The Only Level Playing Field in Investing – Options


I learned about options late in life, accidentally, browsing the pages of the old Exchange and Mart magazine in 1995. A full page article showed how an options trader can work from at home (actually in bed) using BBC teletext prices, back in the day. A lot has changed, but options have existed for centuries before stocks, used for pricing ship cargo. In the 80s, options became traded on the stock exchange and fortunes were made. Warren Buffett is an avid options trader, Nassim Taleb was the most prolific. They aren't idiots and neither should you if you've read this far.

Investing is the word we use for a deal gone wrong! Investing is mostly passive and requires you to be right and / or put your stocks away for decades. With markets hitting new highs and valuations stretched, you need to realize that the stock market cannot continue to rise. If you are happy with paltry dividends and your stock will at some point be worth half of what it is today, then read no further. QE is no longer on the table and that is all that has separated actions from realistic assessments.

So what are the options? In our world, we only trade FTSE100 options. Why? Because the entire index is unlikely to be arrested for fraud / sexual harassment / false accounting / toxic products, and all the other annoyances that can destroy a company representative in the blink of an eye. Eye. The FTSE is therefore the underlying on which our derivatives are based. Options are the right to buy or sell the underlying (at the exchange price at £ 10 per point settled in cash) but NOT the obligation. In the same way that insurance companies collect premiums, options can be written. Have you ever seen a bad insurance company? When you get it right, writing options can bring you a comfortable 2% monthly income per month, on a consistent basis. Nothing else comes close.

So who are the option buyers if everyone is selling them? Well that's the biggest part of education, and the reason I've traded profitably since 1999. Yes, I've had failures and panics – but I made a nice profit in February as the market fell 10%, despite being a bit gloomy! I learned the options from an expensive course and a lot of the free training on the internet. A while ago I met a like-minded options trader, he runs the website that I contribute to every week, with real trade and general talk about our world. It's mind-blowing to start to understand the endless options and combinations, as well as 20 or more strategies that we use. I love options trading and want to reach out to those with a pot of money who are looking for income and a sane way with risk management but don't know where to start. We're not just beginners, there are ideas for everyone. And U.S born want your money.

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