The only level of play in investing – options

I learned options late in life, by chance, by searching the pages of the ancient magazine Exchange and March 1995. A full-page article showed how an option trader can work from home, (actually in bed) using prices from BBC teletext, back in the day. Much has changed, but options have existed for centuries before stock dating, which is used to determine the price of a ship’s cargo. In the 1980s, options were traded on the stock market, and wealth was made. Warren Buffett is a passionate options trader, Nassim Taleb was the most prolific. They’re not idiots, and neither are you if you’ve read so far.

Investment is the word we use for a trade that has gone wrong! Investing is mostly passive and requires you to be right and / or keep your shares for decades. With markets reaching new highs and stretching valuations, you need to understand that the stock market cannot continue to grow. If you are happy with the slight dividends and the certainty that at some point in the future your shares will be worth half as much as today, then read on. QE is no longer on the table and that is all that has separated stocks from realistic estimates.

So what are all the options about? In our world we only trade with FTSE100 options. Why? Because it is unlikely that the entire index will be arrested for fraud / sexual harassment / fraudulent accounting / toxic products and all the other abominations that can destroy company representatives in the blink of an eye. So, FTSE is the basis on which our derivatives are based. Options are the right to buy or sell share capital (the exchange price is £ 10 per point settled in cash), but NOT the obligation. However, in the same way that insurance companies collect premiums, options can be sold. Have you ever seen a bad insurance company? When you understand this properly, sales options can bring you a monthly income of a comfortable 2% per month, consistently. Nothing else is close.

So who are the buyers of the options if everyone sells them? Well that’s the biggest part of education, and the reason I’ve been trading profitably since 1999. Yes, I had failures and panic – but I made a nice profit in February as the market fell by 10%, although it was a little vague! I learned about the options from the expensive course and much of the free online training. Some time ago I met a like-minded options trader, he runs a website that I contribute to every week, with real trading and a general story about our world. It’s utterly stunning when you start to understand the options and endless combinations and 20 or more strategies we use. I love options trading and I want to reach those who have a pot of money looking for income, and a reasonable method with risk management, but who do not know where to start. However, we are not just about beginners – there are insights for everyone. And U.S don’t I want your money.