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Can you Trade Stock Options like a Business?
The true professionals operate like this all the time. Finally, these inside secrets are revealed!
For starters the best traders almost NEVER trade DIRECTION!
Yes you read correctly, they DO NOT Trade DIRECTION, as it carries too much RISK!
The Professional traders have a very unique way of trading that normally doesn't involve purchasing Options or Stock. Instead they usually end up SELLING Stock Options. Then they manage their risks of these Options, and generally re-balance their portfolio's if the risks get too high! Up until now most all of this was kept secret!
Here's two of the reasons why the Pro's do not generally purchase Call or Put Options
When you purchase Stock Options, not only do you have to be:
- correct in the Stock Option timing but also
- correct in the direction of the move of the Stock Option
and every day that you are wrong can really cost you!
The Pro's don't play that way and neither should you!
If you were taught how to trade like the Pros, you would probably sell option premium (called Theta Decay), then the Stock Option, could go up or down, and if it didn't, you could still profit from your trades!
The Pro's look at these trades as a WIN, WIN, WIN!
You see the Pro's don't like to gamble on making money, instead they want to ensure a consistent return each month, with very little down side. They would rather get 5% every month (that's 60% annualized!), then take a chance on losing monies. Rarely do they take a directional bet on whether the stock market will go up or go down. Its very common to see them make a trade with all 3 positions, up/down or even sideways, then they just cash their check, at the end of the month! As they rely on Time Decay, for their trading.
So how did they learn this? The best answer is they got educated from the best. These Professional traders have taught each other, and have kept it a very private club. This was really true, up until a few years ago when Stock Options became more mainstream. Also came along some Stock Option software, through a little firm known as Thinkorswim, which can really help you manage your Stock Option trades. This software was built by former Floor Traders who knew what they wanted and then they also offered it to the public. This software alone helps put the ODDS in your favor, when you are trained and know what to look for.
A combination of all of the events allowed individual traders to trade Stock Options from their homes, with the same quality data feeds the pro's were using! Recently the Stock Options pricing models of the ETF's (also known as Exchange Traded Funds) of the following:
- Spyders (SPY)
- Diamonds (DIA)
- Russell (IWM)
changed as well. All of these ETF's became very tightly priced (in regards to their bid/ask spreads). Now a combination of all of these events, started to place the trading odds in the individuals investors hands. The Floor Trader's, no longer had the upper hand. The tight bid/ask pricing allowed the Floor Trader's, to make a little on each trade, but they would have to make it up in volume, in order to be successful. These tight spreads between the "bid" and the "ask" allows you as the individual trader to put on positions without having to give up a good part of your principal, to enter the trade.
With all of these changes and a little education on this style of trading, the playing field had been essentially leveled, for all parties. Many of the Floor Trader's stated, they no longer have the advantage with a trading seat on the Options Floor. These Floor Trader's also stated they could do just as well trading from their home. As they can trade without ALL of the regulations, costs and hassles; most importantly they could trade as a true "retail investor" (same as you and me).
So how does one get this type of Education? Click this link to get a FREE 30 minute video on how to get started!
After being exposed to this type of trading it took me YEARS to find someone who could teach it to me. I finally met a man who agreed to share this with me! I have convinced him through this special offer to let a few of you in, if you get in NOW!
As my former mentor (a former Floor Traders-CBOE), stated, the odds are in the individuals hands as much as they are in the Floor Trader's, now.