A while back I had the pleasure to speak with a gentleman from a prominent newsletter service. It was interesting to see just how he traded options and how his newsletter service and others that he was affiliated with used options in their services.
As I suspected – he uses options irresponsibly in his service - as most people do. And I told him so.
His response – “You sound like an idealist.”
An idealist? Why? Because I do not allow marketing efforts to control my options strategies? Because I do not gamble with options by attempting to guess which way an earnings call will go? Because I do not buy out-of-the-money options in hopes that an option will move towards my chosen strike price?
I could go on and on.
I was amazed how little he knew about how to effectively trade options. He actually asked me about how I used statistics to gain an advantage in my trading. This man has been in the industry as an editor for several major newsletter publications for nearly 15 years. 15 YEARS!
And yet, he doesn’t know how to create a trade with a probability of success of your choice – be it 70%, 80% or 90% chance of success.
He stated that using credit spreads does not work for the retail public. It doesn’t sell. It’s too complicated.
I could not believe what I was hearing. This man, who had no clue about the true advantages of credit spreads (like in our Theta Driver Options Strategy).
The general consensus in this business is that the the public is too stupid to place a credit spread. He told me that his marketing department told him not to use credit spreads in their options services.
Why? Because according to him, lots of lottery-ticket gambles are more attractive to readers – and they help create a portfolio of huge winners. He didn’t mention that it also creates lots of big losses. And it might be that it’s easier to sell a newsletter when you can promise lots of chances for big gains.
But that is not my goal as the editor of an options service. I want to educate anyone willing to listen how to effectively trade options like the professionals do. And that does not mean creating more complicated strategies – it means keeping them as simple as possible.
I do not tout outlandish gains. I only try to bring to you the best strategies that I know.
The strategies that floor traders use.
The strategies that create real statistical advantages.
And then I try to incorporate risk-management techniques as well. He actually scoffed at that as well.
If you want an options strategy with a gambling mentality then you certainly have your pick. There are probably dozens of them in your email inbox right now. But I am not a gambler and therefore I do not offer daily trades with no statistical advantages.
I am a realist. I realize there is no holy grail in trading. However, one thing I do know for certain is that I have found several unique and concrete strategies that make a world of sense to me and I trade them to make serious money over the long-term. Furthermore, I realize that the less I trade, the better my strategies will perform over the long run: And the long run is what matters. This is what makes my strategies unique and so far, successful.
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