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NerdWallet's Smart Money Podcast

Options Trading, Short Sales and Derivatives: A Nerdy Guide

NerdWallet's Smart Money Podcast

NerdWallet Personal Finance

Business, Education, Investing, How To

4.2665 Ratings

🗓️ 17 August 2023

⏱️ 33 minutes

🧾️ Download transcript

Summary

Explore the risks and rewards of options trading, short selling and margin trading in this nerdy derivatives deep dive. Hosts Sean Pyles and Andy Rosen explain the concept behind derivatives trading before investing Nerd Sam Taube joins the show for a closer look at the ins and outs of specific types of derivatives. Sam explains the speculative and protective reasons for derivatives trading — and the average retail trader’s chances of finding success. Sam also delves into put options and call options when it comes to options trading, as well as the relative risks involved with each. He then gets into short sales and the role that shorting plays in the way our financial markets work. The discussion then leads to an examination of margin trading, including what happens when it goes right or wrong for an individual. In their conversation, the Nerds discuss: derivatives, options trading, short sales, margin trading, the price discovery process of markets, options strategies, risk management, and portfolio diversification. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [email protected]. Like what you hear? Please leave us a review and tell a friend. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0

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0:03.0

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0:07.0

Exactly how much danger is this job putting me in.

0:10.0

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0:15.0

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0:17.0

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0:19.0

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0:23.0

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0:25.3

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0:27.0

Click or tap the banner to find out more.

0:30.2

Sometimes you just want a scoop of ice cream,

0:33.1

just plain vanilla ice cream,

0:35.4

kind of like an index fund,

0:37.2

tasty and safe. But sometimes you want to go

0:40.9

beyond plain vanilla. You want Rocky Road with chocolate sauce and whipped cream. You want to do it the way

0:47.1

you want to do it. And that, my friends, is what we mean when we talk about investing in options,

0:52.1

shorts, derivatives, and contracts.

0:55.0

The risk and reward tends to be a lot higher than with just stock ownership.

1:00.4

Because generally, with derivatives trading, you're either going to get a big payout, double your money or something like that,

1:07.1

or you're going to lose everything you invested in a particular contract.

1:25.2

Welcome to Nerd Wallet Smart Money podcast. I'm Sean Piles. And I'm Andy Rosen.

1:29.9

Welcome to episode three of our nerdy deep dive into next level investing.

...

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