FREQUENTLY ASKED QUESTIONS

If option selling is such a lucrative investment strategy why haven't I heard of it before? For many, options trading has become synonymous with making big profits from small investments. Selling options using a conservative strategy such as that described in my ebook does not have the potential for outrageous profits from any single trade. It offers a consistent series of small profits over a period of time. And by not being a get-rich-quick proposition it is less popular to investors who are looking for big returns on their small investments. Those seeking big profits from stock options do so by buying options and hoping for the best just like betting on gambling tables in a casino. On the other hand selling options is like being the casino operator where the option seller collects the bets and wins small amounts over a period of time.

What exactly do you mean by outperforming the market consistently? What if the market and the economy dropped by say, 10% or more in one year? If the market declined by 10% or more in one year, my system will definitely do better than the market’s negative performance. It may not deliver 30-60% return that year but it will certainly outperform the market’s negative performance and will in all likelihood produce a fairly decent positive return.

 Your past performance page shows a negative return for 2008. Don’t option sellers always achieve positive returns regardless of market conditions? In the kind of chaotic market such as that in late 2008 where prices dropped so swiftly and deeply as has not been seen in a hundred years, there are no winners. It becomes a game of who loses the least and my trading system certainly did a good job of tempering losses under such severe conditions.

Who should be using your options investment system? Definitely not those looking to make short term profits in the stock and options market. The program is intended for those who seek a safe, low risk investment vehicle to grow their capital steadily over a period of time.

 How much capital do I need to get started in options? Only you can answer that question, but keep in mind that brokers would normally require a higher starting capital to trade options using my system. If your experience and skill in option trading is somewhat limited it would certainly be advisable to start at the barest minimum allowed by your broker and work yourself up as you sharpen your skills.

 How much knowledge and experience is required to be a successful option seller? For starters you definitely need a good grasp of the essentials of options and you need to be very familiar with the basics of how options operate. As to experience, it’s certainly helpful if you are currently doing some trading in options. If you are totally new to options and have not done any options trading at all, it’s not a good idea to start your option trading exposure using the strategy outlined in my ebook.

 What type of options do you trade and recommend? Indexes, stocks, ETFs? I trade mostly ETFs, some indexes and, occasionally but rarely, stocks. This is just my preference. I don’t recommend any specific listed issues since this is not what my e-book intends to do. But the e-book gives guidelines on how to select listed options that would make good candidates for my option trading system.

How often do you trade? Do I need to be at my computer every minute the exchanges are open? The number of trades depends a great deal on the amount of money you have invested in the system and the number of option positions you have in a diversified portfolio. A small portfolio of say, $5K-10K where one has only one option position, may require only one trade or two in one entire month. If the stock market gyrates wildly there may be a need to do protective roll outs of that one position in which case more than one or two trades may be necessary. On reading my e-book you will see there are not too many trades done to achieve the profitability achieved. The illustrations in the e-book cover a period of just over a year and as you will see the over-all average is about one trade per week or about three per month. No, you don't have to be at your computer at all during the trading day because you can establish alerts points and when your underlying stock nears the alerts point you can then act.

What is the downside to your system? As mentioned above, trading activities are limited in number and frequency which could make it dull and boring for one who gets his excitement doing numerous trades in a day or week.

How will I know when to trade? Does your e-book give guidance on this? I trade in reaction to the market and not in anticipation of its future direction. Generally, I make a trade when the market has moved some distance from its position either up or down. Following this principle and the information given in the book together with the illustrations you will know when to effect a trade.

Does your system guarantee profits or capital appreciation? How about when the economy goes into recession and the markets are depressed? Nothing is guaranteed in this world except death and taxes. Even real estate, which was regarded by many as the ultimate sure thing when it comes to appreciation values, has its downturns as demonstrated by the state of today’s depressed real estate market. I will be honest and say that in a situation where the stock market goes in a swift and deep decline such as that of September–November 2008 my system may suffer a similar outcome. I will hasten to add though, that the negative impact of a deep market decline will be much less for the option trader than if he were in any other investment, including safe harbor mutual funds. Visit the past performance page on this site and see how the option selling portfolio has outperformed all indices by wide margins.

Does your system apply to options on commodities and futures? I don’t see why not. The mechanics of how options work are the same for stocks, commodities and futures. I personally trade only ETF, index and stock options so I can’t say how successful it will be for the others. If one is an option trader on commodities and futures and would like to see if my system can be used successfully, the cost of the e-book is a very small price to pay for the potential rewards it offers.