Has anyone heard of buying Exchange Trading Options? Is it a good investment?

It sounds like speculations

no options are not an investment in the normal sense of the word, but they can be used to increase you roi.

Options sell at a premium to the underlying assets, a stock for instance. By writing options on the stocks you own, you can increase your roi significantly.

People who buy otions are normally speculating that the asset will perform better or worse in the case of put options than the person who wrote the options anticipates. Buying options is not an investment. It is a speculation. All otions expire after a certain period at which time if they are not executed become valueless.

They do however offer the advantage of leverage. If you were to purchase a 3 month option on a stock that sells for 40 a share that allows you to buy the stock at 41 a share and pay 1.50 for the option, within 3 months if the stock rises to 45 a share you will have made 2.50 on a 1.50 investment less commissions. Whereas if you had bought the stock at 40 you would have made 5 on a 40 investments. That is leverage. Also your risk is limited. The most you can loose is 1.50 where as if the stock falls from 40 to 35, you would have lost 5. But upon the expiration date the option if not exercised becomes worthless.

I think you mean exchange traded options (almost all options in the US are traded on an exchange now). You are right it is quite speculative, and you should not try to trade options until you fully understand them. try www.cboe.com for a tutorial.

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