My Favorite Options Strategies

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News equals noise. When are people going to get it?

The news means absolutely nothing to me as an options trader. The entire industry has been commoditized. And when I say this I mean that one offering (financial media outlet) is nearly indistinguishable from another.

Why? Technological innovation.

News is widely accessible and therefore basically the same everywhere. The only difference is how they market themselves and as a trader I just don’t care about their marketing techniques. Nor do I care about the news that they spew out on a daily basis. As an options trader it doesn’t matter to me.

Fear is what sells. It’s all over the news, every day, every hour. And while I do care about the macro-picture for my own self-interests, it too doesn’t effect how I trade my options strategies.

But, what I do like about fear is that it creates opportunities. Opportunities to sell options at higher prices. Because with increased fear comes increased implied volatility and with increased volatility comes increased options premium. And that is what I want to see as a seller of options.

I also like this type of market because it creates incredible swings and therefore, short-term overbought and oversold markets, hence the reason for the High-Probability, Mean-Reversion indicator that I follow.

But again, the fact that fear sells is humorous to me. The masses just don’t seem to get it. While they complain about the fear mongering they feed off it. They tell you to buy or sell certain sectors or certain stocks. A fool’s game in my opinion.

What I never hear is that you can use a particular options strategy to take advantage of the fear that is currently in the market. You will never hear the market is in a short-term overbought state so now might be a great time to buy some puts in … You will never hear that you can create a high-probability trade with a 80% to 90% chance of success that has a 10%-15% return on the trade over the next 30-50 days. It just doesn’t happen. Why? It is not the fact that we are not smart enough to figure it out. I know my readers are capable of understanding high-probability trades and how they work and more importantly how to manage the risk of each and every trade they initiate.

But this will never stop me from trying to convey my so-called BORING message that I can create options strategies with the type of advantages I speak of. I am not doing anything magical. No secrets here. While my High-Probability, Mean-Reversion strategy has a few proprietary indicators it is based on some very simple concepts. It is a strategy used by floor traders and professional options traders on a daily basis.

So, the question is, why can’t the financial media teach the masses about such incredible strategies? Who knows and quite honestly who cares.

In my opinion it is their loss and our gain. I don’t want these strategies to become mainstream, because when they do, they too will be commoditized and that is the last thing we want.

As always, if you have any questions or comments please feel free to email me. And again, if you are interested in learning how to trade using probabilities, join my high-probability strategy. It’s free for 30 days!

Also, if you haven’t already, please join my Twitter feed or Facebook page.



9-29-2013 2-10-53 PM