in this video you're going to learn the hard truth about options trading this is a tutorial
for beginner traders and you're going to learn the hard truth about trading options so my name
is David Jaffee from Beststockstrategy.com 2017. I made around $755,000 and i
made over 2,000 trades and I won about 95% of them the reality is the first truth is that you're only
gonna make around what and i know that this is very disappointing for some people but on your
best year you're only going to make around 50 all right if you try to make more money than that then
that's fine but you're going to end up losing your money so you can try to make 200 a year
but you're increasing the probability they're going to have losing trades and there's a high
likelihood that your losers are going to offset your previous winners so the first truth that you
need to accept is that you're only going to make around 30 to 70 percent a year the second truth
is that if you have a smaller account an account size is between two and five thousand dollars or
below ten thousand dollars it's actually going to be more difficult for you to make a lot of
money because you're going to have to manage your capital well you're going to have to use verticals
which are going to limit your profitability because you're essentially going to buyer
buy a lower price put and you're pretty much just throwing that money away in order to reduce your
buying power reduction so i don't i'm not a fan of verticals i do use them occasionally when i'm
trading in expensive stock like amazon which is trading close to two thousand dollars right now
but i am definitely all about trading naked options because it is much less risky than trading
verticals because it does use a buying power which inhibits you from trading too large and it's much
easier for you to actually manage and roll that position in the event that it does get challenged
and i know that you're only going to be challenged on like you know five percent of your positions
but when you trade a vertical you then have to use some of that credit that you're rolling out to to
buy a worthless put option so the first point and the cold hard truth is that you should accept that
you're only going to trade and you're only going to make around 50 a year the second truth is that
if you have a small account below 10 000 then you're probably only going to make around 30 a
year maybe 35 percent if you have a great year and you're also going to have to manage and redeploy
your buying power and it's much harder for you when you're trading verticals you have to really
manage closing out your positions and taking winners and redeploying your capital
and you have to be much more disciplined when you have a smaller account in choosing your trades
correctly if you have an account size that's under ten thousand dollars you should really only
be trading one or two underlines you should be trading a facebook and a boeing or just facebook
or just boeing or just lockheed martin or goldman sachs or paypal something like that that's it
you shouldn't have like five or ten different securities that you always have trades on because
god forbid something happens and the market has a five percent or ten percent correction
you are going to get a margin call and you're going to lose money you're going to be forced
to close out those positions the third cold hard truth is that there's a lot of misinformation out
there and people are going to tell you that trading naked options is very risky when in
reality trading verticals is extremely risky because if that position gets challenged it's
extremely difficult for you to manage and roll that position whereas when you trade verticals
it's very easy for you to manage that position so for example i have a current position on in dust
and it's naked and gold has fallen significantly over the past month and i made a mistake by
trading too many contracts but i traded naked options so what i did was i rolled all of those
positions forward by about six months and by getting that excess time premium and that credit
from the time premium i was actually able to take the 200 contracts that i sold naked in dusd and i
cut it in half to 100 if i was trading verticals i would not be able to reduce my size from 200 to
100 just by rolling it out in time because the credit would not be available for me because
instead if i was trading verticals that credit would go into buying that lower price put option
but actually in this case i was selling calls onto usd so the reality is if i was trading verticals
that money the credit that i would receive for extending duration will go into buying the higher
price call option but instead because i'm not trading verticals i'm selling naked options
then i'm able to take that credit and push it towards reducing my contract size and i
was able to reduce the size from 200 contracts to 100 contracts so the third thing is that there's
a lot of misinformation out there you have to be very careful on who you trust and that's pretty
much it that's the cold hard truth and i guess the fourth bonus tip is that you have to be extremely
disciplined and you have to ignore a lot of the excess information and my watch list is only about
10 securities and i only have positions on five securities at all times facebook amazon lockheed
martin boeing and a financial stock like a goldman sachs or paypal and i also like to have a gaming
stock like atvi or electronic arts or ttwo but one of those three so usually i have positions
on just six underlines and i ignore everything else one of my students asked me about tesla or
netflix or nvidia i don't even look at it i don't even know what's going on once again this is david
jaffee from beststockstrategy.com you can go to beststockstrategy.com and sign up and receive 400
worth of extremely valuable information that to some people is worth thousands of dollars you can
also sign up for a real-time trade alerts product at beststockstrategy.com memberships there's a
trial that's going on at this moment where it's only 19 for seven days and so if you're looking
to become a successful and profitable trader then you can sign up or you can just continue to
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