Recently a question was asked about actively trading stocks based on small fluctuations in price.
It seems like if you wanted to do the strategy described here, you might as well buy an option like a long straddle, which generates a profit if the volatility of an asset exceeds a certain threshold.
Both the option and the strategy rely on volatility in the future to succeed. The biggest drawback of the option is that the price won't move, and you won't break even on the premium you paid for the option, and the second biggest drawback is that you may not qualify for an option trading account. Meanwhile, a lot of the problems described in answers of that question, such as day-trading regulations, commissions, risk of the stock going down and never coming up, and so on are avoided.
So is it true that if you want to bet on fluctuations, you are always better off with an option like straddle? Is there any reason to actually buy and sell shares instead of just buying the option other than:
- The premium on the option is too much
- You don't have an option trading account