A: Our service was designed from the very beginning for the novice options trader. Even though the underpinning methodology, screenings and technical analysis are soundly at the professional trader level of complexity, our subscribers never have to see- or deal- with any of that. That's what they are paying us to do for them! We work through thousands of optionable stocks, narrowing them down to a very select list that might become recommendations for this service. Then, we further work that list looking for the ideal technical setups that can be a trigger for a new trade.
When the ideal mix of factors comes together, we prepare a new recommendation in "read it to the broker" language. You could basically call up your broker and read it to them, and they'll know almost everything they need to know to place the trade for you. The one decision left to you is how much money to put into the position, which should probably be a relatively small percentage (probably no more than 10%) of your risk capital account.
If you use an online broker, all of the key information is in that same recommendation, to make it a simple matter to enter the information needed into your brokers option order screen.
After we are into a trade, we watch the positions for our subscribers, applying the same diligent focus that a professional trader would use if this was all they had to do, all day, every day. Again, this is part of what the subscription cost is paying us to do for you, freeing up substantial time on your end so that you can focus your energies on other matters. When it comes time to exit the position, we alert our subscribers with an easy-to-follow (again “read it to the broker”) exit recommendation, which spells out exactly how to exit the position. And again, the same greatly simplified exit recommendation language makes it just as easy to exit the position using online options broker websites.
Other major benefit for option novices include:
the educational rationale that comes with each recommendation, which shares great insight into what we like about each position.
the 100% satisfaction guarantee, making it a no-brainer to just give us a try and see for yourself firsthand
the capped risk involved in only buying options, in the worst possible case, you can't lose more than the money you invest in each position plus commissions. You can come into this knowing exactly what is at risk in every trade.
the low cost of the positions, making it easy to start out with a relatively small risk capital account. We even encourage brand new subscribers to optionally just paper trade the first few recommendations to get a feel for the service.
Q: It's easier to understand how to make money when the stock is going up, but how do you make money on put options?
A: When we're bearish on a stock, we recommend a put option. When a subscriber buys a put option contract, they are buying the right- but not an obligation- to sell 100 shares of the named stock at a fixed price, regardless of how low the stock price might go while they hold that option.
For example, let's say we recommend that you buy a put option on ZYX Corp. with a strike price (the fixed price at which you can sell ZYX stock) at $100. Now let's say that ZYX stock plunges down to $80. Each put option contract you hold gives you the right to exercise your option- that is, to buy ZYX at $80 and immediately sell it at $100, for a tangible profit of $20 per share. The person on the other end of that option MUST BUY the stock for $100 even though it is available for $80 at market.
If you hold 1 option contract, your minimum profit in this case would be $20 times the 100 shares on which you hold the option, or $2000, less whatever you paid for the option plus commission costs. If you bought 5 contracts, that would be at least a $10K profit, less the cost of those 5 option contracts and commissions. Those option contracts will cost a modest fraction of those profits, resulting in a very solid gain.
The point is that we can use put options to capitalize on falling stock prices just like we use call options to profit on rising stock prices. They let you essentially disconnect your classic dependency on a bull market, switching to a mode in which you can make money in a rising or falling market. Put option holders can make huge profits when everyone else is swearing at the bear. Given the volatility of the markets these days, wouldn't you like that ability too?
Q: I've been told that options trading can involve unlimited risk. You say these recommendation all have capped risk. How do you cap the risk?
A: There are forms of options trading that have unlimited risk. However, this service doesn't ever recommend those kinds of options trades. Instead, we ONLY do the simplest kind of options trading- buying call or put options. When you buy a stock option, the most you can lose is the money you put into the trade plus the commission cost of your broker. Since we only buy options, that's how we cap the risk.
Q: Do you do any covered calls or put writing in this service?
A: Most of the big brokerage houses can help you with options trading. Most of the bigger name online brokers also can facilitate options trades. Do some internet searches and compare offerings.
As to commission costs, these days even $15 per trade can be deemed relatively high. When you do the searches, you'll see prices well below this level. Again, compare services carefully and choose the broker that best meets your needs. And note that the lowest commission price does not necessarily mean that they are the best choice for your needs.
Q: How much should I invest in each recommendation? How many option contracts should I buy?
