The focus of the anti-options point is the tail risk (as somebody else put it: what if it completely collapses in price). Guess what, if you buy the stock/ETF/etc. outright (or via DCA) you have the exact same tail risk. If you are concerned about a specific investment completely collapsing then you’re probably looking at the wrong opportunity regardless of which instrument you use.
Fundamentally, when for instance writing an out of the money put, you articulate it as being paid to insure somebody elses risk. While I see some merits to that, my perspective is rather different:
- I want XYZ (let’s say current price: 10)
- By writing an out of the money put (e.g. strike price 8) I reduce the uncertainty about what I’m going to pay for it (regardless of whether DCA or buying it in one go)
- 80% of options wind up expiring with zero value and my experience is that the 20% (perhaps a bit less, in my case) where I do take delivery, the price is not that far below the strike price and I’ve almost always been able to quickly convert it back into cash (+ a premium) using a covered call option.
“we have some history and some logic” - yes, and you purposefully apply it to a case which doesn’t suit your philosophy, narrative, etc. but conveniently ignore the fact that fundamentally this point could be made in almost any situation… e.g. you could argue Warren Buffet’s returns are just luck, a coincidence, a random event (one in a billion investors) while he’d argue it’s not.
That’s fine, everybody finds their own path… incl. some apparently sitting on a high horse without being aware of it.