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- Why aren’t you selling options?
As promised, here’s the recap of this weekend’s training.
But first!
Seats Selling FAST!
ONLY 100 49 seats remain…
Advantage 1: The odds are always in your favor
Source: CNBC
Why, you ask?
A three-year study came to three major conclusions:
On average, three of every four options held to expiry, expire worthless;
The puts and calls that expired worthless played off the primary trend of the underlying;
Option sellers still come out ahead even if they go against the trend.
In fact, of put options alone, 82.6% expired worthless.
In some of the studies, up to 96% of puts or calls expire worthless if sold favoring the trend.
This sounds like common sense, but a lot of traders bet against the trend.
When it comes to selling options, the old adage most definitely holds true: The trend is your friend.
Sell options with the trend and you boost your odds the options will expire worthless.
Source: The Complete Guide To Options Selling 3rd Edition
Advantage 2: You don’t have to pick market direction anymore
The hard part of buying options is you must get the direction right and predict when the move will occur.
Predicting where prices will go is like trying to predict the direction of a hurricane.
Smart option sellers bet that the storm will not make a 180-degree turnaround into the wind.
That’s ALL!
They don’t play the game of guessing where the storm will hit. That’s a low odds game. Guessing where it will not hit is much easier.
Short-term trading (day trading) is too difficult.
Markets can be sporadic over short-term periods.
As a seller of options 1-2 weeks out, day to day market gyration does not concern me.
Advantage 3: Accrued profits can be large
Taking time to learn a strategy and allocating capital likely means you want a bigger payoff.
Most traders don’t know this strategy and that’s fine, but option selling has the horsepower to deliver. In 2023, in the $2,000 Small Account Journey, I alerted 148 real-money trades and won 132 of them or an 89.19% win rate. This puts me on pace to win 180 out of 200 alerts this year.
My current $2,000 - $10,000 goal balance
Results not typical. Trading is hard. Nothing is guaranteed.
My current $2,000 - $100,000 goal balance
Results not typical. Trading is hard. Nothing is guaranteed.
This service launched in 2023 and I’ve already grown a $2,000 balance to $32,000 before a draw down and profit taking.
To me, that’s large accrued profits.
And subscribers’ smartphones get every alert before I enter and exit.
Seats Selling FAST!
ONLY 100 49 seats remain…
Advantage 4: Time is on your side
As an option seller, the passage of time is your greatest ally.
As a seller of an option, you are like a football team that plays defense for an entire game.
How much time is on the clock when you start the game is up to you.
You give yourself a predetermined point lead and your opponent so much time to beat you.
For example, give yourself a 50-point lead and give your opponent two quarters to beat you.
Point is. The option buyer works against the market and time. Same as the offense, trailing, has to work against the defense and time left on the clock.
Advantage 5: Taking profits becomes simple
Most books on trading tell you not to be emotional about your trading. How can you not be emotional about your trading? This is your money that we’re talking about! You’re going to be emotional about it no matter what you tell yourself.
As the seller, the decision of when to take profits generally becomes one that you no longer have to make.
The market makes it for you.
If the option is not in-the-money, the value will deteriorate to zero at expiry.
I teach taking 30% early in the trade or 50% halfway through expiry. It’s that easy.
Advantage 6: Perfect timing is no longer necessary
In a bull trend, sell far beneath the market, allowing for wide price fluctuations.
For this I teach the 10-day EMA, inside bar breakouts, and Keltner Channels. All workshop videos are available the moment you subscribe.
Advantage 7: Many methods of risk control
When entering a bull put, like this example on TSLA, I know exactly what I can make or lose.
My risk on this TSLA bull put was $3,870 to try and make $2,130. I took home $1,248 overnight or 59%.This is an actual trade I alerted subscribers to last week.
My entry was $3.55 on a $10 wide spread which tells me my rough probability of profit is 65%.
Results not typical. Trading is hard. Nothing is guaranteed.
Stop loss strategy #1 is to get out if the stock breaks below the sold strike of $250.
Stop loss strategy, #2, is to exit on a break of the bought strike.
I hope you enjoyed this options selling cheat sheet. Members can download a copy after subscribing.
Seats Selling FAST!
ONLY 100 49 seats remain…
Sincerely,
Jason Bond