I'm in a strange mood, so I'll get on my soapbox again.
the year 2000, I’ve turned my attention to educating individual investors about
the benefits of using option strategies as part of their trading arsenals.
I don't tout expensive seminars, nor is my purpose to promise that trading
options will produce instant wealth. The
infomercials you see on TV or the full-page newspapers ads you read promise
much. But common sense tells you they
cannot deliver as promised.
philosophy on adopting option strategies is that it's worthwhile because it provides two essential
benefits when investing:
In real world terminology, that means if unforeseen events occur
(such as the year 2008 or the bursting of the technology bubble a few
years earlier), your portfolio is protected against significant losses. You can use options as an insurance
policy, in which you establish your own ‘deductible.’
Fewer and smaller losses. As a corollary, you will have more
winning trades, but the gains are not unlimited.
doesn’t everyone use options?
there is a downside. If you adopt the
strategies that I recommend, then it’s true that losses are limited. But in return, profits are also limited. Here’s the key: profits are not minimal,
and you can earn excellent, but limited, returns. Some investors have
the dream of finding stocks that double (quickly) and then double again and
again. Most of us realize that those
days are over, but if that’s your dream – if you are seeking a huge profit when
investing, then the basic option strategies that I love (and use for my
personal trading) are not for you. You
can use options to gamble, but I prefer to discourage that. If that’s your goal, learn about using options from someone who
touts those gambling, high risk methods.
basis for my website, this blog
and my latest book, The Rookie’s Guide to Options, is to educate investors on
how to use options conservatively – and that means to reduce risk and increase
the probability of earning money – when compared with buy and hold investing.
If you already bought into the hype of those infomercials, this blog may not be exciting enough for you because there are no get rich quick schemes. I offer education. I’ll teach you to understand how options work
and how to make intelligent trading decisions when using options. I’ll carefully explain how to
monitor the position and how to manage risk.
I believe in detailed explanations so that you understand and can learn how options work for yourselves. You don’t want to be dependent on someone
else to make specific investment decisions or recommendations, do you?
believe that risk management is the key to success. If you make your primary investing goal the
elimination of large losses, then your chances of success are excellent. The steady profits, coupled with small losses,
will provide for your financial success.
But disasters must be avoided.
have four rules for investors, and it’s important to use them in this sequence:
First: Don't go broke. Protect your assets
Next: Make money
Then: Build wealth
Always: Never forget the first rule