this is a review of Chris Butler with projectoption and
a few people have asked me to review projectoption so i started looking into
it and initially when i look into many of
these guys i'm actually quite skeptical and you know i did
pretty extensive research as far as like watching a few hours of
his videos and his videos have a tendency to be quite long
so definitely stay tuned and watch this video
so that you can learn my thoughts on Chris Butler
and projectoption
so project option chris butler used to work with tastytrade
i believe he was a computer science major and then he switched majors to
finance and then he emailed top sazhnov and then
worked at tastytrade i believe from like 2013 to around 2016
and i've actually seen some of his videos on tastytrade
they're pretty good and then he has modified their strategy
a little bit and from what i can take of his modified strategy
there are a few things that i really like the first thing is that
tastytrade encourages people to trade small trade often
and chris explicitly said that he likes to maintain
a maximum of two positions on at one time and
often times one um so he will not trade often at all instead he will
have like one or two positions on at any one
time and i definitely believe that this concentration
of risk and allocating your capital only to the best opportunities
is highly highly advantageous one of the biggest mistakes that people make
is that they spread themselves out too thin for example if you want to be
successful in life you need to focus and i definitely believe that many
people when they allocate capital to the best opportunities
they will be hesitant to allocate 20 of their portfolio to that one position
and then for diversification purposes they will then enter
inferior trades which will then end up getting tested and causing them
a substantial amount of stress the other reason why i believe it's very important
to keep a concentrated portfolio is that you want to reduce
your distractions and god forbid something happens
like march of 2020 you don't want to have 10 or 15 positions that you have to
manage all at one time instead in the worst
case scenario during a black swan event like we had in
march 2020 it's extremely easy to manage one
position so that you're not going to get overwhelmed and that you're not going to
get stressed out so the fact that chris has
modified tasty trades strategy and he encourages his users to
only trade one or maximum of two positions at a
time in my opinion is fantastic the other
thing that i really like about chris is that he seems to
encourage his followers to trade vertical credit spreads
so whereas three to four years ago i was a huge proponent of selling naked
options because it maximizes the amount of credit that you receive and it's also
easier to roll i now believe that most people
probably every options trader should sell vertical credit spreads the only
caveat to that is i do also believe that during periods
of high implied volatility when the vix is trading over 20
during those periods especially after a rapid
volatility expansion like we experienced in march
2020 or december 2018 i definitely believe that during those
periods after the vix has spiked above like 40 then it is definitely in
your best interests and your best financial interest to
trade naked options and the reason is that the probability is in your favor
where the highest that the vix was intraday
during march 2020 was about 84 or 85. so if you sold options during that time
period then you were able to benefit from the
market turnaround as well as the volatility contraction
even with the vix trading at about 85 and the market continued to
go down as long as the market didn't continue
its free fall after it fell about 36 in 33 days then even if it continued to
go down volatility would still contract to a more normalized level of about 40
or 50. so the market wouldn't even have to go
in your favor for you to make money based upon the volatility contraction
so i do definitely agree with him that traders should be trading spreads to
protect against the black swan event with the one caveat that during periods
of high implied volatility when the vix is trading over 20
you should not be trading spreads primarily because
buying options when the vix is very high is incredibly expensive and it's going
to significantly decrease the amount of credit
that you receive the one thing that i disagree with chris butler about
is that he encourages his followers to close out
spreads early if those spreads go against them and if it
maxes out at their target loss so for example if
you sell a spread and you collect two dollars let's say it's a six dollar
wide spread if that spread increases in price and
you sold it for two dollars and then it starts trading at 350
then chris encourages his followers to close it out early and to take the loss
in my opinion i would not agree with this primarily because based upon my
experience usually what transpires is that
the spread that is going against you is simply going to normalize and then that
trade is going to end up being profitable
you will be much better off at trading more narrow spreads and decreasing the
number of contracts that you trade than it would be to close out a defined
risk trader early the reason why i feel so confident in
disagreeing with him about this is that by definition when you trade a
vertical credit spread it's a defined risk trade
so as long as you reduce the width of your strike prices
so instead of trading something that's like 30 dollars wide if you reduce it to
10 then your buying power is going to be
reduced by the width of the strikes less the credit received so if you trade
