They then go on to explain that 70-80% of options expire worthless. They point out that professional traders, particularly options market makers, are nearly always net short options.
This concept shows a stunning lack of knowledge about options! Let me explain so you don’t fall prey to it.
First, their two arguments are correct. But their conclusion is wrong.
It is true that the vast majority of options expire worthless. The implication is that you should therefore sell options rather than buy because the vast majority of your trades will be profitable.
This is also true but doesn’t really address whether or not you will make money. Here’s the reality.
The profits and losses of shorts and longs have to be equal! If you were to short every option you would have mainly winning trades but your winners would generally be small and your losers would be bigger than your winners.
On the other hand, buyers of options generally have more losing trades than winners but the size of their winners are larger than the size of their losers.
The profit and loss of short and longs are symmetrical but, in the final analysis, equal.
Buying or selling options needs to be considered not that it is just short or long but what other edges you have in the market, such as direction or an opinion on the future value of implied volatility.
So how can you make money in options? Simple! Sign up for our exclusive membership programs at Options University.
I've got some exciting news for you. You can become financially free in just a few years. You'll be able to live where you want and do what you were meant to do, not do a job.
You don't have to get a second job or scrimp. You'll be able to continue to enjoy the life you have now. It's easier than paddling downstream. Your life will get better beyond anything you've ever imagined.
But wait - I have to tell you something honestly - there is a downside. You're going to have to buy all new clothes to fit the new happier, tanner, and thinner YOU! But I don't think you'll mind one bit. LOL.
With financial freedom, you're going to have more energy than you've ever had in your life. You'll problem going to be slimmer and more attractive as the stress of your normal life disappears.
Just picture yourself out on the town for a night - to celebrate your new image. There is a new spring in your step. All because you decided right now to become financially free.
Here are a few concepts that you may not know:
To become financially free, you need to get your money to work for you.
Rich people become rich not by working but by investing
The second best way to become a billionaire is to be an investor
You may be asking yourself how I would know this. It's because I did it. Here's my background:
I managed the #1 performing growth mutual fund
I wrote the #1 performing stock newsletter
I was voted #1 bond and gold market timer for three years in a row
I've been on TV over 1000 times
I've written 10 books on investing
I've taught over 10,000 students how to invest profitably
I was an options market maker
I am the author of the classic book, Options Strategies.
Here's what some of my students say about my courses:
Guess what? I'll give you the keys to this new life for $97, an incredible bargain. And you can get going right now!
Options trading allows you to trade with very low capital. You can easily get the price action of 100 shares of stock for as little as $100. So everybody has the ability to invest in options!
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As the modern day Gold Rush rages on, experts are predicting quite a significant boost in marijuana sales.
In fact, at current pace, sales may be on pace to match U.S. soda sales by 2030.
The $75 billion projection by 2030 also compares with current annual U.S. wine sales of about around $60 billion. Cigarette sales held at $77 billion and beer sales at $110 billion.
That’s according to Cowen & Company, which believes the U.S. cannabis industry is widely expected to reach $75 billion in sales in the next 12 years.
That’s almost as big as the $76.4 billion U.S. soft drink market.
Granted, Cowen & Company analysts previously predicted the market would reach $50 billion by 2026. But we’re already well past that. If we look at 2016 legal and illegal marijuana sales in the U.S. and Canada, folks have already spent $53.3 billion.
States that have moved to legalize it have seen quite a boom of their own.
Nevada’s recreational marijuana market has exploded, as retailers sold close to $200 million of cannabis between July and December 2017. That’s significantly faster than Washington State, which sold $67 million worth, and Colorado, which sold $114 million.
Nevada was also able to collect more than $30 million in taxes in just six months.
California could see $5 billion in revenue from recent legalization. Recreational sales could soon double the size of the marijuana market.
Massachusetts is estimated to see around $1.5 billion in gross sales.
Maine is projected to enjoy $290 million in gross sales annually.
In Florida, legalization could generate up to $2 billion in annual sales. North Dakota could see $75 million just starting out.
But the money is just beginning to flow.
Nowadays, as more than 29 U.S. states plus Washington, D.C. have approved its medicinal use, and as eight states have approved its recreational use, we could be about to witness a repeat of the triple and quadruple digit returns some stocks have already seen.
So what’s the best way to dig to take part in the modern day Gold Rush?
We’re sharing the full details in our next issue of Biotech Options.
We have three levels for you depending on your level of knowledge, interest, and/or commitment. Take our:
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How many of you out there think that the market is performing well?
How many think the market is performing poorly?
And how many feel the markets performance is neutral?
Actually none of these answers is correct. You see, the market does not perform, you do. You perform!
Sometimes you perform well, and other times you do not perform so well. The market doesn’t perform, it moves. It moves up, it moves down and it moves sideways.
It moves along like anything else that travels in a business cycle. If the market did perform, then you would only be able to make money in an up market.
As you know, it is possible to make money in a down market, and even in a stagnant market. Thus it stands to reason that the market simply moves and you react to it. So, let’s talk about your performance. You have two ways that you can perform, directly and indirectly.
Directly, you pick your own stocks. Indirectly, someone else picks your stocks for you, whether it is your broker or a fund manager.
In the latter case, the fact that you chose someone else to pick the actual stock does not mean that the responsibility of a loss is theirs. After all, it was you who chose them.
In the end, it is you and you alone who are responsible for your performance. Consequently, it is your responsibility to become an educated investor.
Years ago, individual investors didn’t have to worry about who was managing their money. Now, things have changed as poor returns from money managers and investment firm scandals have shaken our confidence in these ‘professionals.’
To get a better look at what lies ahead, you have to go back and look at what transpired to get you to where you are now. From there, maybe a clearer path into the future will become visible.
During the Great Bull Market of the 1990’s, many investors, like you, entered the market and reaped the returns of the largest bull market in history.
Everyone, it seemed, made incredibly high rates of return. The market’s incredible, unprecedented move appeared to make geniuses of us all – but in actuality, it masked some major flaws with many industry professionals. It also created a misconception in the general public that all market professionals were experts.
Suddenly, the bubble burst and those flaws were exposed.
Not only did we find out that most of those experts possessed more luck than skill, but we also discovered that some had been cheating us out of our hard earned savings.
Many investors were discouraged with these market developments, and to make matters worse, many had lost significant amounts of money. Not to mention, the prospect of regaining these losses seemed slim to uncertain, at best.
Furthermore, the very people we normally looked to for help in retrieving these losses either lacked the talent to recover them or had lost enough of our trust and confidence that we wouldn’t even entertain the thought of letting them try.
Look to execute a covered call write on the Sohu Sep 70. I'm looking at the underlying at about 72.50 and the bid of the Sep 70 at about $.90. Total investment should be about $6760. Total profit if unchanged will be about $480 which is a 7.36% return to expiration which translates to 61.64% annualized. There is 10.07% downside protection.
The key, as always, is to get the trend of the underlying instrument correct. In this case, Sohu has passed our strict fundamental criteria. I wouldn't initiate the covered call write until we see some strength in the SOHU stock. Right now, it is drifting lower. Still, this is a strong candidate for purchase! Watch it closely!