You Can Profit From a Loss

Today I am a little sad because:

It’s Official…

The Chicago Bears are out of the playoff race!  

For another stinkin year, the 1985 Bears will have to be the lone Superbowl Champion to come from Chicago.  

You know who is NOT out of playoff contention???

The Green Bay Packers! AAAAGGGHHHHH 

I know you can’t see it but I swear there may be tears welling up while I write this, it’s so painful for the sports fanatic in me.

In Chicago we have two favorite teams,  the Bears, and whomever is playing the Packers.  

Just like in options trading, we don’t always have to root for someone to win and can make great money doing it.

Heck I remember in the early 2000’s before the Red Sox broke the curse,  I went to a game at Fenway and in the middle of the 4th inning the bleachers started chanting,

 “YANKEES SUCK!!!…

 YANKEES SUCK!!”

Pretty soon the whole stadium was chanting!

And can you believe it:

The Red Sox were playing the Orioles that day!! They werent even playing the Yankees!!

You see, I do not care who wins the Superbowl as long as it’s not the Green Bay Packers.

…And selling an option is A LOT like me rooting against the Packers.  It’s not that I am rooting for someone to win, Its that I am rooting for a team NOT to win.

When I sell a call I want the stock NOT to go up.  I don’t care if it goes down, and I don’t care if the stock sits. I really only care that the stock DOES NOT GO UP.

When I sell a put, I want the stock NOT to go down.  I do not care if the stock goes up, I don’t care if it sits,  I only care that the stock doesn’t drop.

Notice a trend here?  Selling options is not rooting for or against a stock.  

It’s rooting for or against a stock going up or down.  

It’s rooting against action. Knowing that stocks only trend 30% of the time means that when I bet something isn’t going to move, it’s a whole new way to make money!

We are rooting for NOTHING to happen…and making lots of money doing it.

I do this simply by using what the greatest market makers use:

Volatility.

 Volatility is merely a measure of how much is actually happening in a stock, ie. how much it’s moving.  

When selling an option, in order for it to be a success, one of two things has to happen:

  1. The option needs to be more expensive than the current movement of the stock
  2. The current movement of the stock slows down to below the level where I sold the option price.

Both number 1 and 2  are ways of saying I need to collect more on the option I sell than how much the stock actually moves over the holding period.

If I sell a Boeing(BA) put for $6.00, that is $10 out of the money, I do not want Boeing (BA) to  move more than $16.  

That’s comes out to almost a 24% annualized return! Getting money for nothing is great!

We find trades like these on a daily basis at Option Pit…RIGHT NOW…, as well as teach and talk about them throughout our group chats and in our mentoring sessions, using our proprietary metrics.  

It’s why once someone makes the easy decision to become a client their world of opportunities opens up on different ways to be able to make money.

Your Only Option


Mark

P.S.  We have a HUGE announcement coming up,  make sure you are opening the emails I send you because you will NOT want to miss this.

PPS  to make sure you get my announcements make SURE YOU ARE ON OUR MAILING LIST.

PPS:  Mark is doing a short webinar TODAY at 3:30 CT  register here

Leave A Response

* Denotes Required Field