What is options trading?
An option is the right but not the obligation to do something and in this case, by a certain date. You can choose to buy and/or sell options just like you would a stock. However, unlike, a stock, options have what’s known as an expiration date. Just like milk, it could go bad after it’s expiration date. So, too, can your trade.
Most people think about trading options in that one can buy the right to buy shares at a certain price (i.e. the strike price) by purchasing call options and one can sell call options if they are worth more than what they purchased them for. One can also buy the right to sell shares at a certain price by purchasing put options and again, one can sell put options if they are worth more than what you purchased them for. In either case, time is against you as these options charge you a penalty cost or a “premium”.
Conversely, since there is a buyer of these options, there must be a seller. Most options traders are sellers as options have an expiration date and can be worthless on that day. Think about an insurance salesperson selling you insurance. You are paying a premium for that policy but he/she/they are selling it to you and hoping that the policy will expire, worthlessly. The odds are usually in favor of the salesperson.
What makes us different?
We don’t tell you what to do but rather teach you how to make and own your own decisions. We don’t recommend stocks. We don’t make recommendations. What we do is get you to understand risk and reward. We get you to understand that winning big requires that the odds are against you but winning small but relatively consistently can add up over time. We get you to make your own choice and advise you on how to manage it. There is no secret sauce, and we have nothing to hide. Do we lose? Absolutely. Do we win? Absolutely. What you’ll see is how we brush ourselves off a loss (or two or three or more) and get back up, remain calm, assess the situation, and plan accordingly. Our goal is to get you to the point where you don’t need us, and you can do this on your own or with others.
For our paid subscribers, we trade live in front of you twice a week and share with you all our good, bad, and ugly trades. Our Friday Closing Bell session is important as that’s when decisions need to be made to get in or out of our positions. In these sessions, you will have the opportunity to ask questions and we try to answer them before it’s too late (please don’t hog all the time by asking a slew of questions as there are others on the call as well). You can also post your question(s) in a What’s App chatroom and other members typically address them. You also have access to a Google Sheet (if you have a Gmail account) where trades get updated at least once a day – keep in mind that usually trades last for the whole week.
You’ve probably heard that options trading is way too risky and there’s little reward in it. That’s partly true. Since we’re generally option sellers, the odds are on our side. Our top priority is to collect something from the market each week. We generally use either a cash secured put strategy, a covered call strategy, or a combination of both, but only on exchange traded funds. So, you’re probably asking yourself “why only ETFs?” which is great, because our instructors and outsiders believe in diversifying your risk. An individual stock exposes one to “business risk” where you rely on the management of the firm, the behavior of the market overall, supply chain issues, litigation, and the list goes on. An ETF generally contains multiple firms and the ones we focus on usually follow a heavily traded index. We truly believe that since the Great Depression followed by World War 2, Korean War, Vietnam War, Oil Crisis, 1987 market crash, Dot.com Crash, 9/11, Great Recession, and COVID-19 lockdown, the US and its economy have always found a way to recover. Now it’s true that past performance is no indication of future results. However, should the US economy fail and not recover, we’re pretty sure that we’ll have bigger problems at hand. If one firm should fail in an index, that doesn’t necessarily mean that all the other firms will fail as well.
How do we help?
What we do is guide you on picking ETFs that you’re comfortable with that in some cases we’ll own as well. Full disclosure, we do not get a commission by recommending any of these ETFs but if you hop on the call, you’ll see how many shares of each we own and how we make decisions on collecting something off them each week. We look at some charts to give us an idea of what decisions we should make (taking the live classes help). We sometimes ask you what your opinion is as we want you to feel comfortable making your own decisions. Yes, we have risked our own cash based on ideas from the audience. Don’t worry, we don’t put you on the spot, but we do want you to feel comfortable in making your own decisions eventually. Yes, we are a business that works towards getting you to not need to stay. Should you choose to stay, then great. Another thing that we strive for is to get you to make the right decisions to potentially earn enough so that the membership cost is insignificant. Each month, we have what’s called the “subscription trade” where we show how one can potentially collect the entire subscription fee from one or two trades based on 100 shares of an ETF or two for the week using either a covered call strategy or cash secured put strategy. Yes, the value of the shares can go down and come back up and go higher and that’s why we encourage you to be in this for years as this is meant to create multi-generational wealth. Pull up any long-term chart on either the S&P 500, the Nasdaq 100, the Russell 2000 and you’ll see how they generally have a pulse on the US (and perhaps the world’s) economy. What we do is get you to decide on what percentage of value do you want to receive and accept the odds associated with it.
We generally don’t want anyone who has hate in their heart. In fact, bullying and other forms of being unprofessional and discourteous are never tolerated (please just do us both a favor and don’t join or else you’ll most likely be booted). What we like to have are subscribers who know how to pay it forward and help others catch up. If you have love in your heart, an open mind, and a willingness to learn, come on in – this business is not cutthroat as others may make it seem.
Also, this is not a place where we make money when our subscribers do the opposite – that’s just unethical. Are there subscribers doing better than we are? Yes and we are thrilled to hear that but that’s due to their own decision making. What we don’t want is for you to be “lucky”; we want you to be consistent. That means making the right decisions each week. Will they all be profitable? No way and why not? Because there’s a risk involved and sometimes, we can do everything right and still have a negative outcome. Consider the following: have you ever gone to a job interview and felt so confident in getting the job but in the end you don’t? You may question yourself but if you’ve done everything right, you may still be without a job and that’s not necessarily your fault. That’s why it’s important to be open-minded and be able to participate as it will help grow your confidence.
In summary, we genuinely care about your well-being. Trading on your own can be lonely and sometimes you just need someone to talk to and that’s what we’re here for sometimes. Other times, you may freeze and can’t overcome the fear of possibly losing. We’ll help you to get over that and learn how to accept market risk. Either way, welcome to a good group of people.