork over the cash on draft day, there are plenty of online leagues that let you join for free.
Commandment 2: Practice Makes Perfect
Options: Before risking precious capital, try paper trading first. Utilizing a virtual trading tool (provided by many online brokers) allows you to test your trading knowledge, theories, and risk tolerance to see which strategies work for you and which don’t. Make sure to take diligent notes in order to analyze each trade’s aftermath, which will help you discover what kind of options trader you are and strive to be.
Fantasy Football: Before you head to (or log into) your league’s live draft, try a mock draft first (you can find a plethora of free mock-ups online). The real deal can get pretty intense and move quickly, as there’s often a time limit on how long you have to make your picks (and please, for the love of all things good, don’t be the guy who takes the full two minutes). Plus, not every round will go according to plan, so in…
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