one contract that's 10 dollars wide and you collect three dollars for it
then your buying power is going to be reduced
by the hundred shares the ten dollars of maximum loss so that's a thousand
dollars less the 300 of credit that you receive so
your buying power is going to be reduced by 700
as a result i really don't see the benefit of
closing out the trade early just because in the short term it goes against you
when in most situations that i've been in
you're not giving yourself the ability to roll that position and you're also
not giving yourself the ability to let theta decay work in your favor
and you're not also allowing the stock itself to normalize in price
so that's a small disagreement with him that i have where if you're already
trading a defined risk strategy so i really don't see any benefit to
closing out that trade early and accepting the loss
because from my personal experience probably
seven to eight out of ten times that trade is going to turn around the other
way and show you a profit especially because it's already a
defined risk trade so by closing it out early you're not giving yourself the
ability to roll that trade you're not giving yourself the ability
to allow theta to work in your favor and you're also not giving yourself an
opportunity to let the stock normalized i definitely
agree with chris regarding technical analysis he does not use it
either so i was very pleasantly surprised with
watching his videos so there are other things that i
disagree with for example he'll buy long data call options
if he's very bullish on the position he'll buy a long dated out of the money
call option there are much better ways to
structure a transaction that you are strongly bullish on than
buying a call option but besides that i mean overall chris is
probably one of the best resources
i know that i've been critical of tasty trade before where i definitely do not
believe that tom sazenov makes money as a trader
i am also critical of option alpha where in my opinion i don't
believe that kirk duplessis is a profitable trader however in my
opinion i definitely cannot necessarily vouch
for project options profitability but i definitely believe that he's a great
resource remember if you want to make money in
the stock market and be a profitable trader you need to be patient
disciplined and you need to make very good decisions
for many of these traders the difference between being profitable and losing
money is all in the nuance
meaning things that i might not necessarily be able to communicate to
you very well but when i'm setting up a transaction or
identifying an opportunity someone else might
make that trade and i might look at that same trade and intuitively based upon my
experience based upon the way that i evaluate the markets
i might not make that trade and maybe 6 out of 10 times
that trade ends up being profitable but maybe
4 out of 10 times that trade ends up blowing up
and i think that it's that small nuance where based upon our experience based
upon our perception and interpretation of the
risk that's inherent in the market and in
that specific position those are the distinguishing factors
between what makes a trader highly highly successful
and what makes an average trader or what also makes
a losing trader it's that discipline the patience
the intuitive nature when evaluating a position
now that intuitive nature is something that can be honed over
years of practice and years of adjustment personally speaking
i am very ocd about consistently and constantly improving myself
so it's extremely rare for me to have a losing position because i always am
learning from the past in order to improve now
while not being critical of chris he does
believe that options in nature are not a store value which i agree with
but he also seems a little bit down on options trading and believes
that for many people it's going to destroy their wealth and he would not
encourage his followers to trade solely options and this is something
that i disagree with where i definitely believe and it's something
that i've been doing for years that you can earn tremendous returns
by being conservative disciplined and learning the nuance
so that you develop your own strong intuition i don't believe
that you necessarily have to own stock and sell
covered calls against it in order to be highly profitable and successful in the
marketplace so there are small things that i disagree with chris about
but overall i think he's an amazing resource
his videos are well made and i definitely
would highly recommend checking them out i think that
he gives good information okay the one thing is
if you're an advanced trader are his recommendations
going to help you make money and i'm not so
sure about that i definitely believe that his recommendation about trading
less positions and holding less positions in your portfolio
is worthwhile but i am not so sure and clear yet
about his actual performance he does not post his trading statements
and i am not certain how profitable and successful
a trader he personally is however taking all of that into consideration
and my personal opinion and my intuition on
chris butler is that i do definitely believe that he's a credible source of
information i think his channel is amazing and if
you want another resource to learn basic
options trading without advanced strategies without the nuance
without really the nitty gritty of how to identify opportunities and pick
the best trades and how to manage a position
i think that chris is really a great resource so um yeah i would highly
recommend him i was very pleasantly surprised
and if you have a question leave a comment below