A: This is entirely your call. But as a rule of thumb, you should consider only risking a fraction of your risk capital on any one recommendation. We would encourage subscribers to use less than 10% on each recommendation. And classic money management principles like not "betting the farm" on any one recommendation certainly do apply.
We strongly favor using approx. the same amount of cash on each recommendation as opposed to buying a fixed number of contracts each time. Why? It can smooth out the overall trading experience. For example, lets say that one subscriber (let's call him Jack) puts the same amount of money (let's say $2400) into each recommendation and another subscriber (we'll call her Jill) always buys 10 option contracts.
Now lets say that we send out 2 recommendations
one that costs $100 per contract and
another that costs $300 per contract.
Jack buy's $2400 of each, so he ends up with 25 and 8 contracts. Jill buys 10 contracts in both positions. So she has 10 contracts (or $1000 worth) of the $100 option, and 10 contracts (or $3000 worth) of the position that costs $300.
Let's imagine that the first position closes out with a 100% profit and the second position closes out at a 100% loss (worst case). What happens to each subscriber?
Jack has a wash. He made $2400 profit on one trade and lost it on another. Unfortunately Jill suffers a big loss. She made $1000 on the first position, but lost $3000 on the 2nd one, resulting in a $2000 loss after both trades.
This illustrates why we favor the concept of putting about the same amount of money into every position, rather than buying a fixed number of contracts each time (or arbitrarily adjusting the amount invested on gut feels, etc.)
All that said, the answer to the question really (and completely) belongs to each subscriber. Our service begins and ends at the publication of the recommendations. Subscribers are free to follow our recommendations or not, trading- or not trading- them as they see fit. If you need more help nailing down your own per-trade amount, we encourage you to consult with your financial advisor to better determine what is right for your own situation.
A: Of course, you are free to use the recommendations for your own investment purposes however it may prove helpful to you. If we issue a call option, buying the stock is a lower risk, lower profit potential way to capitalize on the same rationale.
Note though that if we recommend a put position, you might not want to short stock to try to do the same thing on the bearish side. Why? Because shorting stock comes with significant risk if we are wrong.
Q: How soon will I get my first recommendation after I subscribe?
A: A major benefit of this service is that it doesn't work to a fixed schedule. Recommendations are sent as soon as they are deemed ready, but none are ever forced out to meet any kind of quota. This works to your advantage because it means you are getting the very best recommendations we can find at the most opportune time we believe you might take action.
What we can say is that all recommendations will come out only during market hours.
Ask your own question!
If you have a question about the service, you might find the answer in the other features that describe the service. For example the "tour" and "how it works" has a fair amount of commonly asked questions. If you've already been through those and still don't have the answer to your question, call our exceptional customer care team toll free at 1-800-603-4906 or complete the information requested below.
Please note: options involve risk and are not suitable for everyone. You need a broker to trade options. Prior to trading any options, we recommend that you review "Characteristics and Risks of Standardized Options," a publication of The Options Clearing Corporation's (OCC). This booklet is also available at no cost from options brokers, any of the U.S. options exchanges and on the OCC website. While this service strictly buys options (only) to cap the risk, the worst case loss potential on any recommendation is 100% of the money invested in that position plus your broker's commission costs. We make great effort to minimize losses in this publication wherever possible, but aggressive options recommendations like these will sometimes result in total losses on individual positions. As a result, we strongly recommend that only risk capital- that is, discretionary money you can afford to lose- be utilized if you choose to invest in the recommendations made by this publication.
A: Our service was designed from the very beginning for the novice options trader. Even though the underpinning methodology, screenings and technical analysis are soundly at the professional trader level of complexity, our subscribers never have to see- or deal- with any of that. That's what they are paying us to do for them! We work through thousands of optionable stocks, narrowing them down to a very select list that might become recommendations for this service. Then, we further work that list looking for the ideal technical setups that can be a trigger for a new trade.
A: When we're bearish on a stock, we recommend a put option. When a subscriber buys a put option contract, they are buying the right- but not an obligation- to sell 100 shares of the named stock at a fixed price, regardless of how low the stock price might go while they hold that option.
A: This is entirely your call. But as a rule of thumb, you should consider only risking a fraction of your risk capital on any one recommendation. We would encourage subscribers to use less than 10% on each recommendation. And classic money management principles like not "betting the farm" on any one recommendation certainly do apply.
