Option Trading Secrets. If you've ever done any online research related to option trading resources, you've no doubt been subjected to marketers offering to reveal, for the right price of course, closely guarded secrets of professional option traders
The only problem is that there are no option secrets.
Just because you don't know how something works, or you don't have much direct experience with something, doesn't mean there are actual secrets involved. It just means you lack knowledge and/or experience.
As an example, how many people can actually change their own brakes on their vehicle? I'm guessing not very many.
But that doesn't mean that there's some kind of mechanics' guild or secret society actively suppressing knowledge of brake pads. And yet, that's the same absurdity that certain internet marketers are attempting to suggest when it comes to option trading.
Something happens, I think, when a service that's being marketed isn't mechanical or functional (like a brake job) but instead happens to be on the topic of "How to Make Money."
Because if you take a step back and really consider it, any time you're researching option trading or stock market investing, what you're really asking is just that - how to use your money to make more money.
Trust me - internet marketers know this is the real question you're asking, even if you don't. And if they already know the real question you're asking, they also know they can manipulate that question to their advantage.
How? By providing you with an answer on steroids. Or rather, by providing you with the promise of an answer on steroids.
They know you're looking for ways to make money that don't involve a job. And so they use the "option trading secrets" narrative to implant in your mind the promise of a doozy of an answer - they'll show you not just how to make money with options, they'll show you how to make lots of money with options, and the best part? It's super easy to do!
But let me be clear, as someone who is an active options trader/investor, and as someone who commercially operates an investing oriented website - there are NO option trading secrets.
I suppose that's the bad news.
But the good news is that you don't need gimmicks or magic bullets or get rich quick schemes or revealed secrets. You can make money trading or investing. And all it takes is a common sense approach.
So if there aren't any option trading secrets, what are there?
I'm a firm believer in looking at things structurally. And just as we took a step back and considered the real question that option trading researchers were asking, we can do the same thing when it comes to strategies for trading or investing success.
Maybe it's because money is involved, and there's a mysterious element to money and many people have a weird or intimidated relationship with it, but honestly, learning to make money with options and stocks is no different than learning anything else.
There are basically only three ways to develop skill and knowledge, whether we're talking about options or anything else.
But since we're talking about options, let's explore those three approaches in an options context:
This shouldn't be that much of a shocker, but if you want to learn about something, you need to, well, learn about it.
Options trading education can range from the formal to the informal. It could involve anything from taking an actual course to reading books on your own to online research.
This is the intellectual realm of trading stock options. Option education will teach you the nuts and bolts of options and option trading. It's where you learn the terminology, the concepts, and the theory of option trading.
If you want to be successful with options, you'll definitely need some form of options education. But like success in any discipline, the intellectual and the theoretical are only one component.
You need to be well grounded and well versed in the educational aspect of options before you begin, but it's the actual experience of trading options where you learn the most and the quickest.
It's like flying a plane, I suppose. You can study the cockpit controls all you want on the ground (and you should!), but you don't fly until you're actually off the ground.
I'm always amused and a bit puzzled when I see option trading sales pages that hint at the prospect of making a gazillion dollars and it only requires about 15 minutes worth of work once a week.
(Personally, if I could make a gazillion dollars doing anything, I'd be willing to put in a lot more time than 15 minutes a week. Hell, I'd even work weekends.)
But it's an absolutely ludicrous notion (not to mention a big red flag) that anyone is going to be proficient at something while simultaneously remaining inexperienced.
This is only my opinion, but it's only after you spend some time learning about options, and gain some experience trading them, that you should begin looking around for option trading tools.
The process, however, is often reversed.
Most over-hyped sales copy is geared toward the inexperienced and ignorant (and I don't mean that in a bad way - ignorance is simply the lack of knowledge).
In any case, I suspect that's intentional.
We are a serious tool-making and tool-using species. Tools not only make our lives easier, they are the prerequisite for an improving standard of living.
But not everything that get's marketed as a tool is useful, or is even a tool. And it takes both knowledge and experience to recognize what would be useful and what would not.
The purpose of this page is to encourage anyone reading it to not get caught up in all the marketing hype that's prevalent online.
Having ambitions and dreams of improving yourself is noble. But just make sure you keep one foot grounded in reality.
And that leads, naturally enough, to another couple of important questions:
In the end, it really depends on your own philosophy. Personally, I try to avoid the extremes - in general, I'm willing to pay for educational resources, experiences, and tools so long as they are useful. Not being willing to do so, I feel, undercuts your own success and often relegates you to second hand and subpar results.
But there are plenty of high quality resources available for free as well. Regarding options and investing, I even maintain my own small list of free resources for traders and investors.
But at the other end of the extreme, I would advise you to be very wary of overpaying for resources. Not everything with a higher price tag is automatically a rip-off, of course, but make sure you're paying for true usefulness and not merely presentation.
I try to avoid making blanket judgments, but for the sake of argument, let's just say that if someone is trying to get you to pony up several thousand dollars for either a weekend seminar or a piece of propietary trading software, chances are you're going to regret it later.
For that kind of money, some form of adult entertainment or high end escorts should be included in the package. But the real option trading secret is that it's likely that the only whore involved is some charismatic fast talker in a $5000 suit.
KO - 100 shares
GIS - 25 shares
JNJ - 25 shares
PAYX - 25 shares
TGT - 50 shares
Open Market Purchase Price: $11,195.23
Less Booked Option Income: $6235.40
Tot. Discount: 55.70%
Adj. Div. Yield: 7.50%