Buying options is a scam. David Jaffee with BestStockStrategy.com and in this video
I'm going to tell you why buying options is not a legitimate strategy for you to
earn consistent profits in the stock market we all know those fake gurus who
tell you that you should buy put options and buy call options they tell you that
you should do this because you're controlling risk and the maximum amount
of money that you can lose is the amount of money that you invest in buying those
put and call options however when you buy options is very similar to buying
insurance for speculative purposes you don't buy car insurance with the hope of
profiting from that the way that we make money and the way that retail traders
who are actually successful by selling option premium is we turn ourselves in
to the insurance company we turn ourselves in to the casino and we sell
option premium when we put the odds in our favor again buying options are like
buying lottery tickets any fake guru who tells you that you should buy options in
order to be successful if someone that you shouldn't just walk away from you
should run from it is an enormous red flag buying options does not require any
skill anyone who tells you that you have to learn how to read the charts and I
hear a lot of people on YouTube talking about looking at and analyzing three
chart patterns and buying options and making sure that you use technical
analysis and indicators all of this stuff does not work and from a
mathematical perspective it doesn't work because even if you're in a bullish
market and you buy a call option you are handicapping yourself because you're
paying premium and the stock actually has to appreciate more than the current
market price of the stock plus the premium that you paid for it
and additionally it also has to do that within the time frame prior to the
expiration of that contract simply put no
unintended buying options is a really easy way for you to go broke and yeah
it's definitely possible for you to make 10 options trees you can buy 10 options
whether it's calls or puts and you could potentially turn an account from two
thousand dollars into twenty thousand dollars however the trick or the problem
with this is that it gives you a false sense of security because you believe
that something like this is actually consistent you believe that the success
of using this strategy is something that you can replicate over and over but even
if you achieve some type of success in the early going you were going to lose
your money by buying options because a simple probability when you buy options
the probability that that trade is going to be successful is only about twenty or
thirty percent which means that if you take a really small sample size let's
say five trades even if you're successful twenty percent of the time
it's definitely possible for you to have three of those five trades be successful
is it likely no but is it possible yes it is however the more trades you make
with such a low probability of success the higher the likelihood that your win
rate is going to be skewed more towards the expected outcome which is going to
be around twenty or thirty percent win rate as a result you are going to lose
money by buying options buying options has a very low probability of profit it
is an easy way for you to lose money so again any time you hear gurus tell you
that you should buy call options or buy put options or that you have to learn
how to read the chart so that you can time the market and that you can be a
price guesser you should run away from them extremely quickly in my opinion the
only way that I have seen retail traders make consistent profits in the stock
market is by selling option premium I have worked on lost
as an investment banker and while as an investment banker we don't trade the
market but we understand and we deal with traders all the time we deal with
hedge funds private equity firms strategic buyers and we also learn how
successful traders in investment banks trade and we know that even though a lot
of investment banks are market makers there is a small problem there's a small
prop firm inside many of the many of the investment banks and they use for
proprietary funds from the investment bank in order to realize a profit we
used to laugh at day traders because we knew that those day traders lost money
the only traders that I have seen on the retail side which is what you and I are
the only strategy that works is selling option premium because when you buy
options the probability of profit is around 20 or 30 percent when you sell
options the probability of profit is around 70 or 80 percent and the strategy
that I have by being extremely patient maximizes your probability of profit to
over 90 percent so again buying options is a stem if anyone tells you that you
should buy options or you have to time the entry of you have to read a chart in
order to maximize your entry points or you have to use technical indicators you
should run the other way because that person is not a successful trader stock
charts being able to read charts is not a statistically valid way for you to be
a consistently profitable trader again do not buy options I have seen a lot of
people lose tremendous amounts of money by buying options please like this video
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believe buying options is a valid way to earn consistent profits in the stock
market David Jaffee with BestStockStrategy.com
you can go to BestStockStrategy.com and receive $400 worth of free
training information. If you have any questions leave a comment below and I
appreciate your attention