I learned about options late in life, accidentally, trawling through the pages of the old Exchange and Mart magazine in 1995. A full page article showed how an options trader could work from home, (actually in bed) using BBC teletext prices, back in the day. A lot has changed, but options have been around for centuries, before stocks, and are used to price ship cargoes. In the 1980s, options went public and fortunes were made. Warren Buffett is a keen options trader, Nassim Taleb being the most prolific. They are not idiots and neither are you if you have read this far.
Investing is the word we use for a trade gone wrong! Investing is mostly passive and requires you to be right and/or hold onto your shares for decades. With markets reaching new highs and valuations stretched, you have to realize that the stock market cannot go higher. If you’re satisfied with paltry dividends and the certainty that your stock at some point in the future will be worth half of what it’s worth today, then read no further. QE is no longer on the table and that is all that has separated stocks from realistic valuations.
So what are the options all about? In our world we only trade FTSE100 options. Because? Because the entire index is unlikely to get busted for fraud/sexual harassment/false accounting/toxic products and all the other nasty things that can destroy a company’s reputation in a heartbeat. So FTSE is the underlying that our derivatives are based on. Options are the right to buy or sell the underlying (with a market price of £10 per cash settled point), but NOT the obligation. However, in the same way that insurance companies collect premiums, options can be sold. Have you ever seen a bad insurance company? When done right, put options can bring you a monthly income stream of a comfortable 2% per month, consistently. Nothing else comes close.
So who are the buyers of options if everyone is selling them? Well, that’s most of the education, and the reason I’ve traded profitably since 1999. Yes, I’ve had misses and panics, but I made good profits in February, while the market fell 10%, despite being a bit weak! I learned about the options from an expensive course and much of the free training on the Internet. I met a like-minded options trader a while back, he runs the website I contribute to every week, with real trading and a bit of background information about our world. It’s completely mind-blowing when you start to understand the options and the endless combinations, and 20+ strategies that we use. I love options trading and want to reach those with a lot of cash who are looking for income and a sensible approach to risk management, but don’t know where to start. It’s not just for newbies though, there are ideas for everyone. And we whose I want your money