Do you know that some of the biggest winning trades I have ever seen came from people who bought options?
No joke – I’m talking about stocks that rocket after news… causing the options to just explode!
Heck, the other day someone bought 1,000 call options in Beyond Meat (BYND), forking over around $90K in options premium that could have turned into $1.7M in just a few short days.
But when the music stops… boy does it stop.
Gambling is fun and people make a lot of money … until they hit that wall and lose it all and more.
I know people who have turned $20K into $50k from buying options… but I’ve also seen the same traders give it all back.
Some wiping out their accounts, and even their most prized assets—their home.
How did this happen?
They start making bigger and bigger bets without considering the risk.
That is, until one day it all catches up to him.
This is the kind of story that scares people from trading options, and why so many never take advantage of their income-generating strategies!
You see, when someone buys an option there are a lot of things that have to be perfect for the trader to make money.
The stars must align just right for profits to be seen.
First, they have odds against them from the second the trade is put on. There is about a 33% chance that options buyers will ever make money.
This is worse than flipping a coin!
And the main reason why I play this game differently.
You are better off going to play blackjack than buying options since you’d have better odds of winning.
The other thing options buyers have working against them is TIME
Now, when you buy an option there is a term, time decay, also known as Theta working against you.
And the closer you get to the expiration of the contract, it loses value even faster… until it’s worthless!
That’s why you can even be RIGHT with your option and still lose money!
Did you know that more than 75% of all options contracts in the markets expire worthless?
With so many obstacles to overcome buying options why are traders willing to gamble looking for thrills in the options markets?
After all, isn’t trading supposed to be a long-term career and a business source of reliable income and growth?
Well, it can be! That is, as long as you take the opposite side of the trade!
That’s right – you want to be the options seller!
Think about this as being the insurance company or the casino. They might lose once or twice but they rake in the cash with steady positive cash flows every single day!
The Casino:
Every day thousands of people give you money (buy options) in hopes that they win big on their bets. That’s ok, sometimes they do.
But the odds are in your favor. The amount of people giving you money far exceeds the number of people winning.
The Insurance Company:
Just like the casino, the insurance company takes money from thousands of people every year who pay for insurance to protect against a future event.
For example, every month people working pay an insurance company a premium for their health care as protection against an expensive surgery they may need.
But the insurance company knows that the majority of the health care buyers NEVER use the insurance for major healthcare bills.
This allows the insurance company to keep the collected premium as an income stream from their millions of payers!
As both a casino and an insurance company – the odds are always in your favor!
Both of these examples are how options sellers have the advantage over option buyers!
In fact – when we sell options we have both time and the house odds in our favor!
House odds: As an option seller, you have well over 50% chance of winning on your trade. Closer to 75% to 90%, to be exact.
Time: When somebody buys options, time decay or Theta immediately starts to destroy the value of the option contract. And if you are the option seller, time decay works in your favor!
Remember: If 80% or more of the options expire worthless, that means 80% of the people selling options are making money!
Here’s how you can put time and the house odds to work for your portfolio.
So why isn’t everybody selling options if it’s so great?
In short…
It’s easily the most boring strategy you could come up with. The thrill of making 100% or 200% or more in a matter of minutes or days just is not there.
The adrenaline rush is missing. The feeling of winning is gone.
And the feeling of winning is what keeps the gamblers going back to the casinos for more.
But that’s ok.
As a business owner, I know the importance of cash flows and steady income streams…. And selling options is no different.
I have multiple sources of revenue and this is just one more to add to my portfolio, making a consistent 30% to 50% and even 90% gains.
Don’t believe me just yet?
In October 2019, we locked in 4 solid winning trades for consistent returns.
Now, I don’t know about you, but knowing that I can create a revenue stream that wins month over month, year over year, is far more appealing than gambling and losing my house in the off chance to turn $25k into $1,000,000!
In fact, I go into even more details about the Options Profit Planning system I have created and the advantages of selling options in this video.
0 Comments